Old Friends, New Problems
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MARGARET WARNER: For more on the changing relationship between Europe and the United States we’re joined by John Richardson, deputy head of the European Union’s delegation to the U.S.; David Aaron, former Undersecretary of Commerce for International Trade in the Clinton administration — he’s now a senior international adviser at the Washington office of Dorsey & Whitney, a Minneapolis law firm; Stephan Richter, the German-born publisher of the TheGlobalist.com, an Internet magazine that covers the global economy; and Ellen Frost, visiting fellow at the Institute for International Economics, a Washington research group; she’s also the author of Transatlantic Trade: A Strategic Agenda.
Welcome all of you.
Allies but also competitors
MARGARET WARNER: David Aaron, how do you see this U.S.-European relationship? How different is it really over – than it was in the last decade, over the last decade?
DAVID AARON: Well, I think you’re seeing two basic changes. One is that the rationale that the Europeans told themselves as to why they are trying to get together and build a wider Europe, is increasingly changing from concerns about domestic affairs to concerns about competing with the United States. And in that lies the obvious danger that that competition could actually become, actually a very difficult one. The second is that our relationship is so intense, it is so close, we’re like finely meshed gears, our economy, and these issues keep dropping into it like grains of sand and creating an enormous amount of noise, but also could be very destructive at the same time.
MARGARET WARNER: Is it the end of the Cold War that has in a way given the U.S. the luxury to have these disputes?
JOHN RICHARDSON: I think there’s a lot in that. During the Cold War we had to pull together on everything because we were trying to shelter the rest of the world, in particular to the Soviet Union, a particularly way of running our societies and our economies, and we did that successfully. We now have the luxury of being slightly different in how we do that. But I think you can exaggerate this. What I’ve seen over the last decade since the end of the Cold War is European and American values basically moving together. Europe is deregulated, America has got more interested in the social aspects of a social market economy. We’ve come closer, rather than further apart.
MARGARET WARNER: How do you see it, Ellen Frost?
ELLEN FROST: I basically agree with John Richardson, but there’s an element of resentment of the big power in Europe. Americans have a tendency to be a bit triumphalist about their economic successes, and it’s only natural for people in Europe to want to, sort of, poke holes in our image and focus on the social negatives. At the same time, we do have serious social problems ask we don’t think of them traditionally as having an impact on foreign policy, so it’s a good lesson to us, I think, look inward and strengthen ourselves as a nation, then we can be a better partner with Europe in our common agenda.
MARGARET WARNER: But what do you think is at the root of these new disputes? Some of them are kind of old types – trade — but some are different.
ELLEN FROST: Well, as David Aaron says, the integration of the two economies brings domestic issues into focus, but then there are domestic social values that do differ. The death penalty is a good example. I think there’s a tendency in Europe to think of Americans as violent, trigger rather simpleminded people, who are very quick to impose sanctions, even at the risk of hurting European companies and, generally, to lack a more subtle approach to solving human problems. The converse of that of course is that Europe has had to live with dangerous situations, geographically, for a long time, has many more centuries really of diplomacy, and so there’s been a difference in style, which has accentuated really the problems here. I don’t think they’re at the breaking point, but I think they’re worrisome.
MARGARET WARNER: How do you see it?
STEPHAN RICHTER: I think it’s very simple. If you’ve been married for 20 years, you know, it gets tough sometimes and you know each other too well. And it’s not just, you know, he/she, but, you know every in and out, and that’s fortunately where the transatlantic relationship stands. I mean, Germany was reeducated in the direction of American democracy. Everybody is shaped by the new economy from the United States, and so on. But there’s something much larger that I think we need to be aware of and I think Secretary Aaron is very much involved in that. Most of the conflicts that Europe and the United States now has are really agent warfares where Europe and the United States look at the global agenda. If you take at an issue such as data privacy, which is pivotal, where in my view -
MARGARET WARNER: Which was discussed today at the meeting.
STEPHAN RICHTER: — where in my view in America we have a pretty rotten deal. We have companies like Microstrategy and so on that is collecting all the data and there’s no guideline how individuals are protected. The Europeans take exactly the opposite viewpoint. Here we have industry self- regulation; in Europe we say these companies can do anything to anybody, let’s have some guidelines to protect citizens. That’s a failure of checks and balances as it’s laid down in the American Constitution. You don’t have that debate very much domestically. Europe, John Richardson’s European Union and communities actually steps in as an opposition, you know, as a check and balance on the majority opinion in the United States, and I think that is a very fascinating development for the other nations around the world. Yes, we battle heads on all these issues, but we’re also clarifying a lot of hyper-complex issues on the global integration agenda.
Cultural differences as the root of confrontation
MARGARET WARNER: Do you agree with some of your fellow panelists here that there are cultural differences that underline these trade differences or differences on something like data privacy?
DAVID AARON: Oh, yes. There’s no question about it. I mean, for example, the death penalty and the question of privacy, there’s a lot of guilty consciences in Europe, and so there’s a lot of effort today to show that “no, we’re not going to do that anymore, and not only are we not going to do it anymore, you shouldn’t do it anymore either.” I think that one of the keys here is the fact that technology is also passing up entirely new questions. The privacy issue is a good example of it. And when i was negotiating this agreement with the Europeans, it was very interesting how we had to take some rather antiquated ideas about how you deal with the privacy issue and apply it to the most modern information economy in the world which is the United States. And I think we’ve reached a pretty good balance here and I think it will help the privacy debate in America, which is very intense. But we have to take that approach now. I don’t think we can treat these issues like old-fashioned trade issues where we split the difference, or I bargain here, and you bargain there, because we’re dealing with human health. We’re dealing with privacy. We’re dealing with the environment. Each of these issues we have to take an approach which is essentially problem solving. We both have a problem, we both have to solve it.
MARGARET WARNER: You were trying to get in here.
JOHN RICHARDSON: I think it’s absolutely right what David has said. But I’d like to come back to the question of differences in culture and indeed democracy. One of the values we’ve been selling around the world is the value of democracy. We have separate democratic systems with different histories, different traditions, and different values, different cultures. And there are different ways of looking at things. Different ways of looking at the death penalty is one example, but also different ways of looking at privacy, and what you have to reconcile, David, in your discussions with John Maug in Europe, was two different starting points on a subject which has to be by definition global, and I think you did very well in reconciling that. And that’s the direction we need to take in these discussions, while respecting the values which are two different democracies.
ELLEN FROST: If I could build on the last two remarks, one of the problems here is that we tend to channel all of these new issues immediately into the hands of trade lawyers. No offense. Lawyer culture, as I’ve come to call, is a way of thinking of memorizing a brief, going for the jugular, reaching a deal and then going on to the next case. And it’s an adversarial process. And what David is talking about and John too is really standing together with Europe and looking at these new issues and not in a confrontational way, but our U.S. government, in particular, in the last ten/twenty years or so has seen more and more and more lawyers come into these positions.
MARGARET WARNER: We litigate it to death.
Working together to solve global problems
STEPHAN RICHTER: If we need to be a thorn in each other’s side, I hate to come back to my long term marriage thing, which hopefully we’re all engaged in, but the key thing is really we learn from each other. It is painful. Imagine how you change a domestic society, there are all these vested interests. We’ve had a fascinating situation with the Clinton administration on a variety of issues, whether it was genetically-modified foods or whatever. They have said through the FDA that we domestically here in the United States need to make certain changes in anticipation of agreements that one day we will have to consume with the Europeans, where there is no law case, no trade lawyer, nothing. Charlene Barshefsky can’t help you. It is about the future of the world, about allowing technology to benefit human beings and so on. And that’s something in the well of the parliament when you have to change a society, do you spend on this or do you pass the privacy directive or something — you have to have the Americans as a pain in every European parliament, so that the finance minister, or somebody, the chancellor or prime minister can say, we’ve got to do it, we’ve finally agreed on it, that’s the only way — the same thing here. In that sense all the strife is very good and necessary, and inevitable if we want to get ahead — because otherwise those domestic factions that are always for the status quote will always win, and I don’t think anybody is interested in that.
ELLEN FROST: But the problem is it impedes us from acting as partners in the rest of the world, the global economy, the World Trade Organization, this degree of quarreling precludes us from… you know.
JOHN RICHARDSON: I think there are two points which are important here. One is I agree with Stephan, we need a lively debate. We accept that nationally. Why shouldn’t we accept it internationally? A lot of what we’re talking about is precisely that, it’s debate about things where we disagree. But to come back to Ellen’s point, I don’t think that structure has been cooperating together, we’ve been enormously successful in the last decade, which has allowed us to do far more in the world agenda. Think of Kosovo on the political side, think of the WTO, the passing of the Uruguay Round and the subsequent agreements on the economic side.
Europe’s complex decision-making process
MARGARET WARNER: How much do you think this reflects the fact that what was sort of a big brother/little brother relationship for the entire post war period has to have changed, and we’re both adjusting to that?
DAVID AARON: Well, I think that’s part of it. But I think it’s also important to recognize that we have more disputes this year than we had last year, and we have more disputes last year than the year before. There are some 36 economic disputes. Yes, we worked together in Kosovo, but one of the outcomes was European resentment and the desire now to build their own rapid reaction military force because they felt so left out. I think we do have to recognize the fact that Europe is not yet a country. And so when we come to some of these issues, we don’t have an FDA that we can talk to. We don’t have an SEC that we can talk to. We don’t have an FCC. In other words, we have some institutional problems, and the decision-making in Europe is enormously complex. We have a parliament, we have the member states, we have a commission. And they’re all difficult independent, almost independent centers of power.
JOHN RICHARDSON: It is different, and It is as complex as the situation here in Washington.
STEPHAN RICHTER: And what’s getting lost in all that is somebody recently did a calculation, all these problems that we have, all these trade disputes, what do they amount to — 0.5 percent of the entire trade relationship of the value of everything that flows back and forth. We have a situation where millions of Americans all of a sudden can travel to Europe because the dollar is so strong and everybody wants to see Italy before it burns or whatever. And at the same time, it is wonderful to see that everybody can get into it, but the newspapers have a terrible problem. They only report on the trade disputes, because newspapers never focus on the good news story. And that’s the tragedy of the transatlantic relationship and why we have to deal with some of the questions here today.
MARGARET WARNER: And on that good news word, we’re going to end it. Thank you all four very much.