Robert D. Hormats
Under Secretary for Economic Growth, Energy, and the Environment
Washington, DC
December 17, 2012

It is an honor to be here.

The U.S. has a special bond with Europe. Our friendship and alliance have evolved with the times and have stood the test of time. In this context, I’d like to discuss two key considerations.

First, while the rebalancing, or pivot, of U.S. foreign policy to Asia has received much attention of late, it is important to emphasize that this cannot and will not come at the expense of relations with Europe.

And second, strengthened economic ties between the United States and Europe—and the benefits that produces for both of our economies—enhances our ability to build relationships with emerging economies in Asia and elsewhere that support the global economic system.

In the post-war years until 1990, our relationship with Europe was largely one of military necessity, and its focal point was Europe’s security. Since the end of the Cold War, German reunification, and the emergence of the democracies of Central and Eastern Europe, the dynamic has changed. Our partnership is now focused on economic relations and increasingly has a multilateral dimension, particularly as we work together in the G-8, G-20 and countless other multilateral groups. In many ways, and in many fora, our relationship now focuses on what Europe and the United States can achieve as partners to address a range of global challenges. So our partnership with individual European states and the EU, forged initially as a military necessity, is now also one of economic necessity.

Taken as a bloc, the EU is America’s largest trading partner, with $1.5 trillion in annual trade flowing across the Atlantic. So, despite all of the internal challenges ongoing in Europe and America’s pivot towards Asia, we mustn’t forget the importance and value of our transatlantic economic relationship. That is why the U.S. has tried to be so supportive of the efforts European leaders have made in overcoming the current crisis. The EU has survived 2012 in much better condition than many had predicted at the beginning of this year – and of course with the EMU still intact. A sense of common purpose and cohesion – despite many rocky days and even weeks – was one important reason for this. Many innovative approaches emerged and bold actions were taken by national leaders and officials, along with those of the European Union. And, of course, there was the “Mario Moment” in July when the ECB said it was willing to do what was necessary to reduce the Euro risk premium.

With Europe we have two key fora for progress:

The Transatlantic Economic Council—or TEC—which was inspired by Chancellor Merkel and enthusiastically supported by leaders here and in Europe; and the High Level Working Group on Jobs and Growth, which enjoys similarly strong support. The goal of the TEC is to eliminate barriers and reduce costs from transatlantic trade.

By bringing together our respective governments and businesses, we can leverage the size and importance of the U.S. and EU markets to help shape global standards for commerce. For example, Ford and Volkswagen’s subsidiary Audi have been the TEC business-leads in organizing a joint approach to electric vehicles and smart grids. In parallel, within the High Level Working Group on Jobs and Growth, we have come a long way to clarifying the synergies and gaps in our approaches to trade and investment.

Further cementing the United States and Europe through a comprehensive trade agreement could help support millions of jobs and promote growth and competitiveness on both sides of the Atlantic. This is a time to be as ambitious as possible – much as our leaders were in the immediate post-war era in forging the strategic security, political, and economic ties that still guide our relationship and bind us together. A comprehensive new U.S.-EU trade agreement could increase exports, growth, and the number of jobs supported by trade on both sides of the Atlantic. We are encouraged by the level of support we have seen for a potential agreement from the Commission and from member states, and from many business groups on both sides of the Atlantic.

Chancellor Merkel emphasized the importance of trade in U.S.-EU relations last July when she said, “I am absolutely convinced that if we were to manage to work more closely on reducing non-tariff barriers, we would achieve a lot for our economies in a world where others are also gaining in strength. ….So it is worth thinking about the ultimate purpose of some hurdles to investment and trade and, taking it further, to think about ways to bring about a comprehensive transatlantic free trade agreement.”

That the Chancellor, in the midst of all that was going on in Europe at the time should place such emphasis on trans-Atlantic trade underscores the importance she attaches to trade expansion. There are substantial benefits to an ambitious agreement. But to get there, many longstanding, complex issues need to be resolved. We want to take the time to get the substance right so that any agreement we pursue would maximize job-supporting economic opportunities on both sides of the Atlantic.

It’s essential to make progress on these and other key areas to define an equitable solution. This is needed, from our perspective, to gain support from Congress and key stakeholders in the United States. And Europe will need to mobilize domestic support as well. But the goal is worth the effort.

The U.S.-EU High-Level Working Group on Jobs and Growth is still considering whether to recommend the launch of comprehensive trade negotiations. Trade liberalization between the United States and the EU can enhance not only transatlantic economic ties, but also address shared market access challenges in third countries. And it encourages a forward-looking multilateral trade liberalization agenda that supports global economic growth.

The latter leads to my second point.

Our goal is not simply to strengthen economic ties with either Europe or Asia but rather to strengthen economic ties with both Europe and Asia. To do this, the United States and Europe must work together. During the era of post-World War II reconstruction, we took a comprehensive approach to reform that included well thought-out economic governance programs and institutions—like the UN, the IMF and World bank, and the Marshall Plan. These promoted growth, security, and freedom for many millions around the world. European leaders realized that countries whose economies and values are inextricably linked will remain at peace with one another nd forge a common future. This was the underlying principle of the original European Coal and Steel Community.

Today’s united Europe is a powerful tribute to the vision and determination of European visionaries such as Jean Monet, Robert Schumann, and Paul-Henri Spaak, as well as American’s such as George Marshal, Dean Acheson, and President Harry Truman. These men understood the value of closer economic ties as a politically unifying force—and as a force for peace. The wisdom and validity of this view was captured this year when the Nobel Committee awarded the 2012 Peace Prize to the European Union. Generations of Americans like myself who grew up during the Cold War recognized the vital importance of European-US relations. In this new and different post Cold War world, we need to encourage new generations of Americans and Europeans, who happily no longer need to live under the dark and menacing shadow of the cold war, of the profound importance of US-European ties.

We need to ensure that coming generations on both sides of the Atlantic recognize not only the important legacies we share but also the values and principles that underpin our societies, our systems of government, and our view of the world that we want to pass on to future generations. And, we need to recognize that the United States and Europe share, in so many ways, a common future. So, we must work together to shape that future in positive ways.

We need a bold vision of what we can accomplish together in order to energize this relationship among our citizens. Many now take it for granted or think little about it. In fact our mutual prosperity and well being still depend heavily upon it—as do solutions to many global political, security, environmental and developmental challenges. Failure to work together would, on the other hand, diminish prospects for progress in all of these areas.

That bold vision for future cooperation cannot be based on a common enemy. It needs to be based on a recognition of our many potential areas of shared opportunity—and how working together to realize these opportunities will benefit our own peoples and contribute to a better world. The challenge for the 21st century is to integrate a new group of economic participants—principally China but also India, Russia, and others—into the international system. The United States and Europe must leverage our shared interests and values to work with a new set of actors fast becoming major players in the global economy, so that they can assume responsibilities in the global economic system as equals.

At the close of the Constitutional Convention in 1787, as Benjamin Franklin left the hall in Philadelphia, he was asked, “What kind of government have you given us Dr. Franklin?” “A republic,” he replied, “if you can keep it.” Generations who came before us have given the United States and Europe a close and mutually beneficial alliance, friendship, and economic relationship. But it is up to us and future generations – through the decisions we make and the vision we seek to implement – to determine whether we can keep it.

Thank you for your attention