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Remarks by Ambassador Michael Froman: “Dialogue on the Transatlantic Trade and Investment Partnership”

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Remarks by Ambassador Michael Froman:
“Dialogue on the Transatlantic Trade and Investment Partnership”

Rome, Italy
October 14, 2014

As Delivered

“Let me also recognize and tribute Mr Gucht,  whose service to his mission and his country over the last several years and decades have really distinguished him as a leader in Europe, and as his day comes to an end soon, I am enormously grateful for our partnership. The highest compliment a trade negotiator can say to someone else is that he’s a good sparring partner. Karel has been a good sparring partner, and I am very grateful for his friendship.

”Thanks to the solid foundation Karel has helped build, both in T-TIP and in our other efforts, we now have an opportunity to take the transatlantic partnership to a new and higher level. When a new Commission is in place, we’ll have an opportunity to reenergize our efforts and to ensure our partnership contributes as much to peace and prosperity in the first half of the 21st century as it had during the last half of the 20th century.

“This is a natural moment to take stock of where we are, how far we’ve come, to step back and honestly assess the challenges that lie ahead. Next month, will be the 25th anniversary of the fall of the Berlin Wall.  Then, we worked hand-in-hand to unify a city, a country and a continent – and bring the Cold War to a close.  The question is whether that same historic spirit, that same commitment to a joint project of strategic importance endures today.

“The United States and the European Union have grown together, forming the world’s largest economic partnership. We now share $1 trillion in trade each year, $4 trillion in investment, and 13 million workers on both sides of the Atlantic owe their jobs to the transatlantic economic relationship.

“And it’s our economic strength that provides secure lives for our workers, our farmers, our entrepreneurs, and their families. The growth generated by trade and investment underwrites our joint efforts to provide security – both for ourselves and wherever it is threatened around the world.

“But our partnership extends well beyond economics and is anchored upon shared values –freedom, democracy, and respect for the rule of law. Together, we have tackled crises, regional and global. We have provided stability to markets and governments in times of turmoil. We have protected high standards—for workers and consumers, for health and safety, for labor and the environment, at home and abroad.

“For all these reasons and more, it’s critical that we press ahead and succeed with T-TIP, that we build on the more than a half century of partnership and bring economic and strategic benefits to both sides of the Atlantic. The global economic outlook right now is uncertain, and there has been an increase in geopolitical uncertainty, here on the periphery of Europe and around the world.  In this case-- and in this context--the case for T-TIP has never been stronger.

"On the economic front, the U.S. grew at 4.6% last quarter, our unemployment rate has dropped from 10% to 5.9%, and we are creating about 200,000 jobs a month on average including 700,000 jobs in manufacturing over the last 5 years.  And this represents significant progress but we have a long way to go and much distance to run.

“At the same time, growth in other major economies is slow or slowing. With many traditional tools constrained, an ambitious and comprehensive T-TIP would help catalyze the reforms that are necessary to jumpstart global growth. There are a number of estimates out there – ranging as high as several thousand *hundreds of thousands of jobs on both sides of the Atlantic, but all have concluded the same thing: that T-TIP will significantly boost jobs – both in the US and in the European Union.

“Among the many beneficiaries of T-TIP, perhaps small businesses stand to gain the most.  Small businesses are hugely important sources of innovation, employment, and growth, but they lack the resources of large firms to navigate what can feel like a maze of regulations and obstacles to trade.

“In the U.S., 90% of all exporters are small businesses, but only 1% of small businesses export, and most of those export to just one country. The opportunity is huge, and I note, it is equally significant on the European side as well. In Italy, for example, small businesses make up more than 99% of all businesses. They provide more than one-half of all jobs in the U.S., and I understand they provide nine out of every ten jobs here in Italy. One of the goals of T-TIP is to bridge divergences between two well-regulated markets for the benefit of consumers, and for businesses of all sizes.

“Long before T-TIP, our aviation regulators figured this out.  They realized that neither of them had resources to inspect all of the planes that might land in each of their territories. So they together designed a set of protocols and agreed to accept each other’s inspection results.

“Imagine the benefit if regulators on each side of the Atlantic could agree to accept each other’s inspections in other areas. For example, inspections of medical device manufacturers, for example. Regulators would benefit because their limited resources could be deployed to inspect facilities of greatest concern.  Companies would benefit because they don’t have to undergo duplicative inspections of their facilities.  And consumers could benefit from more efficient implementation of our consumer safety precautions.

“There are far more opportunities like that for our regulators to work together, to share information and best practices, to work together to define common standards.  This kind of project is only possible between two well-regulated systems such as the United States and Europe, but if we’re able to do this through T-TIP, it positions us, collectively, to be standard-setters rather than standard-takers more generally in the global economy. T-TIP also positions us to establish basic rules on transparency, participation, and accountability in the development of regulations, setting a high bar for governance and democratic participation.

“When it comes to regulation, neither of us would accept a race to the bottom.  We both want to maintain high levels of protection – health, safety, and environment – and we do not see T-TIP as a mechanism for lowering such protections or for deregulation.  President Obama was absolutely clear about this in March, when he spoke about T-TIP in Brussels. He said, and I quote, ‘I have fought my entire political career and as President to strengthen consumer protections… I fought throughout my political career and am fighting as we speak to strengthen environmental protections…I guarantee you we’re going to be working hard to make sure that environmental protections, consumer protections that are already in place, that those are strengthened.’

“So let me be just as clear:  Americans don’t want lower standards. Europeans don’t want lower standards. We won’t negotiate that kind of agreement. And our legislatures wouldn’t approve such a thing. And the only reason we are negotiating this agreement is because we believe that, on balance, we share a similar commitment to strong levels of health, safety and environmental protection – even if our regulators get to the answer through somewhat different approaches.

“While I’m on this track, let me take on some of the other criticisms I’ve heard. My speech will sound a lot like Karel’s, because we each address the same set of issues.

“Let’s start with the Investor Settlement Dispute Settlement.  Here too, let me absolutely clear: Neither the U.S. nor the EU has any interest in doing anything in T-TIP which would prevent governments from regulating in the public interest.

“In reality, investment protections are designed to promote standards of fairness, not protect profits.  They’re intended to safeguard against a host of abuses, including discrimination, repudiation of contracts, and expropriation of property without due process of law even as we fully preserve our ability to regulate, to protect public health and safety, the financial sector, the environment, and any other legitimate regulatory objective.  

“That’s why we’ve insisted in our trade agreements on the strongest possible provisions for ISDS – to ensure that governments can regulate in the public interest including a wide range of safeguards which express many of the concerns that have been raised, and we look forward to this ongoing dialogue about these and other reforms to ensure that governments will continue to be able to regulate in the public interest even while providing appropriate investment protections.

“Finally, let me say a word about the transparency and here too, I think there is more there than might be evident in the public discourse. We believe that transparency improves policy and public participation, input from elected officials, and spirited national debates must guide our trade efforts. We put an unprecedented effort into communicating to stakeholders and the public exactly what we are doing in these negotiations. 

“Let me describe what we are doing.

“In the U.S., there is no area of policy in which the Executive and Congress work more closely together than trade policy, and this Administration has taken Congressional engagement to historic and unprecedented levels.  As an example, with regards to the Trans Pacific Partnership, and along with T-TIP, we have had more than 1,500 briefings with Congress, just on TPP. And that doesn’t include T-TIP, the WTO, Trade Facilitation, information technology, ITA, TiSA, EGA, AGOA, GSP, TPA, etc. We are constantly in dialogue with our legislature. Every negotiating proposal is reviewed by them before we table them.

“With regard to stakeholders, Congress established a set of advisory committees, and we have more than 500 cleared advisors representing small businesses, agriculture, local and state officials, every major labor union, and major consumer, health, and environmental civil society organizations, and they preview our negotiating proposals and give us direct input, including specific drafting suggestions throughout the negotiation. 

“But we have not stopped there.  We started a practice in TPP and imported it into T-TIP where we suspend negotiating rounds for a half a day during a round, and invite any stakeholders who wish to come to present their views directly to us and to our trading partners.  Some come to present on a particular issue, some come to protest against the entire exercise.  At the last round in Washington, we had over 300 stakeholders come and 65 gave presentations to the trade negotiators.  I’ve attended several of these sessions myself, and I can vouch for their value to our negotiators.  In addition, we hold, as I mentioned, regular conference calls open to all stakeholders where we take questions and provide updates on the negotiations.

“And finally, the public.  We’re working to find new and better ways to engage the broader public on trade.  Several months ago, we’ve published the equivalent of our negotiating mandate – our chapter-by-chapter objectives – for TPP and T-TIP on our website, where we’ve also posted blogs on issues such as ISDS, intellectual property rights, and the environment, and we’re continuing to post updates after each negotiation and press statements, and I’m even Tweeting.

“Engaging the public is vital because there is so much at stake.  We face a choice -- one that will reverberate well beyond our own borders and is as simple as it is consequential: we can use trade agreements to shape globalization, or we can be left to be shaped by globalization.

“Make no mistake. Others are active in this space, and not everyone shares our collective commitment to transparency, to labor and environmental protections, to consumer rights, innovation, to a free and open Internet.  If we do not collectively carry on he mantle of global leadership on these issues, other standards will prevail.

“With stakes this high, half-measures won’t suffice. All of us are eager to reach the finish line in these negotiations, but we cannot take shortcuts.  The Partnership we forge must be ambitious and comprehensive.  This is our opportunity to face the hard issues head-on, not avoid them. 

“We have covered a lot of difficult terrain in 2014, but 2015 is a critical year for this negotiation, and in order to make it productive, we need to make progress soon on all fronts. Some of the most important outstanding issues are regulatory aspects, which are perhaps the most difficult but promise the most value. At the end of the day, the gains from removing tariffs would be undercut if we allow unnecessary non-tariff barriers to go unaddressed.

“Sure, it will be difficult. I saw a sign at the White House the other day that said ‘Hard things are hard, the biggest achievements always are.’  But let’s remember that our partnership is one that was forged doing hard things.  Our economic relationship, the strongest in the world, didn’t happen by accident or mere coincidence.  It’s the result of common interests, common values, and a long history of working together to advance both.

“Seven decades ago, it would have been inconceivable that a partnership this strong would rise from the ashes of World War II. Today, and in the days that follow, we have an opportunity to honor the sacrifice of the generations that came before us.  We have an obligation to recommit ourselves to the project they began. We have a duty to take our partnership to the next level.”