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U.S. Department of State - Great Seal

U.S. Department of State

Diplomacy in Action

Transatlantic Economic Council

FPC Briefing
Michael Froman
U.S. Deputy National Security Advisor
Günter Verheugen, Vice-President of the European Commission for Enterprise and Industry
Foreign Press Center
Washington, DC
October 27, 2009

3:30 P.M. EDT

MODERATOR: Good afternoon, everyone. Welcome to the Foreign Press Center. It’s a pleasure to have you all here today. Before we get into the briefing, let’s just set some ground rules. This is on the record. I ask everyone to make sure their cell phones are off. Before asking a question, please wait for the microphone to come up to you and make sure you clearly state your name and news organization.

As you all know, today, the Transatlantic Economic Council had a meeting, its fourth meeting. And we are honored to have the co-chairs of the meeting, Mr. Mike Froman –on my left side, and Mr. Günter Verheugen on my right. And we will start with a few remarks from both. Mike, if you’re ready, why don’t you take the podium? Thanks.

MR. FROMAN: Thank you. Good afternoon and thank you for coming. Today was the fourth meeting of the Transatlantic Economic Council, the first one in the Obama Administration, and I thank my co-chair, Commissioner Verheugen, for working with us to organize a successful meeting. This is in anticipation of the U.S-EU summit that happens next week here in Washington. And the goal of the TEC is to build on the already very deep and broad relationship we have between the U.S. and the European Union, to find further ways to integrate our economies, to remove barriers to trade and investment, and to work together to deal with new issues on the agenda.

We had a broad-based discussion today that lasted – well, it started last night and finished a few minutes ago that covered regulatory approaches, different regulatory approaches that we’re considering here in the United States and in the European Union. We talked about the progress that had been made by the various bilateral regulatory dialogues that have been working along the way. We discussed areas of possible cooperation in the future, including with regard to energy efficiency, labeling, nanotechnology.

We laid out some timetables or deadlines for work to be delivered on customs issues. And we agreed that with the new commission coming in, that we would lay out a more specific and detailed work program for the next meeting of the TEC sometime in the first part of next year. As part of the work of the TEC, we also did – had consultations with a number of stakeholder groups – the Transatlantic Business Dialogue, the Transatlantic Consumer Dialogue, the Transatlantic Legislators Dialogue, as well as representatives of labor unions from both the U.S. and Europe. And there was a very good participation on both sides.

Let me just say that it is a very strong and important relationship between the United States and the European Union. We’ve worked very closely together in the context of this economic crisis, both bilaterally and through other fora such as the G-20 and the Financial Stability Board. We discussed financial regulation. We discussed efforts to come out of the crisis. We discussed trade and the importance of completing a balanced and comprehensive and ambitious Doha round. And we laid out an ambitious work program going forward.

There will be a lot of work that’ll be done now at the working level between our teams and the teams in the European Union, and in consultation with our stakeholder groups, in anticipation of further engagement by our leaders. And with that, let me turn it over to Commissioner Verheugen.

MR. VERHEUGEN: Thank you very much, Mike. Ladies and gentlemen, the importance of today’s meeting was the fact that both sides renewed the commitment to create the barrier-free transatlantic marketplace for trade and investment as much as we can and as soon as we can. It was my priority as the European chair of the Transatlantic Economic Council to make sure that in this year of transition, there will be no interruption. Therefore, we are very grateful that the American side agreed to have the meeting. Now, we immediately – can even say neck to neck – with U.S. summit that we will have exactly in one week.

From my experience after more than three years now in this exercise, I can say that after a trial and error phase, we have now a clear direction for this Transatlantic Economic Council. We do not try to solve trade disputes or trade irritants. Instead of that, we try to find common ground for regulatory approaches, for common initiatives which might lead to regulations on both sides. And as far as existing regulation, the existing regulatory concern, to look into existing and new tools, how we can overcome them. And one promising instrument, in my view, is – despite the fact that it didn’t work in the past, is the instrument of mutual recognition agreements.

I can tell you from the experience if you try to harmonize existing legislation with the involvement of both sides of parliament and all (inaudible), it does not work. It’s a nonstarter. It does not work. We need to find (inaudible) solutions.

Mike has already mentioned what we have discussed today. I found it extremely encouraging that we fully agreed in which areas we, the Europeans, and the Americans need to cooperate in order to maintain our leading role in the world’s economy. This is exactly what he said: Innovation, clean technologies, energy efficiency are the key enabling technologies for the future. And that is what we have discussed today.

It was a meeting in an excellent, positive, constructive and friendly mood. And if you ask me whether there was an issue, whether there was disagreement or a problem, I’m unfortunately in – not in a position to answer that because we shared the same views and the same vision. There was a lot of agreement today.

Finally, I found it extremely promising the way how we had our traditional lunch debate. This is – perhaps you might know – a meeting that we have in a very restricted format, the principals only, where we discuss long-term strategic issues of mutual interest. And today, of course, we have discussed in the presence of Larry Summers and with his active participation the state of play in the economic and financial crisis and the lessons to be learned so far and the steps which we still have to go.

MODERATOR: Thank you very much. Now, we have about 20 minutes for questions and answers, and I see Brian from Europolitics. Why don’t you start us off?

QUESTION: I’m Brian Beary from Europolitics. I was struck, Commissioner Verheugen, when you said that the purpose of the TEC is not to solve trade disputes. Well, I just was – would like to ask what is the purpose of the TEC and what value – you know, for ordinary people, what value does it give if it’s not supposed to solve trade disputes?

MR. VERHEUGEN: To give you the example, we tried to solve longstanding trade disputes in the years before that I tell you today it was a big, big mistake because it became close to a trade war about chicken between the United States and Europe. It was completely useless.

What we have to do is not to address a specific problem, a great problem. What we have to do is to address a regulation that created the problem or the regulatory approach that creates a problem. So we must not – we will not discuss the chicken problem. We must discuss the way how we in the United States and Europe regulate food safety. And this is – the issue is not poultry; the issue is food safety, just to give you the example.

And there are a lot of instruments which we can use in order to make sure that different regulatory approaches do not lead to unnecessary costs for the operators, because that is what we wanted to – basically, it’s very simple. We want to increase productivity of the economic operators by reducing the cost of the international price, reducing simply the costs, do not double testing and other kind of different legal requirements. That is what we want to do.

And since – and I have told you, it is basically impossible on both sides to change existing regulations, in the sense to harmonize it, so therefore you need to find another system. And the two systems which we are now assessing and which we will use in future is upstream coordination of common legislation and mutual recognition in areas where this possible for existing legislation.

MODERATOR: Mike, did you have something to add to that?


MODERATOR: Let’s see, I see Der Spiegel back there.

QUESTION: Hello, both of you. Good to have you here. Gabor Steingart from Der Spiegel. One question for both of you. Some in Berlin and in other places in Europe are worried that with the new majority of the Democrats in the Congress, not in government but in Congress, there will be some resistance to free trade. Do you share this worries? What’s your take on that?

MR. FROMAN: Well, look, trade is an important issue and it’s a controversial issue. I think the President has made clear his position on trade and has been in favor of open and free trade. He has also been in favor of enforcing trade agreements, enforcing trade laws. And we look forward to working with Congress. We think it’s important that if we’re going to pursue and when we pursue agreements that we do so in a way that’s done in consultation with major stakeholders and with Congress to ensure that we’re meeting the broad set of objectives that trade agreements ought to have. So my sense is we’ll work very closely with Democrats and Republicans in Congress to pursue a trade agenda that makes sense.

MODERATOR: Let’s take this question right here.

MR. VERGEUGEN: I’m well aware that these concerns exist, but from my experience I can only say it seems not to be – seems not to be founded. It’s unfounded. But today there was a clear understanding on both sides that it is in the interest of the American and the European economy to fight together for free trade and open markets. Particularly discussed were instances in the area of investment that was clearly stated on both sides that restrictions here do not make sense.

I’m well aware that the proof of the pudding is eating it. But as far as practice is concerned, I have to say there are shortcomings on both sides. It’s not only (inaudible) sometimes, but the thing is (inaudible) and then (inaudible) put back to us. It makes no sense. I think we have a clear understanding what is in our common interest. And if you understand that we together are strong enough to write the rules which would clearly – I want to say – lead, but put in the influence the rest of the world which would guarantee that free market and open trade principles are respected, then we should do that.

MODERATOR: Thank you. Let's go back to this question here. Please use a microphone.

QUESTION: Thank you. Camille El Hassani with Al Jazeera English Television. I wondered if you could look ahead to next week's summit and talk about specifically what have you guys – what's on the agenda and specifically with regards to the global economic recovery stimulus, that sort of regulations that you guys talked about in the last few days.

MR. FROMAN: Well, I think the summit next week is a broad-based summit between the U.S. and the European Union where there'll be a discussion of economic issues of the sorts you mentioned, including where we are in the recovery, what steps need to be taken, what we can do together, including through the TEC, to further integrate our economies' energy security, but also political and – or rather security issues. And my sense of it is there'll be other issues on the agenda, including probably the Middle East or Afghanistan and Pakistan and other issues.

MR. VERGEUGEN: Yes, I can only confirm that we have adopted two documents today which will be available for you, if I'm not mistaken, or if they are not ready (inaudible). We have adopted a progress report that shows what we have delivered. Because the meetings of the TEC addressed the tip of the iceberg; it is the visible part of the work that we are doing. The real work, of course, is done in several dozens of dialogues (inaudible) institutions which you have already in place or have created in order to do the practical work. So we have a conclusive (inaudible) report showing what we have achieved and is quite impressive, and together with the political statement that will go to the summit next week.

But the political statement is, of course, the most important political message we expect, both Mike and I, that we can already report, as it was always the case, and that there will be short debate, and then we get a clear and strong mandate from the summit to implement what we have discussed today, in particular a concrete work plan with milestones and everything to be adopted already at the next meeting of the TEC. I think it has – it tells an enormous political importance for the summit of next week, because it demonstrates a very important area of economic cooperation. We have – we are already right on track on making progress.

MODERATOR: We do have copies of the statement available out front if anyone needs it. Let's take another question up front, please.

QUESTION: Thank you. Jim Bergin from Washington Trade Daily. The TEC previously, and before that the Transatlantic Business Dialogue, has always talked about the importance of regulatory cooperation through exchanges, through a possible early warning system, and an understanding of each other's regulatory system. But what's happened? Nothing's happened –


QUESTION: Oh, things have happened? Is that in the report?

MR. VERGEUGEN: No, this happens – it happens, more or less, every day. You can see that in the progress report. The question is not does it happen, the question is does it produce results already? And here, I have to tell you, we need to be patient. And the – and rest assured that it will bear fruit relatively soon. But for the time being, you cannot have the expectation that this kind of work and this kind of cooperation solves immediate problems and changes existing legislation or existing rules. But in many, many areas we are coming very close. And this exchange of regulatory approach is the assessment of how they work and the exchange of best practices, and I would think that is already taking place every day.

MR. FROMAN: And I would just add to that, we had today participating Dr. Peggy Hamburg, the head of the FDA, who talked about the interaction that was going on between the FDA and their counterparts within the commission. The EPA was there and also talked about issues of common interest and interaction between themselves and the commission there, as Commissioner Verheugen says. Then we had Secretary Geithner and Commissioner Almunia there who also talked about the work being done on financial regulation and the joint work being done there.

So there is a lot of work going on, as Commissioner Verheugen says, on an ongoing basis. The purpose of the TEC is to bring it together, to give momentum, to link it to the leaders process as necessary, and as he said, to try and go upstream to anticipate future areas of regulation. And where we can find common approaches, whether it’s through mutual recognition agreements or through other mechanisms – and we had a very interesting and very good discussion about the Administration’s approach to regulation, how it is similar or different than the European Union’s approach, and how we might have a dialogue about that over new areas of regulation to hopefully avoid the sort of disputes that might arise in other circumstances.

MODERATOR: I see a question here. This first gentleman. Yes.

QUESTION: Thanks. Hi. Doug Palmer with Reuters. The Swedish Trade Minister Bjorling – I hope I’m saying her name right – spoke yesterday, and she talked about – she said there was growing interest in Europe in a free trade agreement between the United States and Europe. Do you all see this evolving in that direction at all?

And then a question for Mr. Froman. The EU has recently initialed a free trade agreement with South Korea. Does that change how the Administration views the South Korean agreement? Or put a little differently, does that heighten the need for Congress to approve the South Korean agreement so U.S. exporters aren’t at a competitive disadvantage?

MR. VERHUEGEN: No. It might be that there is a growing interest in Sweden. And – but right now the problem of an FTA United States-European is simply not on the agenda and I do not foresee it for the near future. I do not exclude it forever, of course, but for the foreseeable future, I do not see that, and the reasons are very clear. The first reason is it would be a signal that would certainly not support the common idea of strengthening the multilateral framework trade agreement and resuming the Doha – the Doha talks.

And secondly, the problem that we have in transatlantic economic relations are not the typical and classical trade issues like quotas or tariffs. The problem that we have are sometimes very sophisticated non-tariff barriers. It’s sometimes even very difficult to identify them. And I do not see that a free trade agreement would help us to solve these problems. But so far, I have never seen a free trade agreement in the history of international trade that would really change the way how different countries or different regions regulate matters, how they legislate and (inaudible) political system. So I think this is not an issue of today. As I have said, I would not exclude it forever. But to my knowledge – to my knowledge – it is for the next time clearly not on the agenda – on both sides, if I’m not mistaken.

MR. FROMAN: I think on your Korea question, there’s nothing more I can really add to what the President has already said about this in the context of his meetings with President Lee. And we note with interest the European and South Korean free trade agreement, but our situation remains the same.

MODERATOR: Let’s take this center one, please. Right here. Thanks.

QUESTIONS: Hi. Brian Sayid with Inside U.S. Trade. My question is it sounds like you have consensus on going forward that you want to look at future regulatory differences that might arise. Has either side identified priorities of where you want to look in terms of those regulations and sectors and that sort of thing? And secondly, what now happens with the priorities of the previous administration’s text, such as 100 percent scanning or SDoC and in those regards? What happens to those issues?

MR. FROMAN: Let me take the latter question first, which is there was a conversation today about the 100 percent scanning issue. So even as we develop a work program for the future, the TEC/WG can remain and will remain a forum for raising those sorts of regulatory issues about which one party or the other has concerns. I think in terms of future agenda items, we ask that the TEC develop by the next meeting a specific work program, but noted nanotechnology, energy efficiency, and labeling as three areas that we’d like to make immediate progress on.

MR. VERHEUGEN: From – well, one sentence regarding the trade agreement with South Korea. It’s true, it’s initial, but it has a long – still a long way to go until we have that.

Now, on the priorities which we used to have, they are still there. And for the European Commission, the two priorities which we have presented – the 100 percent scanning or the secure trade issue, and the question of the Supplier’s Declaration of Conformity – is still on the table.

Today we have discussed really intensively the secure trade, because there is a common understanding that there is a problem and that we do not deny the idea of the American position that they have to have security here. But we believe it is possible to do that in a way that really minimizes negative economic impact, and there’s clear understanding on both sides that we follow that through.

On the other issue, the Supplier’s Declaration of Conformity, that was not discussed today. But I promise you my successor will present it differently next time again (inaudible).

MODERATOR: Okay. We have time for one last question, so maybe it’s appropriate to take it from one of your German compatriots.

QUESTION: Hi. Gregor Schmitz, Der Spiegel again. Der Spiegel online this time. I have a question for Commissioner Verheugen. You were talking about closer transatlantic cooperation today. What is your take on the fact that your likely successor as German Commissioner Mr. Oettinger would be a regional politician with virtually no international experience?

MR. VERHEUGEN: The question who is my successor as the commissioner from Germany has nothing to do with transatlantic relations or international relations because, so far, there is no decision is taken how the portfolios in the commission will be distributed. So I do not know. I know (inaudible) Oettinger very well. He was very often in Brussels. We had open, constructive, and good cooperation. And if support and advice is required, it will be available for him.

MODERATOR: Okay. Thank you very much. That wraps the press briefing today. We really appreciate your coming to the Foreign Press Center. Thank you.

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