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Speech by German Foreign Minister Klaus Kinkel To the Foreign Trade
Committee of the Federation of German Industry (BDI) On the Transatlantic
Free Trade Area (TAFTA) Bonn, July 11, 1996
Volume XIX , No 10
The end of the Cold War, Foreign Minister Kinkel observes in this address,
has brought new challenges that require continued cooperation between
Europe and its North American allies. For that reason, closer transatlantic
cooperation takes its place alongside European integration as one of the
fundamental objectives of German foreign policy. Foreign Minister Kinkel,
insisting that the transatlantic partnership cannot be taken for granted,
calls for a new transatlantic agenda. Atop that agenda, he argues, should
be the creation of a "Transatlantic Free Trade Area" uniting
the European Union and North America as a force for trade liberalization
worldwide. The occasion of this speech was the presentation of a study
of TAFTA prepared by Professor Donges of the University of Cologne and
introduced by Hans-Olaf Henkel, President of the BDI. Ladies and gentlemen,
I was before the press once already today, together with Mr. Henkel and
Professor Donges. It is a pleasure for me to be able to discuss our topic,
a transatlantic free trade area, in somewhat greater detail before this
audience. Needless to say, I will be doing this primarily from a foreign
policy standpoint. This is the right time to be thinking about this kind
of new and trend-setting "joint venture" between the new and
the old continents.We are currently at a turning point in history. Throughout
the world the cards are being reshuffled, growth and prosperity are being
redistributed. The Atlantic community emerged from the Cold War as the
victor. Nonetheless, the main political victory has yet to be won, i.e.
a Europe that is lastingly united, peaceful, and closely linked with America.
In the global framework, the core question is: how do we create the many
millions of jobs in the industrial and the developing countries which
we will need in order to keep life on this planet in an orderly state?
Two fundamental priorities emerge for the German foreign policy sector:
European integration and transatlantic partnership. This is the indispensable
basis for everything else. The first objective, the creation of a common
European currency, will be the milestone of the decade, comparable to
the founding of the EEC. The common goal of achieving a transatlantic
free trade area could have similar significance for relations across the
Atlantic. This would also spur movement towards inevitable reforms involving
the elimination of subsidies and the introduction of deregulation with
a view to enhancing Europe's attractiveness as a place for corporate investment.
The sceptics are now asking: why do we need this? We already have NATO
as a firm common bond and things are going well with regard to trade and
investments across the big pond. This is very true: America and Europe
continue to be the most important partners for each other {SONDZEICHEN
190 \f "Symbol"} both politically and economically. NATO was
never before as popular as it is today. Polls show that close ties with
the United States are more important to the Germans than with any other
country. The United States is the largest foreign investor in the new
German states, accounting for investments of some seven billion marks.
Last year, German companies were the most important foreign investors
in the United States, accounting for an investment volume of 14.2 billion
dollars. The Atlantic continues to be the main artery of global trade.
American subsidiaries sell eleven times more in Europe than in Japan,
four times more than in all of Asia or in Canada and Mexico together.
Sixty percent of all European Union foreign investments are made in the
United States. Fifty percent of all United States foreign investments
are made in the European Union. Does this mean that everything is all
right? I am an ardent transatlanticist and optimistic about the future
of this partnership, but one thing is certain: the partnership across
the Atlantic {SONDZEICHEN 190 \f "Symbol"} if it ever was something
automatic {SONDZEICHEN 190 \f "Symbol"} will no longer be automatic
in the future. The end of the East-West conflict has brought with it the
end of being able to take things for granted in the transatlantic relationship.
You are aware of the sharpened competition which has been brought about
by the process of globalization. On both sides of the Atlantic, foreign
policy is gaining importance as "a means of promoting the attractiveness
of countries for business investment." However, this must not lead
us to see each other as competitors and no longer as partners. The transatlantic
community was the "winning ticket" of the post-war era. It must
continue to be the dominant force for global security, stability and open
markets in the 21st century. It is only in this way that the struggle
to overcome poverty, overpopulation and environmental destruction will
have any prospect of success. Who should replace the transatlantic community
as a guarantor of stability? Who is sufficiently close to each other culturally?
In crisis situations, who is more willing to provide each other rapid
assistance than Europeans and Americans? From the Gulf War to the mission
in Bosnia, we have seen the extent to which we are dependent on one another.
This applies particularly to Germany. We need only take as an example
the very strong German interests in Central and Eastern Europe. No other
country except the United States has advocated opening up the European
Union and NATO to the same extent as Germany. Our German objectives in
this area and those of the United States are virtually identical. In a
speech he gave in Berlin in 1994, President Clinton rightfully described
our relationship as "unique." For me, the cultivation of this
friendship is a primary duty as foreign minister, alongside a close alliance
with France. As you are aware, the success of the free trade system is
based on the "bicycle theory," i.e. only those who continue
to pedal will avoid falling off and reverting to protectionism. The same
sort of thing applies to the transatlantic relationship. It, too, will
require constant effort. A profound generational change is taking place
in the United States. In 1994, a large number of young representatives
were elected to Congress with a clearly domestically oriented mandate.
Eight days ago, I had an interesting meeting with Democratic Senator Bob
Kerrey from Nebraska. A number of our established interlocutors in the
Senate will not be seeking reelection this year. In April, members of
the Bundestag and of Congress had a positive meeting in Missouri, which
my Minister of State Hoyer attended. It became evident there, however,
that many of the young congressional representatives view a trip to Europe
as a "mortal sin" in terms of electoral strategy. This cannot
and must not continue to be the case. For us Europeans, it will be of
decisive importance to exert a stronger influence on the political class
in the United States. We will need to reinvigorate interest in Europe
on the Hill. The same applies to American students with regard to German
universities. This is one of the core tasks for the transatlantic relationship.
It is only in this way that we will be able to preserve and maintain what
the war generations built up. Thus my appeal to the business community
and the foundations on both sides (of the Atlantic): Please strengthen
your engagement in promoting exchange of our academic elite. It will pay
for itself with compound interest. Ladies and gentlemen, it was with this
in mind that I advocated a new transatlantic agenda in a statement I made
in Chicago last April, and in that connection I formulated two ambitious
objectives: closer political cooperation and a free trade area. The two
together would result in a genuinely common European-American security
and economic area for the 21st century. And this is what I am seeking
to achieve. What is crucial in this context, as I see it, is that a further
economic lane must be added to the transatlantic bridge. Trade and technology
are the driving forces of our era. For this reason, the transatlantic
partnership will have to have this additional dimension if it is to survive
in the 21st century. American legislation to impose sanctions and the
tentative failure of negotiations on the remaining elements of the Uruguay
round are indicators. I would like to repeat what I said in the press
conference today: American sanction policy of the kind embodied by the
Helms-Burton bill as well as that toward Iran and Libya is unacceptable
to us. I made no secret of this during my last visit to Washington on
May 8. Its extraterritorial effect violates international law and the
rules of the World Trade Organization. What this comes down to in very
plain terms is a policy of hitting your friends to get at your enemies.
Recent news from Washington has shown that the firm stance taken by America's
allies has made an impression. The House of Representatives has made a
number of important changes in its draft Iran-Libya bill. Together with
our European partners, we will continue to exert an influence on the American
government with a view to getting Congress to reverse this policy. Ladies
and gentlemen, TAFTA is intended to take advantage of the enormous economic
potential of the Atlantic community and to release additional political
energies, but not to initiate movement away from a multilateral system
of world trade. On the contrary, the consensus between Europe and North
America was what made it possible to conclude the GATT agreement and to
create the World Trade Organization. Now both will once again need to
help pave the way for a further opening of markets around the world. A
third of German exports hindered by trade barriers go the United States.
Only about half of trade across the Atlantic is free of tariffs. We must
not stop at what we have achieved thus far. Free trade does not cost us
anything; it creates jobs, and that is what we are after. In Europe, this
insight led to the creation of the European single market and in North
America to the regional free trade area, NAFTA. The European Union is
concluding free trade agreements with more and more neighboring countries.
It has built a bridge to the Mercosur countries with prospects of association
and free trade, and it will soon initiate corresponding negotiations with
Mexico. The United States and Canada are also members of APEC, potentially
the largest economic area, accounting for nearly 40 percent of the world
population, 46 percent of global GNP, and 49 percent of world exports.
All of this shows that there is a will to go further than was possible
in the GATT agreement. And that is my question: if there is this will
in Europe and in North America, if the Pacific rim countries have committed
themselves to the grand objective of achieving a free trade area, why
should the Atlantic rim remain behind? Why shouldn't the transatlantic
community pursue the goal of forming a common security and economic area
across the Atlantic? The German government is willing and able to assume
the dynamic role in world trade called for by WTO Director General Ruggiero.
The GATT talks have shown where we stand. And that's where we will continue
to stand in the future {SONDZEICHEN 190 \f "Symbol"} on the
side of free trade. Regional free trade agreements have become an integral
part of this process. They will accelerate this process as long as they
are designed to be building blocks in and not alternatives to the multilateral
liberalization process. And that is our objective. The ideal case would
be {SONDZEICHEN 190 \f "Symbol"} and in this I agree with Professor
Donges {SONDZEICHEN 190 \f "Symbol"} to liberalize trade world
wide from the outset. However, this is not a realistic option at the moment.
For this reason, I have appealed for "open regionalism," no
new barriers against third countries, and openness for all who want to
be involved. Ladies and gentlemen, the free movement of goods, capital
and services across the Atlantic can, of course, only be achieved in stages.
For this reason, we should concentrate first and foremost on those trade
policy issues whose resolution is within reach {SONDZEICHEN 190 \f "Symbol"}
e.g., the harmonization of standards and the recognition of testing procedures.
This is what is provided for in the proposals for the "transatlantic
business dialogue" and the European Union - United States action
plan. Consideration should also be given to the provision of pacemaker
services in connection with: - the elimination of current restrictions
on access to government procurement contracts; - a common investment protection
agreement; - liberalization in the services sector, with particular regard
to air transport and audiovisual services; - a code of conduct for competition
in third-country markets with a view to establishing a fair trade policy
towards future markets in Asia and Latin America; - close coordination
in connection with the new areas of WTO activity, i.e. trade, environment
and social affairs. No protectionism by the rich against the poor in any
form whatsoever; - creation of a standing consultative mechanism for bilateral
trade and investment matters, as well as a binding dispute settlement
mechanism. Ladies and gentlemen, in his study Professor Donges issued
a warning to the government sector, saying that transatlantic free trade
should not merely be a means of achieving a foreign policy goal. I understand
the concerns that have been expressed regarding a "transatlantic
fortress," but a special partnership does not necessarily mean isolationism.
It can also mean assuming a role as world leaders for the liberalisation
of trade. As a (European) liberal, I am clearly for the second alternative.
Locking out the growth markets of Asia and Latin America would not be
in the interests either of America or of Europe. And in (international)
politics the greatest measure of reliability has always derived from interests.
Ladies and gentlemen, when we talk about the vision of a single transatlantic
trade area involving 700 million people, I am reminded of something Charles
de Gaulle once said: "We need to set ourselves high goals, that way
we can permit ourselves little detours occasionally." This is what
European statesmen did 41 years ago in Messina when they began implementing
the vision of a European community. This spirit should be the yardstick
for us today on both sides of the atlantic. More than anything government
and business need to work together. Our discussion today is a good beginning
for this. I am pleased, Mr. Henkel, that the BDI has taken the initiative
in this and feel that we should continue this dialogue. I know that many
of those present here today are actively involved in the transatlantic
business dialogue. I would once again like to express my thanks for this
commitment.
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