The EU and America in the world economy
Speech by Peter Mandelson at the German Marshall Fund
Washington DC, USA, 17 June 2005
In this speech, Peter Mandelson notes a defensiveness to free trade in Europe and Americathat "if it builds into protectionism or isolationism, will threaten our prosperity and theinternational trading system we have laboured to build."“Both in the United States and Europe economic certainties are being eroded. Manufacturingand trading patterns that have shaped the global economy for decades are shifting…In thespace of a decade, India and China have emerged as challenging, dynamic competitors. Thecase for open trade needs to be made again and again.”Commissioner Mandelson argues that this new situation “demands active political responsesbut not protectionism …The US and Europe today have to make the political choice tocompete. To recognise where we are up against the laws of comparative advantage. Tomove up the value chain and to bear the costs of retraining and adjustment. The rise of China and India is a clarion call to reform and greater competitiveness, not a cause for retreat and introspection.”Mr. Mandelson argues that the EU and the US also have to make a case for free trade that is“almost a moral one”: that “open trade can deliver real development for the poorest. It is infact the single most effective tool for ending poverty and achieving sustainable development.”Commissioner Mandelson concludes: “Our goal should be a transatlantic partnership of principle to tackle the shared global challenges of our time, between a strong internationalistAmerica and a more united and effective Europe.”------------------I am happy to be in Washington today. I welcome the invitation of the German Marshall Fundto share with you my thoughts on Europe, on transatlantic relations and on the need for astrong and open global trading system. I am pleased to see that my friend Grant Aldonashas found a new home here after leaving the Commerce Department.
What is happening in Europe?
I imagine that most of you have followed recent events in Europe with a mixture of interestand bemusement. The triumphant achievement of enlargement one year ago has given wayto the political uncertainty generated by the referenda in France and the Netherlandsrejecting the new Constitutional Treaty.I am not sure I would have dignified this treaty with the badge of a full-blown Constitution,that had to be put to referenda in our Member States. And fundamentally, Europe is nodifferent for the freezing of the ratification process, although there are many bits of the Treatythat would have – and, I hope, will yet – make the EU a more effective and efficientorganisation. In the meantime, the powers of the EU remain unimpaired, and the rights of its