AMBASSADOR Robert Holmes Tuttle
Speeches, Remarks & Events
30 March 2006
Speech at the British-American Business Council : The Transatlantic relationship: A Key Gateway to World Trade
Gateways
Your conference theme — and a good starting point, because it is such an accurate description, not only of the relationship at the heart of this conference, between the United Kingdom and the United States — but also because the United Kingdom is America's gateway to Europe.
Her Majesty's Government and the British business community are important and impressive parts of this transatlantic gateway. They assist American companies coming to London and looking toward the rest of Europe, and assist European companies coming here before they make the jump to the United States.
American and European companies get first-rate help in the United Kingdom, particularly from members of this audience, which includes both investment decision-makers as well as decision-facilitators. Welcome to all of you.
When I started reflecting on this conference, it struck me that, not only is a gateway an apt image — but there are three relevant aspects in today's business world:
First, the definition of a gateway is that it serves a real connection between two places.
Second, because it connects places, this gateway has to be open in both directions, to everyone.
In terms of the business connections, the Anglo-American relationship is in a class by itself.
In 2004, United States direct investment into the United Kingdom exceeded $300 billion, while UK direct investment in the United States exceeded $250 billion. We just got the figures for last year — and two-way trade in goods and services exceeded $165 billion.
America is Great Britain's largest export market and its second largest source of imports — behind Germany. China unquestionably presents exciting commercial possibilities — but I would point out that the UK exports nearly 15 times as much to the United States as it does to China.
Our economic partnership remains unrivalled.
Take one industry that people look to as a kind of indicator of the state of the U.S./UK relationship.
Defense:
There are a couple of things you might not know by reading the newspapers. Things like the fact that BAE Systems is the fifth largest supplier to the U.S. Defense Department.
Or that of the 5,000 requests from the UK to the United States for technology transfer - only four were denied!
The Joint Strike Fighter issue has also been in the news quite a bit lately - so let's remind ourselves of a few important facts there:
- UK companies have earned contracts valued well over Britain's eventual $2 billion investment - and when the plane goes into full production, additional contracts are likely to be worth many times that amount
- Over 100 companies from all over the UK are subcontracting on this project.
- In terms of jobs - the estimate of 8,500 looks to be on track for this project alone.
That sounds like a pretty good working relationship to me!
The second aspect about gateways is that they need to be open - and sometimes that can be difficult.
But, they have to be open because false barriers and artificial pressures drive up prices and drive down quality.
No one has been clearer than President Bush that isolationism is not an option America can afford - and with the help of Treasury Secretary Snow, U.S. Trade Representative Rob Portman, and others, he will continue to take that message forward.
The good news is that overall, the policies of the United States and President Bush have produced an American economy that is the world's largest import market.
The United States has been a leader in market liberalization. Two outstanding examples are our dismantling of the Bell telephone monopoly in the U.S. and our deregulation of airlines. Both of these measures have been emulated around the world.
More recently, the Bush administration has vigorously defended the freedom of the internet from regulation and national controls. We believe in the efficiency and innovative power of free markets.
At the end of the day, the United States is driven by results, and it is clear that opportunities overseas and foreign investment at home creates jobs, and elevates wages, profits, and GDP.
Foreign investment has also been topical. But, again, let's look at the broader picture, rather than at the headlines of the day.
Foreign investment can flow into a country in two ways: as portfolio capital, or as foreign direct investment.
America's investment market is open. It attracts $4 billion in foreign investment every day. Foreign direct investment in the U.S. has grown steadily for the past decade and 75% of America's foreign investment comes from the EU.
The United States encourages foreign investment because it recognizes that our continuing economic growth depends on it.
The fact that 2005 marked the fourth straight year and 17th consecutive quarter of growth indicates that this part of our economic strategy is working.
Foreign investment has another welcome by-product and that is its impact on productivity.
During the past four quarters, productivity in the United States has increased 2.5% and it has grown at an annual rate of 3.4% since the first quarter of 2001.
That said, productivity remains a bit of a mystery - even to economists. I see that the Chancellor - Gordon Brown - has established an economic advisory group that will include Americans Bill Gates and Lee Scott, the CAO of Wal-Mart, along with prominent British economists and industrialists, to examine these issues.
And productivity is an issue not only in the UK but in Europe as a whole. So I was pleased to see Chancellor Merkel take a page out of the UK's economic handbook by endorsing more "British" policies.
I hope the Chancellor's new group will also look at some recent research that points towards foreign investment as an important element of productivity growth - especially since we all know that we have faced challenges on foreign direct investment in industries as diverse as shipping - and even yogurt.
Finally, gateways need to be stable.
In the President's State of the Union address, he pointed out that in this globalized world, what we have called "foreign policy," is no longer what we do "over there," nor is domestic or economic policy something that affects only those "at home."
Every government is learning to deal with the new reality that foreign policy and domestic policy are two sides of the same coin.
In spite of hurricanes and high gas prices, the American economy grew by 3.5% in 2005. Unemployment is below 5%.
Those statistics are important because the U.S. economy not only supports its own citizens, but it continues to be one of the great engines of the world's economy - by being a major market for the world.
Economic stability is the first step, and the best hope for peace and progress for the millions whose poverty prevents them from developing their resources and their people.
As the President put it, "to overcome the dangers in the world, we must also take the offensive by encouraging economic progress, and fighting disease and spreading hope in hopeless lands."
One issue that clearly illustrates this point is the need to complete the WTO Doha development round.
Last October, the United States made a bold proposal for reforming global agricultural trade to move the negotiations forward and unleash the potential of the round.
Reducing trade-distorting policies and barriers to agricultural trade among all countries is the surest way to lift poor countries out of poverty.
The President offered substantial reductions in trade-distorting support measures and tariffs, along with the complete elimination of export subsidies - to be phased-in over a five-year period. In the second five-year period, the remaining subsidies and tariffs would be eliminated.
As you know, the European Union chose to emphasize the need for countries like India and Brazil to make offers on services and non-agricultural market access.
We agree that they should - but without further opening of the European agricultural market, the negotiations may not succeed.
We hope it will - because we all need Doha to be a success. We need increased opportunities for trade and investment, including a more open market for service providers.
Increased trade and investment among all countries will bring more resources and will create more jobs than development assistance alone.
The world's most developed countries need to ensure that the world's least developed can participate and grow.
Gateways are connectors. And the United States and the UK - as well as Europe - continue to be connected at every level.
Gateways need to be open. And while we may struggle in our own countries with domestic pressures, we must continue to strive towards the openness we know the economy needs to succeed.
Gateways need to be stable. The international trading system and grassroots economic development provide the major way to ensure stability into the future.
There is one final aspect of a gateway that I will leave you with - gateways are an apt image, but they are also symbolic of a frame of mind - a kind of open dialogue.
The transatlantic relationship is successful precisely because we reach out, not only to each other - but to the world.
What we do every day in our business life ensures that this engine of economic development - this relationship between our two countries and between the United States and Europe - has the ability to bring prosperity and hope to those in the world currently without either.
May this conference capture both this image and this attitude.
Thank you for listening. Let's have some questions.
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Speeches, Remarks & Events