Mr. President of the Regional Parliament, Ambassador Brown, Ambassador Schallenberg, distinguished panelists, ladies and gentlemen. Good morning. I am honored to be here today to deliver the keynote address on "European Union Enlargement in Central Europe: Challenges and Opportunities." One could hardly imagine a lovelier venue for such a conference than Graz. And I understand that Graz has a long history as a crossroads of cultures and peoples.

The Last Brick in the Berlin Wall

Indeed, the enlargement of the European Union is effectively the reintegration of peoples, cultures and economies that were artificially divided for half a century. From the days of Vaclav Havel' s Charter 77, and Solidarity's courageous Gdansk shipyard strike of 1980, the United States has stood shoulder to shoulder with Central Europeans struggling to liberate themselves from communism and to take their rightful place in Europe. President Reagan's challenge to Chairman Gorbachev to "tear down this wall" is well known to all of you. The process of dismantling that wall began on November 9, 1989. But the last brick in the wall, figuratively speaking, will be removed only when all the nations of Europe are no longer divided by artificial barriers. The enlargement of the EU into Central Europe is a significant step towards that goal.

The United States has been a strong supporter of European unity since the years following World War II. The U.S. has applauded and tangibly supported the national aspirations of European states to take their rightful place as full members of the Euro-Atlantic community of democracies. As President George W. Bush said, "All of Europe's democracies from the Baltic to the Black Sea -- and all that lie between -- should have the same chance for security and freedom and the same chance to join the institutions of Europe." The embrace of ten new members attests to the European Union's institutional strength and to its confidence in itself. It also testifies to the essential role the Union plays as a force for democracy, prosperity, and for stability throughout Europe and well beyond. In that connection, I also want to stress how very pleased we are that seven new members, including Slovenia and Slovakia, were welcomed into NATO this week. The North Atlantic Alliance is vital to ensuring that Europe remains whole and free, providing an important foundation for increasing its prosperity.

In 1953, the United States sent an Ambassador and opened an office to the European Coal and Steel community. The U.S. has been a partner in this endeavor with the European Union from its inception because we recognized that we had a stake in its success, and that a strong, free, and prosperous Europe was in our best interests. We also believed from the beginning that our relationship was a partnership based on a common vision of political and economic freedom for our peoples and the rest of the world.

Throughout the post war period there have been two constants in American policy: support for the NATO Alliance and support for European integration. Having such bedrock under the transatlantic relationship, of course, never meant the surface was untroubled. In the past, we had famousdisagreements and disputes over the wisdom of military actions at Suez and in Vietnam, disagreements how to counter Soviet missiles in Europe; and arguments over European farm subsidies and U.S. trade remedy measures. However, today as in the past both sides appreciate that too much is at stake to lose sight of the shared values and responsibilities that have united us for so long. We understand that we must use our combined resources to bring light and hope to people around the world who have suffered from conflict and oppression.

The Economic Ties that Bind

A key area of U.S.-EU engagement is economics. Today, the U.S. and EU have among the most integrated and interdependent economies on earth. We enjoy the benefits which flow from our $2 trillion investment and trade relationship – significant employment created and supported on both sides of the Atlantic and an incredibly diverse array of goods and services traded with one another.

While trade is a key part of our relationship, it’s just one facet. A more significant expression of our commitment to each other -- and a real reflection of the ease, which marks so much of our relationship -- is the enormous investment we have made in each other’s economies. We remain each other’s largest investor. Throughout most of the 1990s and on through today, operations in Europe accounted for half of the total non-U.S. earnings of U.S. companies. Investments have created over four million jobs on each side of the Atlantic.

Beyond our trade and investment relationship, our citizens continue to enjoy countless opportunities in our shared transatlantic space to fulfill their aspirations – to travel, pursue higher education, engage in artistic collaboration or joint scientific research and achievement. They do so on both sides of the Atlantic.

The Promise of EU Enlargement

In addition to the European Union, the ten new members are joining an on-going relationship between the United States and the EU, which is arguably among the very most important political and economic relationships in the world. We have a transatlantic agenda, we hold a summit meeting every year, and we cooperate in countless international arenas to make the world a better, safer place. As Secretary of State Powell recently said, "Meeting the challenges of the 21st century rests to a large degree on a broad, strong and lasting partnership between Europe and the United States. We must work together, whether the issue is combating terrorism and weapons of mass destruction, fostering global growth and good governance, or stemming infectious diseases."

Just as we continue to enjoy strong bilateral relations with the current 15 EU members, after accession we look forward to deepening our already dynamic relations with the ten new member states. While EU membership will mean closer relations with Brussels for the accession states, it will also mean even more robust relations with the U.S. Those who believe the accession states must decide between loyalty to Europe or the United States are posing a false choice. More Europe does not mean less U.S. The U.S. has excellent relations with all the accession states; and they will continue and deepen. As President Bush put it, the accession states have not come all this way - through occupations and tyranny and brave uprisings -- only to be told they "must now choose between Europe and America." The two are not incompatible. One can be a good European and a good transatlanticist.

Accession will, no doubt, bring some changes to the EU. The new members will be participating in all the EU institutions, and bringing new perspectives to the issues we've been discussing for many years with current members.

This enlargement of the European Union has already been significant on many levels. Preparing for accession has been a massive undertaking for the accession states themselves who have had to adapt their laws and regulations, adopt new policy goals, and further restructure industries. Preparing for accession has also been a challenge for current EU members who, to cite one example, have had to reform their Common Agricultural Policy to accommodate new members. The agricultural reform hasn't been easy, and much more remains to be done. This specific reform spurred by enlargement is indicative of the structural adjustments that Europe will have to implement in order to revitalize its economy. Such a revitalized economy would enable Europe to better shoulder its responsibility as an engine for global growth.

We congratulate the accession states on all they have accomplished. Indeed, the addition of 80 million people and a wealth of culture, history and languages have posed unique challenges and have affected not only the EU and accession countries, but also the partners of these countries.

The U.S. has warmly welcomed this enlargement. U.S. firms have factored EU enlargement in their decisions to invest in Eastern and Central Europe for a decade. These investments not only serve as export platforms to an enlarged European Union, but have been an important source of development, employment and technology in countries eager to assume their role in an increasingly integrated global economy. For example, General Electric is among the ten largest investors in Poland, and in 2003 US Steel won the Secretary of State's Award for Corporate Excellence for its activity in Slovakia, which consisted of transforming an unprofitable state-owned relic into a world-class operation which contributes generously to its local community.

We are pleased that we have been able to work productively with the Commission and with Member States to preserve our Bilateral Investment Treaties with accession countries to ensure that U.S. firms continue to benefit from a stable and secure investment environment. As a signal of our commitment to supporting investment, the U.S. Overseas Private Investment Corporation last month hosted an investment conference bringing together representatives of over 75 U.S. businesses with the region's government officials and business people. Together, they explored business opportunities in Central and Eastern Europe and elsewhere.

The United States has been and will remain engaged bilaterally with the accession states. We've signed Open Skies agreements with the Czech Republic, Slovakia, Poland, and Malta, for example, as we have with 11 of the 15 EU members.

When it comes to trade, enlargement has had a more mixed impact on the United States' relationship with accession countries, in large measure due to the extremely lengthy accession period. While the harmonization of commercial laws and regulations has facilitated the creation of a more predictable business environment in Central and Eastern Europe, the U.S. lost market access and market share as a result of differential tariff treatment when these countries entered into preferential agreements with the EU in the early 1990s. While the U.S. and other trading partners are looking forward to the long promised benefits of lower average industrial tariff rates when the accession countries adopt the EU's Common External Tariff in its entirety, we have paid a significant price in terms of lost trade during the accession period and will lose further market access for our agricultural products as a result of the EU's restrictive Common Agricultural Policy. As entitled by WTO rights, the U.S. will engage the European Commission in compensation negotiations on these issues.

We will also be watching with great interest as the Commission extends to an enlarged European Union restrictions on formerly open markets, such as the banana market. We trust the Commission will adopt new licenses and quotas in a transparent, objective manner which will minimize uncertainty for both consumers and the traditional operators who supply well-priced, high quality products to this market. As EU enlargement proceeds, it is important to avoid unnecessary costs either to the U.S. or to the future member states. To this end, an early identification of potential problems and an open exchange about them is critical.

Opportunities and Responsibilities

With accession, we fully expect that the new EU members will join us in shouldering the great responsibilities that devolve to the most important economic partners in the world, i.e. the United States and Europe. I'd like to broach this by enumerating several key economic priorities for the United States. Of course, Europeans have their own "list of priorities," but I'm confident that much is shared. The three broad economic priorities are: Assuring Economic Security, Expanding Trade and Investment, and Encouraging Development:

Economic Security: First, we must cut off the financing of terrorism. The events of 9/11, Bali, Istanbul, Baghdad, and of Madrid make the urgency of this effort abundantly clear. The United States and its partners have worked very closely to disrupt the flow of money to terrorists and to their supporters. We have led international efforts, under the auspices of the U.N., to identify and block assets to nearly 361 designated terrorist individuals and groups. We have disrupted their ability to finance operations and access the funds of charities to carry out acts of violence against our friends and us. We have broadened the mandate of the Financial Action Task Force (FATF) to include terrorism. With 31 members, the FATF is the world's leading international organization on combating financial crime. Alongside our allies, the United States has improved coordination of technical assistance to countries at the frontline of the war on terrorism to develop their capacity to cut off the flow of funds to terrorists. Although our work has not finished, terrorists now find it much harder to move money and assets around the world.

Second, we must make sure that our infrastructure is secure. The U.S. has worked closely with the European Union to improve the safety and security of transatlantic travel. We share a common interest in protecting our citizens.

We each bear the scars of terrorism. Because we share common values -- and perhaps equally important -- common objectives -- with the nations of Europe, I am confident that we can meet this challenge. When we -- and our relationship -- face increasingly global threats, we have demonstrated that we can harness our common will and uncommon talents to find common ground and develop effective, innovative ways to counter these threats. Together, we work to make the structures that underpin travel and commerce more secure and more efficient to allow more people to people and goods and services exchanges. We refuse to allow threats and fears to keep us from realizing our aspirations.

Speaking as President of the European Council, Mr. Bertie Ahern stated on March 15th, "We need to enhance the efficiency and effectiveness of the EU's mechanisms for the freezing of terrorist assets and to identify the movement of terrorist finances." That point and many more are embodied in the European Council’s important March 25 Declaration on Combating Terrorism. As the EU undertakes its internal efforts to improve anti-terrorist financing and other measures, the U.S. looks forward to working closely with the EU in order to strengthen our cooperation in this area.

Expanding Trade and Development: The United States and Europe have traditionally taken a leading role in expanding the boundaries of development and prosperity. To continue this vital effort in the 21st century, we must continue to push ahead on all fronts to liberalize trade globally, regionally and bilaterally. Unfortunately, the Cancun WTO Ministerial caused us to stumble. It is crucial that we get the Doha Round moving again. The accession states should be particularly sensitive to the great promise that trade and investment play in economic development. We look to the accession states –as well as other EU members--to work with the European Commission and the US in leading the negotiations to a successful conclusion.

It is now hard to imagine that the negotiations will be completed by the end of 2004 as called for in the Doha Declaration. We may have to adjust the levels of ambition to which we originally aspired. Nonetheless, we cannot turn our back on the multilateral approach to trade liberalization that has served us so well since the founding of the GATT.

The Doha Development Round is a rare opportunity to lower trade barriers and expand economic opportunities throughout the world. Our aim in these negotiations is straightforward — we want to open global markets across the board and expand the virtuous circle of trade and economic growth for developing and developed economies alike.

Although we tend to focus on our disputes, most of our economic relationship is conflict free. That is not to say that the disputes that do arise are not important. They are. The key is to manage them responsibly. The U.S. and the EU agree to take difficult disputes to the WTO for settlement, even though WTO panels are making uncomfortable decisions -- against the U.S. on FSC and steel; against the EU on bananas, beef, and likely soon, on biotech products.

We are also working with Europe to make it easier for transatlantic business to flourish. A special emphasis these days is upon regulatory issues, since with the reduction of tariffs and quotas, regulatory differences are a main source of obstacles to expanding commerce. We have begun transatlantic aviation negotiations designed to liberalize air traffic between the U.S. and Europe, for example. We are pursuing an agreement that would extend Open Skies to the entire U.S.-EU market, including the accession states.

|Development: We start with the premise that only substantial and rapidly expanding trade and investment can generate sustainable economic growth on the scale needed to lift entire nations out of misery, and that trade and investment is only likely to flourish in nations that follow wise economic policies. Foreign assistance -- wisely channeled -- can play an important part in creating the conditions that attract trade and investment in the first place. The international community agreed to these important premises at the Monterrey Summit on Financing for Development in 2002. This is the context for the Millennium Challenge Account, a new concept that represents the most thoughtful and important American development initiative in the past forty years. I am delighted to report to you that Congress is in the final stages of approving this important Presidential initiative, which we hope will be funded at $5 billion a year by FY06. The MCA will deliver measurably effective development assistance by bringing together all the lessons we have learned about development, including:

That economic growth is the key to development.
That no one can develop a country except its own people.
That there is no substitute for measurable results.

The MCA targets countries that govern justly, invest in the health and education of their people, and encourage economic freedom. By selecting countries whose policies encourage growth, MCA assistance will deliver much greater economic development. And, for those countries that do not initially qualify, it provides a strong incentive to adopt growth-enabling policies too, with which the U.S. will be prepared to assist.

Further on the subject of development, I'd like to mention the reconstruction efforts in Afghanistan and Iraq, two areas where Europe has played an important role. We expect that the with the accession of ten new states, the EU Member States and the European Commission can utilize their substantial resources to continue to make important and extraordinary contributions to the reconstruction of Afghanistan and Iraq, through multinational trust funds or bilaterally, and can accordingly play major roles in those countries’ rebuilding efforts. We greatly appreciate the contributions the countries of Central Europe have already made to the peace, stability and reconstruction of Afghanistan and Iraq.

Conclusion

We all know that EU enlargement will bring challenges -- challenges for the accession states themselves, for current EU members, and for the United States, including some which I have not discussed today. We should, however, have no doubt that enlargement will also bring a valuable richness to tomorrow's Europe and to tomorrow's transatlantic partnership.
[End]

Released on April 15, 2004

U.S. Diplomatic Mission to Germany /Public Affairs/ Information Resource Centers