Opposition to Sanctions

Trade sanctions imposed on a third country for foreign policy reasons are another long­standing source of transatlantic disputes. Although the EU shares many of the foreign policy goals of the US toward the countries concerned, the EU objects to unilateral trade sanctions with the assertion of extraterritorial jurisdiction applied by the US. Under the so-called Helms-Burton Act [Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996] and Iran and Libya Sanctions Act (ILSA), European companies doing business lawfully under EU laws in Cuba, Iran, or Libya are subject to the extraterritorial application of US law.

President Bill Clinton, Prime Minister Tony Blair as EU president, and European Commission then-President Santer agreed at the EU-US summit in May 1998 on a package of measures to resolve EU-US disputes arising from Helms-Burton and ILSA, including waivers from Title III of Helms-Burton and certain sections of ILSA. President Clinton renewed these six-month waivers throughout his term, and the Helms-Burton waiver was renewed by President George W. Bush on July 16, 2001. However, on July 27, 2001, the US Congress voted to extend the Iran and Libya Sanctions Act (ILSA) for another five years, a decision that cast doubt on the full implementation of the May 1998 agreement.

Transatlantic Economic Partnership

The May 1998 EU-US summit also launched a new initiative, the Transatlantic Economic Partnership (ТЕР), to eliminate or reduce many of the remaining barriers to the free flow of commerce across the Atlantic. It includes both multilateral and bilateral elements. Bilaterally the purpose is to tackle technical barriers to trade through the expansion of Mutual Recognition Agreements (MRAs) and other measures, with multilateral efforts directed at joining forces on international trade issues. The ТЕР also provides for an "early warning system" to share information on legislative and regulatory initiatives in an effort to contain future disputes, particularly in the area of food safety.

EU-US Trade and Investment Relations

The European Union and the United States together account for more than 30 percent of world trade. They also represent almost 60 percent of the industrialized world's Gross Domestic Product (GDP). EU-US trade in goods is balanced, with bilateral flows amounting to $394 billion in 2000. The EU took in 21.4 percent of total US exports and provided 18 percent of US imports, while the US took 24.7 percent of EU exports and provided 19.2 percent of EU imports. The Union is also the biggest export market for US farm products.

The EU and the US have a high and steadily increasing level of direct investment by their companies in each other's economies. Cumulative direct investment by EU firms stood at $624.8 billion in 1999 (63 percent of the total foreign direct investment in the US), while

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American firms had investments worth $512.1 billion in the EU. About 3 million jobs on each side depend on that foreign direct investment.

EU-US Leadership in the Global Economy

Given the sheer size and impact of transatlantic economic relations, the EU and US are called upon to provide leadership in the global economy. The EU and US worked diligently with partners to launch the new WTO round leading both to liberalizing world trade further and to clarifying, strengthening, and extending WTO rules in meeting the challenges ofglobalization. These challenges include meeting the needs and acknowledging the priorities of developing countries, responding to the concerns of civil society, and promoting sustainable development. In addressing transatlantic trade disagreements through the WTO dispute resolution process, the EU and US take care to avoid any collateral damage to the WTO as an institution. (See also Chapter Seven.)

The Transatlantic Consumer Dialogue (TACD) is a forum of US and EU consumer organizations that develops and agrees on joint consumer policy recommendations for the US Government and European Union to promote the consumer interest in EU and US policy making. December 2000: EU-US Summit leaders meet with TACD members.

Working with Multilateral Institutions

As a result of the European model of governance, which has at its heart the principle of pooled sovereignty, EU member states are used to debating the right role and level of government in making and implementing public policy. Europeans generally agree that different issues need to be tackled at the global, regional, national, or subnational levels. In many cases, global issues are most efficiently addressed through the use of multilateral institutions, with efforts to combat international terrorism being an important example.

The EU has also demonstrated that regional integration can enhance economic prosperity and democracy, providing a political stability that is now being extended to Central and Eastern Europe and the Balkans. This logic of pooled sovereignty applies to cooperative efforts at the multilateral level.

The New Transatlantic Agenda and successive EU-US summits have highlighted the need for the EU and US to work together in addressing global challenges. As Chris Patten, European Commissioner for External Relations, noted:

"It is vital that we persuade the US to embrace and maintain its multilateral commitments. And

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our commitments with our financial assistance and other policy instruments. When the US and the EU work together, we set the international agenda. If we are divided, the opportunity for international progress is often lost." (May 16, 2001)

The transatlantic partnership takes on even greater importance in forming a multilateral response to international terrorism. The EU has expressed its solidarity with the American people and pledged its full support to the US Government in this effort. Given its range of capabilities, the EU is uniquely positioned to help the US strengthen global systems of cooperation.