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Remarks by Ambassador Michael Froman at the Munich Security Conference

Time for Action: T-TIP and Global Leadership
Remarks by Ambassador Michael Froman at the Munich Security Conference

February 12, 2016
Munich, Germany

*As Prepared for Delivery*

Thank you. Since its first meeting over 50 years ago, the Munich Security Conference has changed in many ways. It has grown from what was called a “transatlantic family meeting” into a truly global gathering. Discussions once limited to strategic studies have expanded to include experts on energy, technology, health and other areas. You’ve even opened your doors to trade ministers. 

To a certain degree, these developments reflect a fundamental shift in the nature of security itself. Historically, economic power has been viewed primarily as an enabler for military power. Indeed, in the 17th century, Europe developed the first estimates of national income by comparing the ability of states to raise and support militaries. Today, economic capacity is widely recognized not only as the foundation for military might, but also as a source of influence in its own right.

Nowhere has this been more evident than here in Europe.  From reconstruction to integration to expansion, the European project has been a remarkable exercise in translating political will into economic power and economic power into political identity. 

There is, of course, no shortage of challenges. The world is awash in economic and geopolitical uncertainty. Global demand has declined, markets are volatile, and many have warned that mediocre growth is fast becoming the “new normal.”  Europe faces challenges from within and without: Slow and uneven growth, persistently high unemployment, especially among youth; the most significant migrant and refugee crisis in decades; disorder on its periphery that raises real concerns about energy security and long-settled questions about borders; and fundamental questions about the composition and nature of the union itself.

But Europe has beat tough odds before. Its journey to becoming the world’s largest market was not always smooth, and its success was never guaranteed. Twenty-five years after the European Economic Community was formed, the cover of The Economist carried its tombstone.  But Europe came back and dealt with its challenges.

From its conception, T-TIP was intended to tackle big challenges.  It was born in the aftermath of the 2008 financial and economic crisis, when policymakers were looking for drivers of growth.  Since then, in the United States we’ve seen more than 14 million new jobs created, unemployment has fallen from 10 percent to 4.9 percent, and wages finally though too slowly are beginning to rise, but that economic rationale remains as critical now as it has always been.

We have a firm foundation on which to build. The US-EU trade and investment relationship is the largest in the world, a testament to the creativity and productivity of the Atlantic community. Already, $2 billion of goods and $1 billion of services are traded back-and-forth across the Atlantic every single day. Our mutual foreign direct investment stands at over $4 trillion. And these economic ties support more than 14 million jobs. T-TIP can deepen that relationship even further.

Any trade agreement must rest first and foremost on its economic merits, and the economic case for T-TIP is strong: higher long-term growth, more opportunities for our small businesses to expand and for our workers to secure well-paying jobs, and greater competiveness in an increasingly competitive world.

But alongside this economic rationale is the strategic rationale for T-TIP – and that has only grown stronger with geopolitical developments on the margins of Europe over the last few years:  Diversifying markets, enhancing energy security, and most importantly, reinforcing the strength of the transatlantic relationship.

The greatest strategic gains of all could result from the U.S. and the EU working together under the framework of T-TIP to shape a rapidly changing world.  It is easy to get caught up in the technical details of this project – cheese names come to mind – but when you step back and look at the bigger picture, perhaps what is most distinctive about T-TIP is the opportunity it provides for elevating global standards.

Globalization is not a choice; it is a fact. The only choice is whether we use trade policy to shape globalization, or stand by and be shaped by it.  T-TIP is an opportunity for the United States and Europe to work together as equal partners to shape a better future and be standard setters rather than standard takers. It’s a chance for us to raise our collective game, and in doing so, play a leadership role in defining new rules of the road for the open, rules-based trading system.

It is American and European leadership after the Second World War that brought this global trading system into being, developed it, and has led it for the benefit of all ever since. As the rest of the world saw its advantages, that greater openness meant greater opportunity, they came on board. And thanks to the growth created by these efforts, we’ve made significant progress reducing extreme poverty and creating greater security.

But the system that has delivered so much is now bending under the strain of seismic shifts and competing alternatives. In recent years, a series of forces -- globalization, technological change, and the rise of emerging economies -- have reshaped, and continue to reshape, the international landscape. At the same time, some nations are offering alternative, more mercantilist visions for trade and investment that challenge fundamental tenets of the system from which they have benefitted enormously.

In these alternative visions, the state is often absent where it should be present, and present where it should be absent.  Rather than promote fair competition, they engage in excessive and unfair subsidies. Instead of building bridges of innovation, they raise national walls to block the flow of ideas.  Instead of recognizing that labor and environmental protections are essential for balanced and sustainable growth, these alternatives sacrifice long-term interests for short-term gains.

No nation can or should dictate tomorrow’s rules, but if we want progress towards a high standard, open, rules-based trading system that reflects the needs of the 21st century, there needs to be leadership. Tomorrow’s rules will not be written by force or coercion, but by forging consensus and demonstrating success. In this context, the world is watching and wondering whether the United States and Europe have the political will to move forward together.  

For its part, the United States is ready to lead on trade. Last year, President Obama demonstrated his willingness to expend significant political capital on trade by securing Trade Promotion Authority.  And recently, we brought together a diverse group of 12 economies and united them around the highest-standard trade agreement ever negotiated: the Trans-Pacific Partnership, or TPP. That agreement includes, among other elements, the strongest enforceable labor and environmental standards in history, the first rules to keep the Internet open and free, and the first rules to level the playing field between state-owned enterprises and private firms. These high standards will cover nearly 40% of the global economy, and there is a growing list of countries expressing interest in joining this platform over time.

And as we continue working to upgrade the open, rules-based trading system, the United States wants to lead with Europe side by side. We’re two advanced, high-wage, high-standard economies. Our partnership stems from common aspirations. I know we don’t agree on everything, but we’re closer in our values to each other than we are to anyone else. We believe, for example, that growth, by itself, is not enough. We believe in creating growth that is sustainable and inclusive; not by sacrificing standards, but by raising them; not by reducing protections for workers or the environment or against corruption, but by enhancing them. By getting T-TIP done, we can show the world that a more ambitious model of growth is possible and enjoy the strategic benefits that result from exercising economic leadership.

Now is the time. After making steady progress for more than two and a half years, we have the opportunity to bring these negotiations to a successful close. The Obama Administration is prepared to make every effort to conclude T-TIP, but to do so, we need both sides to apply the necessary political will. We understand the strains and stresses Europe currently faces – the refugee and migrant crisis, the risk of Brexit, the overhang of the global financial crisis -- and there is a lot at stake in how Europe addresses these issues. Obviously, the decision about the UK’s role in the EU is up to the British people, but as the President has said, we value a strong UK in the EU. And a strong, unified and confident Europe is very much in the interest of the United States and the broader international community.  T-TIP provides a potential opportunity for Europe at a time when the headlines are replete with challenges.  And no group of people is better positioned to understand and explain what’s at stake than those in this room. 

Thank you for the opportunity to join you.