Transatlantic Business Conference: The Transatlantic Marketplace: Challenges and Opportunities Beyond 2014

Frankfurt, November 12, 2014
Ambassador John B. Emerson

Bernhard Mattes, Ulrich Grillo, this Transatlantic Business Conference is one of the milestone events  in the life of calendar of the German-American business community.  I would like to congratulate both of your organizations and the co-sponsors.  It is an honor to once again be invited to speak here.

Given that this is my second year, I would like to take this opportunity to review what has happened since we last met; and more important, discuss with you some of the challenges the world faces today and how we, as trans-Atlantic partners, can make a difference in finding their solutions.

Since the end of World War II, and in particular since the fall of the wall 25 years ago, Germany and the United States have been united in a common understanding that our security and our prosperity depends not only on each other, but on advancing the cause of a Europe whole, free and at peace.

Thanks to the integration of central Europe and the Baltic states into the European Union and NATO, more than 90 million people have enjoyed relative safety and prosperity for more than two decades in a region whose historic instability helped launch two world wars and was ground zero for the Cold War.

But the European project was never simply a security or an economic initiative; it was a project based on common values.  And these values are captured in the first line of Germany’s Basic Law that, and I quote, “human dignity shall be inviolable — as the basis for every community, of peace, of justice in the world.”

That fight for human dignity is ongoing in Ukraine, and Iraq, and Syria, and any corner of the world where freedom, rule of law, and human rights are trampled by forces which have their own divisive, violent and repressive agendas.  It is also ongoing in Liberia and Sierra Leone and guinea.  In an era in which regional crises can quickly become global threats, stopping Ebola and making sure that all of our children enjoy lives of opportunity and dignity is in the interest of everyone in this room.

And so, while the challenges we face today may not pose the same existential threats that we experienced during the world wars of the last century or the Cold War, they are significant.  Consider: the Russian aggression towards Ukraine, undermining the rule of law and territorial integrity that has been emblematic of post-Cold War Europe; the emergence of a terrorist threat in the Middle East, that threatens to destabilize an entire region and exports hateful extremism to the west; the alarming spread of the Ebola virus; the challenge of harnessing the impact of globalization, through creating the largest free trade zone in the world; and the urgent and growing threat of a changing climate – all of these issues demand collaboration.

We must remember that while one nation can win a war, it takes many nations to win and maintain the peace.  And in addressing every one of these challenges, Germany is front and center in virtually everything that we do.

That is why, in the context of the debates regarding broader questions on intelligence; concerns about the transatlantic trade and investment partnership; and the undercurrent of anti-American feelings that is stirring among some segments of German society, my top priority is to strengthen the conviction and confidence that has characterized our partnership since the end of World War II.

First, consider the dangers posed by globalization.  The ongoing discussion in both Germany and the U.S. about how to strike the right balance between Freiheit und Sicherheit has even more resonance in an era where non-state actors and metastasized terrorist groups use tools of terror to promote their hateful ideology.  Even as we reform, we must keep in mind that our collaboration on intelligence today is more important than at any time since the end of the Cold War.

Second, consider the opportunities presented by globalization.  And there is no bigger opportunity that is presented today than the Transatlantic Trade and Investment Partnership.  Yet the debate over T-TIP is dominated by fears rather than the realities of free and fair trade.  Opposition to T-TIP has become a symbol around which those who are afraid of globalization, and those who distrust the concentration of power in Brussels, have rallied.  Yet as Wirtschaftsminister Sigmar Gabriel says, “T-TIP is our opportunity to guide and harness the impact of globalization.”

Candidly, we lost the first round of framing the public discussion; and not because we lost a battle of ideas – but because we were very late in even showing up.  Now I can talk about T-TIP ‘til I am blue in the face – and sometimes I do; but let’s face it – the U.S. has little credibility here.  First of all, we’re on the other side of the negotiating table.  Second, for a whole host of reasons, people are mad at us –and that hasn’t helped.  But fundamentally, Europeans need to hear from Europeans why this is so important.

And in this context, I specifically want to compliment and thank Ulrich Grillo and the BDI, and Bernhard Mattes and AmCham, for what you have done to bring a more balanced perspective to the T-TIP debate; but we still have a long way to go.  We need to paint the big vision; we need to get the facts out.  We need to bust the myths.  We need to take whatever tough issue is in play in the press and hit it hard, head on. And we need to connect the dots for folks about the specific benefits of T-TIP to local communities, individual companies, and to your employees.

One prevalent myth about T-TIP is that its efforts to harmonize standards will result in a ’race to the bottom’.  One 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  –approaches that can be harmonized through this agreement.

This kind of project is only possible between two well-regulated systems such as the United States and Europe; and if we’re successful, T-TIP will position us, collectively, as standard-setters rather than standard-takers in the global economy. It will also enshrine our shared values as reflected by basic rules on transparency, participation, and accountability in the development of regulations, thereby setting a high bar for governance and democratic participation that will have to be adhered to by other countries seeking the same opportunities.

Let me be clear:  Americans don’t want lower standards. Europeans don’t want lower standards.  We won’t negotiate that kind of agreement.  And our leaders wouldn’t approve such a thing.

And on that topic, allow me to make one observation about the recent midterm elections in the U.S.  People are concerned about even more gridlock in the U.S. government but the results last week may actually accelerate the prospects for Trade Promotion Authority.  Some in the Tea Party may be against T-TIP and TTP, the trans-Pacific partnership; but the mainstream business-oriented republicans who now control both houses of Congress, are not.  And since the Democratic President has asked for TPA, it is an opportunity for the Republicans to both do something for a part of their base, and show that they can work with the White House.

Here is another myth we need to address:  some maintain that the investor-state dispute settlement mechanism, or ISDS, which is often necessary to encourage companies to invest in other markets, will impose new, extra-legal conditions, limiting the ability of sovereign nations to regulate in the interest of financial stability, environmental protection, or public health.  Not true.

The ISDS clause was, in fact, an invention of Germany that has been included in hundreds of agreements.  The United States promotes provisions in trade agreements that protect our right and the rights of other nations to regulate in the public interest.  Nothing in bi-lateral investment agreements prevents any government from adopting or maintaining non-discriminatory laws or regulations that protect the environment, health and safety, or other public interests.  And in fact, this approach has helped establish higher global standards and strengthen arbitration procedures through clearer legal rules, enhanced safeguards, and transparency throughout the ISDS process.  Nevertheless, as Ulrich Grillo noted, these processes can always be improved, and the negotiators on both sides are open to suggestions.

Another issue we need to address pertains to agricultural products and the question of GMOs.  No, the U.S. – which itself has a major market for organic foods (bigger, in fact, than in the more populated EU) – has no interest in telling people what to eat.  We do, however, have an interest in making sure that decisions to ban “freak food” products are based on science, and not on fear.  One fact about American agriculture that surprises people: 87 percent of U.S. farms are operated by families or individuals; and 89 percent of those farms are considered small businesses.

We also hear concerns about the transparency of the negotiations.  In fact, in the United States, never before has the dialogue among stakeholders, negotiators, and senior trade officials been so candid and open. Unfortunately, I don’t hear the same thing from Europeans, many of whom are frustrated by the level of EU transparency.  But that is changing.  We are encouraging greater transparency – but with a caveat: as in any negotiation, no progress will be made if every discussion has to take place before television cameras.  You know this better than anyone.  And at the end of the day, every comma, period, and clause of this agreement will be subjected to intense public scrutiny before anyone has to cast a vote, yea or nay.  But on the issue of transparency there certainly must be a middle ground between negotiating in public and simply saying “trade is good – trust us!”

Finally, T-TIP will help to create a framework that will encourage innovation and entrepreneurship. Think about it.  The United States knows how to encourage and cultivate startups. Not so long ago, our country was a startup.  Innovation isn’t just in our interest; it’s in our DNA.

But let’s not forget how many German companies, both large and Mittelstand, began as startups.  Over the past year, Ii have visited many of these companies.  Innovation is also in Germany’s DNA.  We both have a tradition of tackling new challenges, adapting to new circumstances, and seizing new opportunities.

Today, we need innovation and entrepreneurship more than ever.  No investment is about the past.  It’s about the future.  The world, as we all know, is getting more competitive, and so will we.  Capital chases confidence.  That means that in both of our countries, we will have to continue to make smart investments in research and development, education, and infrastructure.  And T-TIP will increase the payback for these investments.

One last question for you all to ponder that is critical to the future of the trans-Atlantic relationship: how can we build lasting bridges with the younger generations on both sides of the Atlantic?

Earlier this week in Berlin at the commemoration of the 25th anniversary of the fall of the Berlin Wall, the question was “where were you when the wall came down”?   I can remember vividly where I was.  It was daytime in Los Angeles and I was at work.  And having been through Checkpoint Charlie just a year earlier, I was riveted to the TV in my office.

What happened in the GDR 25 years ago, and Germany’s subsequent development as a strong and unified nation, sent the world a very powerful message.  When the Berlin Wall came down, it felt like anything was possible.  It still is.  But most of the young people who flock to Berlin today were not even born when the Wall came down.

And therein lies my fear: namely, that those Germans who came of age after the fall of the Wall do not share the visceral connection with the U.S. of those who grew up during the days of the Cold War and reunification.  Many of these young people not only question the value of the German-American relationship; they are questioning whether we even share the same values.

Now this is a subject that is a subject for a separate speech; but I want to make one final point that is relevant to this gathering.

In the fourteen months that I have been here, and after many conversations and discussions, I have learned that the concerns of young Germans are not so different from those of young Americans.  On both sides of the Atlantic, our young people are mistrustful of big government and big business.  They are concerned about jobs, education, the environment, and the role and responsibilities of government in dealing with the challenges and choices facing their lives.

They are disturbed by what they saw on the streets of Ferguson, Missouri this summer, as well as the demonstrations here in Germany regarding the crisis in Gaza that exhibited ugly anti-Semitism.

But they also share the same passions for sports, art, music, film, and fashion – the popular culture they both consume and help to create.  And while in some ways, young people are drifting away from an interest in America, there is an ongoing appreciation for the innovation and creativity that has made places like Silicon Valley in my home state of California iconic.  There is a sense of the opportunity it represents for their lives, and therein lies the potential for building new bonds.

Perhaps, a trans-Atlantic relationship, based on shared cultural and civic interests and a yearning for collaboration and innovation, will serve to bond the younger generations.  And the business community has a crucial role to play in building that bridge.

One of my great joys over the past year has been our work together.  And I look forward to deepening that connection in the weeks and months to come.

Herzlichen Dank!