TTC meeting: EU and U.S. take stock of their trade and technology cooperation

Speech by Executive Vice-President Dombrovskis at the US Chamber of Commerce

Washington, DC, 30 January 2024

Dear Suzanne,

Thank you very much for these kind words of introduction.

And above, all thank you very much for the opportunity to speak to you today.

Ladies and Gentlemen,

The year ahead will be one like no other.

Around 4 billion people will got to the polls in 2024. Not all these elections will be free and fair. But some will have major repercussions, building on the profound geopolitical shifts from the past years.

What sets 2024 apart is not just the sheer number of national elections involved: almost one third of the globe. It is also striking that a US Presidential election coincides with elections in other major countries, including India, Mexico and – on our side of the Pond – in Europe.

Against this backdrop, I would like to talk about three things today:

First, I would like to start with a few geopolitical reflections on the world in 2024.

I will then zoom in on the Transatlantic relationship and,

Third, end with our role in the international rules-based order, notably the WTO.

***

Ladies and Gentlemen,

2024 will be decisive for the world’s democracies, not least because of the threats that autocracies and aggressive regimes pose to the democratic order.

The risk of election manipulation by other parties is very real – and dangerous.

So, we need to fight back in the global information war. That means investing real resources in this work, both at home and abroad.

In Europe, it is now an established fact that anti-democratic forces, including Russia have been meddling in the internal politics of the EU and seeking to influence electoral outcomes.

The United States is not immune to this kind of threat.

It is much cheaper and easier for the Kremlin to engage an army of internet trolls to wreak information havoc than to engage a conventional army on the battlefield.  But now Russia is attacking us on both fronts.

Its illegal, unprovoked war against Ukraine illustrates the dangers that the democratic world faces again.

For us in Europe, it is an existential threat.

Russia’s attack on a democratic country challenges the international rules-based order built by the Western democracies after the Second World War. For 70 years, we have been  developing a multilateral system based on international law. This system is now challenged by Russia’s brazen aggression.

I come from Latvia, a Baltic country that was occupied by the Soviet Union for 50 years.  The Soviet occupation brought devastation and poverty.

But it could not eradicate our trust in democracy, the free economy and rule of law. We did not forget these values, which helped us to transform our country much faster once we regained independence. We became a member of the European Union, NATO and the euro area.

As President Zelenskyy said, there is one thing above all that motivates Ukraine’s soldiers. It is the expectation that one day, they and their children will live in a free and prosperous country.

Helping Ukraine to defeat Russia is the only way to ensure long-lasting peace in Europe.

First: This means giving them all the weapons they need. It is absolutely vital to maintain our support, if we want David to continue standing up – and ultimately win – against Goliath.

So far, the EU has supported Ukraine with about EUR 88 billion / USD 95 billion, of which USD 27 billion has been military assistance. The Baltic countries stand out as providing the most support, when measured against their GDP. Soviet rule taught us that freedoms should be defended, including by military means. If Ukraine fails and Russia feels bolstered, it will try to attack other countries. And that would simply mean a much bigger war with NATO.

To avoid this scenario, we must continue to provide Ukraine with financial and military support and to change the narrative from ‘as long as it takes’ to ‘as much as Ukraine needs for its victory’. We also need to accept Ukraine into the EU and NATO. These steps will define the future of the rules-based system or its collapse.

Second:  we need to hold Russia accountable. The International Criminal court in the Hague has already taken the first step.

We should maintain the pressure on Russia. This means we need to continue to impose and enforce sanctions, including on companies that continue to export goods to equip the Russian military industry.

We should also look at how we can use Russian principal assets to support Ukraine. This needs to be an international effort.

This is why I am pleased by the G7’s recent decision to keep Russia’s sovereign assets in its jurisdictions immobilised until Russia pays for the damage it has caused to Ukraine.

Europe and the United States must jointly lead in this key area. Let’s continue!

Meanwhile, today’s geopolitical dangers unfortunately expand far beyond the horrific war in Ukraine.

The tragic events in the Middle East or the attacks by Houthi rebels in the Red Sea all bear witness to that.

As the shockwaves of those events ripple across continents, they are causing a far-reaching realignment of international relations – economically and geopolitically.

There are many other shifts underway. China has grown into a competitive and assertive power that challenges the current rules-based system. It is a major trading partner for both the EU and the US. But we must learn to carefully manage the risks that come with this relationship.

This brings me to my second point – the importance of the Transatlantic relationship for steering a pathway through these complex global challenges.

***

Former US President Jimmy Carter famously quoted his high school teacher, as saying the following:

‘We must adjust to changing times and still hold to unchanging principles’.

I could not agree more.

And I would add: At a time of extraordinary global change, the world needs transatlantic leadership more than ever.

It needs Transatlantic leadership anchored in those deeply held, shared and unchanging principles.

The EU and US are partners that see eye to eye.

Not only do we cherish the same core values such as freedom, human rights, democracy and the rule of law. We also have a joint history of defending them in an international system that we have built together for their very protection.

We are both economic heavyweights. Together we make up 42% of global GDP. Trade across the Atlantic has been hitting one record after another. In 2022, our bilateral trade amounted to USD 1.6 trillion. That is USD 4 billion a day (15% increase compared to pre-pandemic levels). Our supply chains are deeply intertwined. Investments on both sides of the Atlantic are worth more than 5 trillion Euros, while free trade and investment opportunities have created millions of high-quality jobs.

And our deep bond has always been the best formula for peace, stability and prosperity around the world. The strategic goal of countries like Russia is to look for fissures in that bond.

Ladies and Gentlemen,

2024 is also the year when both our administrations will reach the end of their respective mandates. By now we have shared more than 1000 days working together.

It has not always been easy. We both took office at challenging times when our Transatlantic relationship was being tested.

Since then, I believe we have overcome many obstacles.

We reached an international agreement on business taxation.

On the trade side, we worked effectively with the Biden team to find solutions to the trade spats we inherited.

For example, we landed the Airbus – Boeing dispute.

And perhaps most importantly, we have created a strong positive momentum with the creation of the EU-US Trade and Technology Council.

The idea behind it is simple: Transatlantic cooperation has always mattered most at the biggest crossroads of history. Once again, we need to join forces and make sure that democracies write the rules for the 21st century.

With the TTC, we want to do just that. To cooperate on trade, economic, and technology issues. As trading superpowers, we can influence the global conversation in these areas.

The TTC has also proved critical to coordinating our trade-related sanctions against Russia.

Later today, we plan to make progress across various important work streams. This will include work on the Transatlantic Initiative on Sustainable Trade to facilitate trade in clean tech and green goods. And we hope for progress on conformity assessment and digital tools that simplify trade. There will also be a focus on creating strategic supply chains,like semiconductors and solar. We are deepening cooperation on export controls, investment screening an economic security at large.

We have laid a solid foundation over the past four years. We now need to build on it with commercially meaningful outcomes.

But most importantly, this trusted platform should endure and continue its work beyond the mandates of our current administrations.

***

At the same time, there are certainly areas where the EU would have hoped for more tangible progress over the last years.

A prime example is the steel sector and the US 232 tariffs. Global steel overcapacity has been a serious problem for decades. It distorts the global level playing field. And it remains an obstacle to decarbonise the steel industry.

We regret that we did not manage to reach an agreement – in spite of the very hard work and constructive proposals.

Throughout the negotiations, we did not see a credible path from the US towards the elimination of the 232 tariff rate quotas. This would have put to bed the Trump-era dispute once and for all.

This is a missed opportunity for businesses on both sides of the Atlantic.

The same goes for the negotiations on the Critical Mineral Agreement.  If concluded, it would address certain EU concerns over the Inflation Reduction Act’s discriminatory aspects.

And it would strengthen EU-US supply chains in critical minerals which we need for the green transition.

The CMA could have served to promote high levels of sustainability and labour rights along global critical raw material value chains.

We would have liked greater flexibility from the US side. And we still hope to get this agreement over the line.

***

Let me end with a few broader reflections on the global rules-based order.

For our Transatlantic relationship to thrive and exercise the maximum clout on the world stage, we need to cooperate with our partners across the globe.

Global problems need global solutions. And this begins within multilateral institutions.

Fixing the World Trade Organization is a crucial piece of the puzzle. There can be no doubt: It needs to be revitalised, updated and reformed.

And we also need to remember: In spite of all the Organization’s problems, 75 % of world trade still takes place on WTO terms. It is the most favoured nation principle that has underpinned the resilience we have seen in trade throughout the dramatic global challenges of the last years.

Let us consider the alternative. A fragmented trading system based on power relations will harm everybody and benefit no one – with the exception perhaps of China. If Western countries, including the US, want to maintain a rules-based world order and balance China’s influence in particular, there is no alternative to strengthening transatlantic leadership in these fora.

This is why it is crucial for us join together to advance the much-needed reforms at the 13th WTO Ministerial Conference next month. We need to make progress along three tracks in particular:

First, we need to work together to fix the dispute settlement system. We know US criticism of the appellate body is consistent and bipartisan.  We hear you. And that’s why we are willing to work with the US to reform it.

Second, we need to design trade policy to meet the new global challenges. The 21st century is the digital century – e-commerce is a rapidly growing force in global trade. We rely on US support to give e-commerce negotiations further impetus at MC13 and also to extend the e-commerce moratorium.

Third, trade rules need to finally catch up with the realities of the 21st century. One prime example is the need for updated rules on both industrial and agricultural subsidies. We also need to conclude negotiations on fisheries subsidies as a priority. There are of course differences between the various constituencies. And we need to bridge them.

***

Ladies and Gentlemen,

2024 will be a decisive year for our democracies.

Hence, it is even more important that our governments lock in the progress we have achieved together up until this point.

The world needs Transatlantic leadership.

Now, more than ever.

Let’s continue to build on what we have achieved so far.

Thank you very much.

Source – EU Commission