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In introductory remarks at a May 2008 discussion on Trade and Investment sponsored by The European Institute, German Ambassador to the United States Klaus Scharioth outlined the background to the Transatlantic Economic Council (TEC). The TEC was established on April 30, 2007 at the EU/U.S. Summit by German Chancellor Angela Merkel, U.S. President George Bush and EU Commission President Jose Barroso as part of the EU/U.S. framework agreement for advancing transatlantic economic integration. “Both sides of the Atlantic point out that although the economic topic du jour may be the emerging Asian markets, the most important economic relationship in the world – with two billion dollars of daily trade and two trillion dollars of investment stock – remains that between North America and Europe,” he said.

The TEC acts as a high-level discussion forum and instrument to remove trade barriers and promote economic integration between Europe and America. In particular, it works on key areas of mutual interest: investments, secure trade and commerce, financial markets, accounting standards, protection of intellectual rights and innovation and technology. The German ambassador praised the TEC, saying, “It’s a remarkable body. We all know that governments are usually quite good in creating barriers and creating obstacles and creating new red tape. But this body has exactly the opposite function; it has the function of trying to eliminate those burdens.” The TEC has met twice thus far: in Washington in November 2007 and in Brussels in May 2008. Leaders in the U.S. and EU have pledged to keep the TEC as a top priority in the coming years, according to Ambassador Scharioth.

The Transatlantic Economic Council (TEC) achieves its highest purposes when it takes on the mission of advancing the goal of transatlantic economic integration. I see the TEC as a forum where European commissioners and U.S. cabinet officers and other senior officials address three sets of concerns. One, they address so-called horizontal issues: those areas where our regulatory policies could be better aligned, particularly in the areas of risk assessment, cost- benefit analysis, transparency and public participation. Second, the TEC takes on discrete bilateral issues that are not simply important issues in and of themselves, but are also symbolic for the transatlantic relationship. Accounting standards, poultry restrictions and suppliers’ declaration of conformity are all examples of bilateral issues that the TEC has focused on. Finally, the TEC considers the joint interests of Europe and the United States in coming to grips with third-country issues involving trade and investment policies, energy security and import safety.

To see how important the TEC is to both the EU and America, one only has to look at the high level of participation at its meeting in May. To get the Secretaries of Agriculture and Labor, the Commissioners of the FDA and SEC, the U.S. Trade Representative and numerous other high level officials on the same plane to go across the Atlantic is no small feat. And our dedication was equally matched by the host of EU Commissioners who were waiting for us in Brussels.

I believe that the TEC has done a very good job so far in not only acting as a forum for discussion, but also in facilitating actions that bring about results. Without results, the TEC will simply turn into another talk shop, where leaders of the two sides periodically get together and talk. While useful, “talk” alone is not the mission of the TEC.

For example, look at the issue of poultry. Since the EU imposed its ban in 1997 on U.S. poultry imports, the issue has been an irritant between Europe and America. The TEC committed to solving this problem not because it wants to involve itself in minor trade issues, but because it sees the issue as an important test of the council’s ability to deliver on its commitments. At the May meeting of the TEC, the EU Commission promised to introduce a proposal to lift the ban. We are now waiting to see whether the Commission can deliver on its commitment and work with other EU entities to end the ban. As I said, this is not about the $180 million or so in the poultry trade: it's about fulfilling commitments, and the same standard needs to apply to the United States.

And just as we expect the TEC and the EU to follow through on poultry, we expect America to follow through on issues that the European Commission has been advocating, such as reconsidering our system for certifying that electrical equipment traveling across the Atlantic is safe for use in the U.S. workplace. We are making good progress so far; the U.S. Department of Labor recently announced that it would request information on an alternative to the current system.

Another important accomplishment at the last meeting concerns the EU's new chemicals regulations, collectively known as REACH (Registration, Evaluation, Authorization and Restriction of Chemicals). When key provisions of REACH take effect in June 2008, non-EU producers of cosmetics and ingredients that go into cosmetics will be required to register these substances with the EU Chemicals Agency. The current registration requirement under REACH is enormously burdensome, and non-EU producers are not entitled to the same three-to-eleven year phase-in period and other procedural advantages that are available to EU producers. Fearing a disruption in U.S. chemical exports, we raised this substantial problem with the Commission at the TEC and it agreed to take concrete action to ensure that the cosmetics trade is not disrupted by the REACH implementation. Again, robust follow through is essential, and we will be working with the Commission to make sure that these TEC commitments translate into results.

At the May meeting of the TEC, we addressed how the U.S. and EU might align regulatory approaches in the future to avoid unnecessary divergences and minimize the cost of regulation to economic actors. We not only have looked at recommendations for strengthening cooperation on the safety of imported products and how to manage the impact on trade and investment that proposed regulations may have, but also at ways to recognize each other’s accounting standards. Because of the TEC, the Securities and Exchange Commission has agreed to allow European companies to file financial statements in the U.S. using International Financial Reporting Standards that they are accustomed to, and the European Commission has been working to allow American companies to file in Europe under American standards.

Through the TEC, the U.S. and EU have also worked to express a common view on their concerns regarding investment protectionism. In a joint statement, both sides committed to pursue and coordinate efforts to eliminate barriers to international investment – across the Atlantic and elsewhere – in an effort to counter emerging signs of protectionism in both developed and developing countries. The investment statement is an instance of both parties using the TEC to elevate the profile of an issue of growing importance and to signal their common point-of-view to the rest of the world, as well as to their own domestic constituencies. At a time when global prosperity and economic development are increasingly dependent on cross-border capital flows, investment protectionism is a serious concern for all. The joint statement shows that the United States and Europe are working together on the investment front to promote open investment regimes and to advance trade liberalization through the Doha round.

The TEC meetings also allow a group of commissioners and cabinet officers to sit across from one another and talk about, not only the issues on the agenda, but also the thematic issues that are in front us: Trade liberalization versus protectionism, energy security, climate and import safety – a whole range of issues.

With this agenda and list of accomplishments, I am optimistic about the TEC. But we must avoid complacency. We cannot stand still. The TEC must remain an effective forum for advancing economic integration, and it must keep delivering. That means following through on commitments, setting new targets and choosing select issues that are worth the TEC’s time in terms of really making a difference in economic integration or in having symbolic importance.

The TEC is expected to convene again in fall 2008. Until then, we hope to set a work plan for the TEC, not only for the third meeting, but also for the medium and longer term. Since we are stakeholder driven, we will continue to seek input from the various organizations, trade associations, companies, consumer groups and legislator groups who have thus far provided us with enormously useful input. We in the United States are committed to ensuring that the Transatlantic Economic Council continues to serve as a high-level focus channel for work towards integration. The TEC has a bright future and with continued follow through by government and stakeholder input, I am sure of its success.

Mr. Price responded to questions. Excerpts follow.

Question: With regard to issues addressed by the TEC, do you think that the approach being taken by the United States and the Commission one of tit for tat? In other words, are both sides looking for an even balance-sheet between America and Europe?
No, I do not see issues on the TEC agenda as related. At least I have not taken the view, and our administration has not taken the view that the legitimacy of an issue on the agenda and the need for a resolution depends or is contingent upon the willingness of the other party to fix issues of importance to you. I hope it is not the attitude the Commission is taking either.

Q: Given that the TEC runs the risk of having difficulty achieving agreement without broad public support, should issues regarding consumer protection be placed higher on the TEC agenda?   
I believe that we do need to ensure that the agenda is broad enough to deal with a range of concerns and it does, in my judgment, deal with consumer protection concerns. That is why we are so focused on product safety and import safety and why a lot of work has been done between the regulatory bodies of America and Europe.

Q: What is the current thinking between the Commission and the Bush administration about the continuity and longevity of the TEC after the coming US elections and the expected change in the Commission in 2009?
We believe that the continuity of the TEC depends on two things. First, whether it can demonstrate its utility in fulfilling its objectives of removing barriers and promoting economic integration. Second, it depends on setting an agenda that has near, medium and long-term objectives in order to ensure that the TEC remains actively engaged in matters and that, regardless of who assumes control of Washington and Brussels, the TEC continues to be given the same degree of attention that it enjoys now.

Daniel M. Price, Assistant to the President for International Economic Affairs, is the leading U.S. official on the TEC. Adapted from a  talk delivered at The European Institute Transatlantic Roundtable on Trade and Investment: May 27, 2008.