Ambassador’s Keynote Address

Austrian Federal Economic Chamber, May 23, 2012

Thank you for inviting me to address such a large and distinguished group. I’m pleased to see so many familiar faces in the audience.

Earlier today I spoke about the advantages of investing in the United States and how Austrian companies can benefit from our domestic market. Tonight, I’d like to focus on the importance of our economic relationship with Europe and how the Obama Administration is working to maximize the potential of that relationship to boost America’s international competitiveness and create jobs.

The economic crisis that began in 2008 greatly affected both the U.S. and European economies. In the United States, we lost more than eight million jobs and we are still fighting to replace them. Recovery from a financial crisis presents a special challenge under any circumstances. But our recovery has faced a number of external shocks that have greatly magnified this challenge, ranging from elevated oil prices to supply chain disruptions in the wake of Japan’s earthquake and tsunami to recurring bouts of financial stress in Europe.

Increasingly, though, we are seeing signs of resilience: Americans are returning to work, banks are lending, and corporate profits are surging. We are expecting the U.S. economy to grow by nearly two percent in 2012, while we've kept our unemployment under nine percent – and are expecting it to fall below eight percent. That said, we continue to consult with our Austrian friends to see if any of the steps taken here to keep unemployment at a commendably low rate are transferrable to our economy. We have more to do, but over the past 26 months, our businesses have created 4.25 million jobs.

In 2011, we added more private sector jobs than at any time since 2005. American manufacturers have added roughly half a million jobs since early 2010, growing for the first time since the 1990s. Indeed, we are seeing a strong trend of “reshoring” jobs which had previously moved overseas. A recent surveyof senior U.S. executives by Accenture found that 65% had moved manufacturing operations to a new country in the last two years, and the #1 destination was the U.S. China was #2, followed by Mexico. After nearly collapsing, the U.S. auto industry has added nearly 160,000 jobs – the fastest pace of job growth in the industry since 1998.

This sector has proven especially interesting to Austrian and other European companies, who have opened a significant number of new facilities in the United States. Our job creation measures are complemented by much more difficult compromises designed to cut our budget deficit by more than $2 trillion.

The President has proposed a "Blueprint for an Economy Built to Last,” which was released in January and is available on the White House web site. This is not only a strategy for growth, it also focuses on measures that improve the situation of all sectors of society. It contains everything from investments in education to helping families refinance their mortgages. The President has also signed into law new rules to hold Wall Street accountable, so a crisis like the one we’ve endured never happens again.

So, the U.S. recovery is getting stronger, but – as we all know – its strength is also dependent upon events beyond America's shores. We fully understand that continued improvement at home is linked to developments in Europe. Our economies are irrevocably linked across almost every sector. The U.S.-EU bilateral economic relationship -- which accounts for almost 50 percent of global GDP – is one of the central drivers of the world economy.

On the one hand, the United States looks to attract foreign investment from Europe to produce high-quality jobs, a mutually beneficial relationship from which numerous Austrian companies already profit. On the other hand, U.S. companies look for new opportunities to export industrial, consumer, and agricultural goods, as well as services, to Europe.

To put this in perspective, trade flows between the United States and the EU exceed $3.5 billion per day, which is far more than between the US and China. U.S. Foreign Direct Investment into the EU – $1.95 trillion – is more than twice U.S. Foreign Direct Investment into any other region in the world. Europe’s FDI in the United States is nearly as high, at $1.5 trillion, and is 4x that which we receive from any other region. On top of this economic symbiosis, Europe and the United States rely on each other’s support on the international stage. Our cooperation is essential to ensuring an open trade and investment climate around the globe.

Realizing that fiscal consolidation can be complemented by growth-enhancing reforms, we are seeing similar debates in Europe as in the U.S. on how to support jobs and growth while maintaining fiscal discipline.

I hope that today’s discussions about developments in the United States will offer an opportunity to both Europeans and Americans to learn from each other. After all, we face nearly the same challenges, especially the key question of finding the right balance between fiscal consolidation and boosting economic growth. From the U.S. perspective, we are seeing a commitment by the EU to address current economic challenges, not only through fiscal consolidation aimed at improving debt sustainability, but also by facilitating job creation and structural improvements and putting in place measures to assist member states to find a path back to economic growth.

Many countries are still facing the need for sharp cuts in public spending at a time of weak private sector demand. It will be critical to strike a careful balance to avoid a downward spiral of austerity and recession which sets back the cause of reform. It will be important that countries under pressure are given space in the short term coupled with greater credibility on the medium-term fiscal path. This approach, combined with innovations to the region’s fiscal governance, should help enhance the fiscal integrity of the monetary union.

We know from our own experience that moving from crisis to recovery depends on swift and aggressive action to restore market confidence. We have every reason to believe that decisive action by European leaders can overcome both fiscal and competitiveness challenges. There is no doubt that the debt crisis has put serious strains on the European Union and its members, both politically and economically – we face similar challenges in the United States.

But the American commitment to European economic integration – in which we are proud to have played a minor role with the Marshall Plan – remains strong. Although I know you will be more focused on economic than on foreign policy today, I would also like to note that slow growth and tight budgets in Europe and the United States also affect our ability to achieve foreign policy goals.

Foreign assistance is under great pressure both in Washington and in European capitals. Our security forces – though greatly reduced in numbers – require constant training and modernization to meet new threats around the world. It is important that we continue to spend the money required to meet our key priorities, and maintain critical deployments. Reduced outlays overall should not mean reduced engagement in critical parts of the world. This message was brought home forcefully to the United States by September 11. I believe many Europeans learned a similar lesson during the Balkan conflicts that accompanied the disintegration of Yugoslavia. The Obama Administration is committed to deepening and broadening our economic relationship with Europe.

To sum up, I’d like to quote – and agree with – my boss, Secretary Clinton, who has said that: “We need to forge an ambitious agenda for joint economic leadership with Europe that is every bit as compelling as our security cooperation around the world.”