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The use of Economic Sanctions In Foreign Policy

The use of Economic Sanctions as a Foreign Policy Tool

Alan Larson: The use of Economic Sanctions as a Foreign Policy Tool

Alan Larson, Acting Under Secretary of State for Economic, Business, and Agricultural Affairs

Remarks to the Konrad Adenauer Foundation's
International Trade Seminar
Washington, DC, September 22, 1999

The Future of Transatlantic Economic Relations:
Beyond Beef, Bananas and Biotechnology Disputes

I am delighted to be here today and want to thank the Konrad Adenauer Foundation for the opportunity to share some thoughts about transatlantic economic relations with particular emphasis on the WTO and biotechnology.

Let me open by noting that the EU is the United States' largest investment partner and second-largest trading partner. Total U.S.-EU trade was $326 billion in 1998, up from $298 billion in 1997. By the end of 1997, the EU had more than $382 billion invested in the U.S., and the U.S. had more than $369 billion invested in the EU. Investment from Europe supports 1 out of 12 U.S. manufacturing jobs. European firms are the top foreign investors in 41 of 50 states, and second in the rest.

To be sure, U.S.-EU trade disputes are real and front page coverage of them this past year may have at times obscured the generally excellent relations between the U.S. and Europe, but we continue to make progress together. For example, we unveiled last December a Transatlantic Economic Partnership (TEP) Action Plan, designed to reduce regulatory barriers and more fully realize the promise of transatlantic trade. To reduce the likelihood of future tensions, we have jointly created an early warning mechanism to alert policymakers to issues requiring attention lest they become intractable trade or diplomatic disputes.

One of these issues is hushkits--devices that quiet jet engines. The EU's rule banning new registrations of hushkitted aircraft has had a chilling effect on U.S. industry without delivering the environmental benefits promised. While we welcome the one-year delay in implementation, it is vital to make rapid progress to resolve this explosive issue in the face of Congressional impatience.

On the multilateral side, at the November Seattle WTO Ministerial we want to achieve a market-access-oriented new round of negotiations, in cooperation with Europe, covering services, agriculture and industrial goods, and structured to achieve a single package of results in 3 years.

The U.S. and Europe generally agree on the need for the Seattle Round to deliver market-opening results. Whatever our differences, we should strive to find as much common ground as possible and work together to achieve our mutual objectives on such issues as extending the prohibition on e-commerce duties.

Second, the President has urged the WTO to set a forward work program that includes trade and labor: a WTO trade and labor working group, ILO observership in the WTO, increased ILO participation, and inclusion of labor as a component of the Trade Policy Review Mechanism.

In addition, we want to work with Europe to promote the active involvement of developing countries in preparations for the launch of the new Round so that we can ensure that developing countries benefit and better integrate into the world trading system. Together, the U.S. and Europe need to improve technical assistance to developing nations, but not at the expense of all WTO members carrying out their current obligations.

President Clinton, who will be hosting the Ministerial, puts a high priority on transparency and openness. I hope that European WTO representatives in Geneva will demonstrate additional flexibility on undertaking institutional improvements to make the WTO a more transparent organization.

Finally, a top U.S. priority for the new Round is the total elimination of export subsidies for agricultural products. The rest of the WTO membership is less and less willing to pay the costs of Europe's expensive farm policies. We hope to build a solid consensus in the upcoming Round, including both developed and developing countries, to end for good this practice.

Let me now turn to biotech foods. There is a great deal of misinformation out there regarding both biotechnology and U.S. policies for approving biotechnology products. This misinformation could, if left unaddressed, affect the way biotechnology is viewed in the upcoming Round. The debate on biotechnology should be based on the facts. We recognize that some have honestly felt concerns about biotechnology, and we think they should be addressed. We, including our friends in Europe, encourage others to emulate the well- functioning system we have developed.

The U.S. supports cooperative international approaches, for example, the work on biotechnology underway in the OECD requested at the Cologne G-8 Summit. We will work with others to address food safety issues using the enormous body of scientific information on plant biology and nutrition, and to undertake sound, joint efforts to protect against environmental risks. We will continue to encourage approaches that allow the potential of biotechnology to help people all over the world in a safe and responsible manner.

With respect to regional issues, the U.S. has consistently supported European integration in the Post-War period. We view further enlargement to the East as vital to the stability and prosperity of Europe. However, more far-reaching reform of the Common Agricultural Policy will surely be necessary not only to accommodate accession states, but also to add impetus to negotiations under the new Round.

Our Administration has drafted legislation to extend unilateral trade preferences to Southeast Europe, which are being cleared interagency, and we are working on a legislative strategy. We hope that the EU will make a similar effort. The U.S. is also providing technical assistance to Southeast European countries on WTO accession and implementation of WTO norms. We are also undertaking a Northeastern Europe Initiative, which complements the EU's Northern Dimension in addressing pressing concerns in the region.

In closing, I want to emphasize once again how important transatlantic relations are. We look forward to working together more closely with Europe in the run-up to the Seattle Ministerial. And we call on all reform-minded Europeans--and by that I include all of those present-- to work with us to further strengthen transatlantic ties.

Thank you for your attention, and I look forward to your questions after the other speakers.

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