Tal
Amerikanska handelskammaren i Stockholm 4 maj 2007
Sten Tolgfors, Handelsminister
European and US Competitiveness in a Globalised World
Ladies and gentlemen, it is a great privilege to be here at the US Chamber of Commerce.
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In the beginning of the last century about one-third of the Swedish population decided to start a new life in the US. Today, there are about 10 million Americans of Swedish descent.
In the old days a trip to the US was the trip of a lifetime. You left your old country, never to see it again. Today, we visit Statton Island and the Statue of Liberty over the week end, email the pictures home to our friends from our cellphones, and meet our friends on Monday lunch back in Stockholm again. Our societies are interdependent and intertwined.
We are historically closely connected. In 1638, Sweden established the colony New Sweden in what is now Delaware. I went to high school quite near that area, just outside Atlantic City. And I still have friends there. I am just one of many examples of close ties formed by extensive travel and cultural exchanges between our two countries.
We are like-minded in so many ways, even if political decisions and the debate that follows them often underline the differences.
We also have strong commercial ties. The US is one of Sweden's top two export markets. Swedish exports to the US are greater than our total exports to Asia and the Middle East combined.
Between 1995 and 2005, Swedish exports of goods to the US increased in volume by 9.5 per cent on average each year. In the first three quarters of 2006, the US was the tenth largest supplier of goods to Sweden. That is 25 percent more than China and 61 percent more than Japan.
The EU and the US represent the world's two largest trading blocs. Our combined economies generate a total of nearly 60 per cent of world GDP, accounting for more than 40 per cent of world trade.
Stronger cooperation with the United States is natural when we are dealing with today's global challenges. Shared values and interests enable the US and the European Union to work together for the development of freedom and prosperity globally. International trade is an efficient tool to this end.
I am a free trader. I am a friend of market economy and private ownership; I dislike market distortions. I believe that natural comparative advantages should be allowed to allocate resources in the most effective way.
If you believe in the market economy, it is just a question of determining the size of the market. The bigger the better, if you ask me.
Free trade is a cornerstone of Swedish foreign and business policy. It is also the basis of our domestic economic policy. Swedish prosperity is built on international trade and the ability of our companies to compete in markets all over the world. Our economy is small and open. Exports and imports combined correspond to about 90 percent of GDP.
I am also a multilateralist and a friend of the US.
I firmly believe in:
- a strong transatlantic link,
- the necessity of strong ties between the European Union and the United States,
- our common values of democracy and a free economy,
- our common responsibility for the world economy and world trade.
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It is clear to me that we need to work together to promote economic growth and competitiveness on a global level.
When my Government won the election in Sweden last September, we declared our wish to focus more on our relationship with the US and to strengthen the transatlantic link - both bilaterally and through our membership of the European Union.
The transatlantic economy is driven and held together by investments. Sales by the companies involved in their respective markets far surpass trade flows.
200 000 Americans work in Swedish-owned companies such as Volvo, Ericson, IKEA and fast-growing service companies such as Securitas. More than 100 000 Swedes work in US- owned companies.
Since 1997 the US has held the largest aggregated amount of Swedish FDI (foreign direct investments). FDI totaled USD 37.3 billion (SEK 266 billion) in 2001. Larger than the investments in any other country. The trade between the EU and the US has stagnated in relative terms. Trade across the Atlantic Ocean corresponds to some 20 per cent of US exports.
US trade with the rest of the world is about four times the size of the trade with the EU. Growth in trade is strong in absolute terms, but from a US perspective, trade with the EU is at a relative standstill.
If nothing is done, there is a risk that these trends in trade will have a long-term political and economic impact. There is a risk that the balance in US interests will change. We must not allow a situation where trade with the EU becomes less important to the US.
Part of the problem lies in the bureaucratic trade barriers that must be removed. Trade development between the EU and the US could be improved if we removed the barriers posed by different regulations and standards in the two markets. The goal must be that products produced in Europe are automatically approved for sale in the US and vice-versa. That is why the so-called Merkel initiative, that the Germans launched during their current EU Presidency, is so important.
In this context I welcome the EU-US Summit. The adopted framework on transatlantic economic integration lays a long-term foundation for building a stronger and more integrated transatlantic economy, in particular by fostering cooperation to reduce regulatory burdens.
The creation of the Transatlantic Economic Council will oversee and guide the work between the yearly summits. One of the important areas that will be addressed is "Fostering cooperation and reducing regulatory burdens". We should continue with this now, while there is clear interest, bearing in mind that the actual work can be done after Doha is in place.
One concrete example where a strengthened transatlantic cooperation would be of major benefit to all of us is the automotive industry. Automotive manufacturers are calling for common regulations on both sides of the Atlantic ocean. They can accept more or less any requirements as long as they are the same on both sides. Cross-ownership across the Atlantic and existing profitability problems within the car industry underlines the necessity to solve these problems.
On my initiative Sweden and Germany have decided to set up an expert group to study what could be done in order to create a joint European and US automotive market. A successful harmonization of EU and US tests and standards can lead to reduced costs by up to seven per cent per car -or SEK 15 000. This would mean increased competitiveness for our automotive manufacturers and subcontractors. This would facilitate Swedish and US exports and trade across the Atlantic Ocean and strengthen investment opportunities in Sweden.
Free trade and a market economy are, by definition, good for the effective use of resources. Economic development must be in harmony with a sustainable environment.
Climate change is rapidly changing the political map. We need to create a world market for bio fuels such as ethanol.
1. The EU must not protect European bio fuel production or stand passively behind its own tariff barriers while ethanol production expands. Abolishing ethanol tariffs would benefit both the environment and developing countries that have favorable production conditions.
2. We must welcome new production capacity created in developing countries.
3. We cannot divide the world between us by excluding production agreements.
4. We need to co-operate on new technology.
A good example of how, through trans-atlantic cooperation, we can enhance environmentally friendly innovations is the initiative taken by the US ambassador to Stockholm, Mr. Michael Wood. Upon taking office in Sweden last year the ambassador announced the One Big Thing-initiative that aims at strengthening cooperation between Sweden and the US on clean technology. One of the goals of the OBT is to highlight to US investors the potential of the "green technology" sector in Sweden. The Swedish Government considers this initiative very important both for the climate and for the further development of Swedish innovations. Many of the innovations are developed by SME:s - companies that often have limited financial possibilities to develop and market their products.
In order to promote the OBT initiative we have created an inter-ministerial working group to deal with these issues. I also visited some interesting companies together with the Ambassador. Now, a list of 30 Swedish companies has been presented to a number of US venture capital investment funds. Swedish inventions and technology, combined with US capital can find success on the world market.
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We also have a joint responsibility for trade and economy.
My Government's foremost priority for trade policy is an ambitious result in the Doha Round. It would provide stability and predictability for the world economy.
The response to globalisation cannot be that the world disintegrates into regional trade blocs. The response to globalisation must be multilateral, i.e. the WTO.
The response to globalisation cannot be protectionism, preserving one's own companies behind tariff barriers and entry restrictions. Such actions result in deficient competitiveness and growth.
Sweden's role is to emphasis the importance of the Doha Round and the possibility of reaching a successful conclusion. There is still a possibility of concluding the negotiations during the first couple of month next year. But as you know, there are others who draw attention to the problems, perhaps to put a brake on the forces that want success.
Sweden highlights the offensive interests of Sweden and the EU in a debate that often focuses on defensive aspects. Liberalisation of tariffs on manufactured goods would account for two thirds of Sweden's profits from Doha. Considerable profits for Swedish companies will also be the result of reforms of trade procedures.
I have met many key actors involved, such as US Trade Representative Susan Schwab, Commissioner Mandelson, US congressmen and trade ministers from countries like Russia, the Czech Republic, Tanzania, Bulgaria and Germany, as well as Minister for Foreign Trade Lagarde from France.
We point out that companies have global supply chains and that regional agreements are not sufficient.
We highlight the importance of the WTO even after Doha as an arena for new rounds and for conflict resolution.
It is important that the global business sector has a commitment to Doha. I seek your support.
The G4, the EU, the US, Brazil and India met recently in New Delhi. Agreement was reached that the Round should be concluded by the end of the year. The US accepted that a breakthrough was necessary in the first half of June. It's a good sign, but more is needed.
We need a breakthrough in the negotiations in June and we need a two-party agreement in the US in order for the President to be given an extended TPA. In mid-April leading Democrats such as Congressman Rangle indicated that this was possible.
Let's make no mistake. Agriculture is an important sector of our economies. But the core of our economies are industrial goods and services.
The results must be accepted by all 150 WTO members, including all the developing countries that have great hopes of results from the 'Development Round'.
Sweden is pushing for increased market access within the framework of the Doha Round, not least for the world's developing countries.
As the balance of political and economic power shifts, additional actors will press for influence in the global trade regime, such as the WTO. A multilateral trade agreement is crucial. The best way to make sure that globalisation brings benefits to us all, is to facilitate free trade. In some countries trade is blamed for effects that are more connected with domestic policy than anything else. Protectionist views can not be allowed to become more frequent.
Sweden is often referred to as the watch dog of the European Commissions' free trade approach. Free trade strengthens transatlantic relations and enables
better opportunities for the economies of both our countries.
The EU constitutes the largest market in the world. We're almost twice the size of US, with 550 million consumers, and we're growing. But this only underlines the need for trans-atlantic cooperation.
The EU and the US have a particular responsibility for the world economy and multilateral institutions. Yes, other actors certainly need to do more, but we must also be prepared to show further flexibility if needed.
I'd like to call on friends of free economy, multilateral co-operation and solutions in the US to take the opportunity now at hand and support the WTO and Doha Round.
