European Union

PROFILE
HISTORY
MAJOR INSTITUTIONS
U.S.-EU RELATIONS
ECONOMY
2007 U.S.-EU SUMMIT

Last Updated: March 2008

Official Name:

European Union (EU)

Editor's note: The information in this article was compiled from Fact Sheets and releases available through the Bureau of European and Eurasian Affairs of the U.S. Department of State 2007 and 2008.

PROFILE

The European Union (EU) is one of the United States’ strongest strategic partners, with the importance of the relationship reflected in our close cooperation on regional crises and conflicts, our extensive collaboration on a wide range of global challenges, from counter-terrorism to nonproliferation, and our deep trade and investment relations.

Geography

Area: 4,326,243 sq km

Cities: Capital—Brussels, Belgium (European Commission, EU Council); Strasbourg, France (most European Parliament plenary sessions); Luxembourg City, Luxembourg (European Court of Justice).

Terrain: mainly flat along the Baltic and Atlantic coasts; mountainous in the central and southern areas.

Climate: cold temperate; potentially subarctic to temperate in the north; mild, wet winters, and hot, dry summers in the south.

People

Nationality: EU (Every person holding the nationality of a Member State is a citizen of the Union. Citizenship of the Union complements and does not replace national citizenship. This provision currently applies to Austrian, Belgian, British, Bulgarian, Cypriot, Czech, Danish, Dutch, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Luxembourg, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish, and Swedish citizens).

Population: 490,426,060

Religion: Roman Catholic, Protestant, Orthodox Christian, Muslim, Jewish.

Languages: Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Gaelic (Irish—from 2007), Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovene, Spanish, Swedish (note—only official languages of the European Union are listed).

Health: total: 10 births/1,000 population; 10 deaths/1000 population (2007 est).

Life Span: male: 75.6 years; female: 82 years (2007 est.).

Unemployment: 8.5% (2006 est.).

Government

Type: supranational/mixed intergovernmental.

Founded: November 1, 1993 (Treaty on European Union (Maastricht Treaty) establishing the EU entered into force). (Belgium, France, Germany, Italy, Luxembourg and the Netherlands signed the Treaty of Rome on March 25, 1957—see History.)

Member States: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK; note—Canary Islands (Spain), Azores and Madeira (Portugal), and French Guyana, Guadeloupe, Martinique and Reunion (France), which are legally part of EU Member States, are sometimes listed separately as territories forming part of the EU.

Government branches: Executive—European Commission; legislative—EU Council, European Parliament; judicial—Court of Justice of the European Communities, Court of First Instance.

Political parties: (in European Parliament) European People's Party-European Democrats (EPP-ED); Socialist Group (Party of European Socialists -PES); Group of the Alliance of Liberals and Democrats for Europe (ALDE); Independence/ Democracy Group (IND/DEM); Group of Greens/European Free Alliance (Greens/EFA); Confederal Group of the European United Left-Nordic Green Left (EUL/NGL); Union for Europe of the Nations Group (UEN).

Suffrage: determined by national legislation in the individual Member States.

Economy

GDP: (2006) $13.08 trillion.

Annual Growth Rate: (2007) 2.9%.

Per Capita Income: (2004) $29,900 (2006 est).

Inflation Rate: 1.9% (2007 est.).

Natural Resources: iron ore, arable land, natural gas, petroleum, coal, copper, lead, zinc, hydropower, uranium, potash, fish.

Agriculture: Products—wheat, barley, oilseeds, sugar beets, wine, grapes, dairy products, cattle, sheep, pigs, poultry, fish.

Industry: Type—ferrous and nonferrous metal production and processing, metal products, petroleum, coal, cement, chemicals, pharmaceuticals, aerospace, rail transportation equipment, passenger and commercial vehicles, construction equipment, industrial equipment, shipbuilding, electrical power equipment, machine tools and automated manufacturing systems, electronics and telecommunications equipment, fishing, food and beverage process-ing, furniture, paper, textiles, tourism, media, financial services.

Trade: (2003) Exports—machinery, motor vehicles, aircraft, plastics, pharmaceuticals and other chemicals, fuels, iron and steel, nonferrous metals, wood pulp and paper products, textiles, meat, dairy products, fish, alcoholic beverages. Major markets—U.S., China, Japan, Switzerland. Imports—machinery, vehicles, aircraft, plastics, crude oil, chemicals, textiles, metals, foodstuffs, clothing. Major suppliers—U.S., China, Japan and Switzerland.

HISTORY

Following World War II, traditional European rivals sought to solidify peace by bringing their nations together under a common institutional structure. Influenced by his compatriot Jean Monnet, French Foreign Minister Robert Schuman officially tabled a plan on May 9, 1950 to pool French and German coal and steel production under an organization that would be open to other European countries. German Chancellor Konrad Adenauer supported this proposal, and six founding countries—Belgium, France, Germany, Italy, Luxembourg and the Netherlands—took an early step toward European integration by establishing the European Coal and Steel Community (ECSC) the following year.

After failing to establish a European Defense Community in the 1950s, the six countries then decided to set up a common market. With the entry into force of the Treaty of Rome in 1957, they created the European Economic Community (EEC), with an objective of liberating the movement of goods, capital, workers and services. (The European Atomic Energy Community (EURATOM) was also established at this time.) The Treaty of Rome established the basic institutions and decision-making mechanisms still in place in today's European Union. As of July 1, 1968, the EEC abolished customs duties between Member States on manufactured goods. New policies, including a common agricultural policy (CAP) and a common trade policy, were in place by the end of the 1960s.

The success of the European integration project during a period of steady economic growth in the 1960s set the stage for a first enlargement—the accession of the UK, Ireland and Denmark—in 1973. Further “deepening” of European integration followed: the Community acquired executive authority in social, regional, and environment policies. The benefits of economic convergence became more evident in the context of the 1970s energy crisis and financial turmoil, which led to the launch of the European Monetary System in 1979. In the same year, the first direct elections to the European Parliament (EP) took place. Previously, delegates from national parliaments had represented their country's legislative bodies at the EP in Strasbourg, France.

The Community further expanded southward with the accession of Greece (1981, the second enlarge-ment), followed by Spain and Portugal (1986, the third enlargement). These accessions led the EEC to adopt “structural programs” in order to reduce economic and social disparities among its regions.

During the 1960s and 1970s, the Community began to assert itself on the international scene with the conclusion of agreements with southern Mediterranean countries. Starting in 1963, the EEC signed four successive Lome Conventions, which guaranteed trading advantages and development aid for Member States’ former colonies in Africa, the Caribbean, and the Pacific (ACP).

World recession and internal disputes over Member States’ financial burdens gave way, from 1985 onward, to renewed efforts for economic integration, enshrined in the 1985 “Single European Act” (SEA) and marked by the 1992 “Single Market Project.” The SEA set January 1, 1993 as the date by which an internal single market was to be established and, by extending the practice of majority voting rather than unanimity in the EU Council, gave Community institutions the means of adopting the 300 Community-wide Directives required to abolish the remaining barriers and obstacles to intra-Community trade. In 1995, the Community entered into the “Barcelona” partnership with twelve southern Mediterranean countries. The partnership, reinforced by agreements on social, cultural, and human cooperation, was intended to lead to a free-trade area.

The collapse of the Berlin Wall and German unification prompted Member States to negotiate the 1992 Treaty on European Union (the “Maastricht Treaty”). In addition to establishing the European Union, the Maastricht Treaty set an ambitious program of further integration: establishment of Economic and Monetary Union (EMU) by 1999 (part of the “First or 'Community’ Pillar”), setting up of a Common Foreign and Security Policy (CFSP) (“Second Pillar”); and cooperation on Justice and Home Affairs (JHA) (“Third Pillar”). Shortly thereafter, in 1995, Austria, Finland and Sweden joined the EU—the fourth enlargement.

Signed in 1997 and entering into force on May 1, 1999, the Amsterdam Treaty partially streamlined the EU institutional structure. Its most significant effects were: (1) to transfer aspects of Justice and Home Affairs policy to the Community Pillar, enabling the Commission to propose decisions to be taken by the EU Council by qualified majority voting instead of by consensus, and (2) to establish a High Representative for the CFSP (who also serves as Secretary-General of the Council Secretariat). Ten countries in Central and Eastern Europe and Cyprus began accession procedures in 1997, followed by Malta. The prospect of eastward enlargement raised significant resource concerns and prompted the adoption in March 1999 of the “Agenda 2000” package, which covered amendments to the CAP and EU structural policies, as well as a budgetary framework through 2006.

In May 1998, EU heads of government officially designated eleven Member States eligible to adopt a single currency. Greece initially did not qualify, and Sweden, the UK and Denmark “opted out.”On January 1, 1999, the euro became the official currency of the EU, and the European Central Bank (ECB) put euro notes and coins into circulation on January 1, 2002. Today, thirteen countries use the euro: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain.

Streamlining the size and procedures of EU institutions to make the expanded EU more efficient was also an aim of the 2003 Treaty of Nice. A year later, in May 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the EU, bringing total membership to 25. In 2007, Bulgaria and Romania joined the EU, which currently stands at 27 members. Formal Candidate countries currently include Turkey and Croatia, as well as the Former Yugoslav Republic of Macedonia (FYROM).

In October 2004, Member States signed an EU Constitutional Treaty in Rome, intending that it take effect on November 1, 2006. French and Dutch voters rejected the treaty through referenda in 2005, thereby suspending the ratification process. A new effort, undertaken in June 2007, calls for the creation of an Intergovernmental Conference to form a politcal agreement, known as the Reform Treaty. In contrast to the Constitutional Treaty, the Reform Treaty would amend existing treaties rather than replace them. The IGC approved the new reform treaty, called the Lis-on Treaty, in October 2007. The Lis-on Treaty must be ratified by all 27 national Parliaments. So far, only Ire-and has indicated that it is constitutionally bound to hold a referendum. The Lisbon Treaty would ideally streamline the decision making process of the EU and abolish the rotat-ng Presidency of the Council, replacing it with a more permanent President of the Council. The Lisbon Treaty would also combine the role of the High Representative for Common Foreign and Security Policy, currently Javier Solana, and the EU Commissioner for External Relations, currently Benita Ferrero-Walder, into a single position, in an effort to combine the face and the purse strings of European foreign policy.

MAJOR INSTITUTIONS

The European Commission

The role and responsibilities of the European Commission place it at the center of the EU's decision-making process. Acting as the EU's policy and executive engine, the Commission is composed of 25 Commissioners, one from each Member State and is supported by a substantial staff located primarily in Brussels, Belgium. In matters relating to economic integration (“First or ‘Community’ Pillar”), only the Commission has the right to propose legislation for approval by the EU Council and European Parliament. As “guardian of the Treaties,” the Commission ensures that EU laws are applied and upheld through-out the EU, prosecuting Member States and other institutions for failing to follow treaty precepts or other-wise apply Community law. The Commission has full authority to enforce Community competition policy, and its policing of implementation of Community legislation preserves the integrity of the EU single market. The Commission likewise manages and develops the Common Agriculture Policy (CAP), implements the budget, and represents the European Community in its areas of competence, notably including international trade negotiations.

The Commission President is appointed by agreement of the EU heads of government and is subject to approval by the European Parliament. Commissioners serve for a renewable five-year term. New Commissioners are identified by Member State governments in consultation with the President-designate of the Commission and are normally put in place at the beginning of the term of the Commission President. The entire Commission must be confirmed as a collective whole by the European Parliament before its formal appointment by common accord of EU governments.

The European Council

The European Council brings together EU heads of government and the President of the European Commission; foreign ministers of Member States also participate. Finance ministers are normally included when the leaders discuss questions related to EMU and the economy. The European Council meets at least twice a year, usually quarterly, at the end of each Presidency, to review major EU projects, set guidelines for policies and provide necessary guidance. The Presidency of the Council rotates every six months among EU Member States (January-June; July- December). Its role has become increasingly important with the expansion of EU responsibilities and competencies, leading member states to coordinate their Presidencies in troika formations. A ‘troika’ consists of the current President of the Council, along with the outgoing and incoming Member States. The Presidency organizes and presides over the meetings of the European Council and EU Council (ministerial) meetings, drafts compromises, and seeks solutions to problems submitted to the European Council.

Council of Ministers

The Council of Ministers of the European Union (the “EU Council”) is the body in which representatives of the individual Member State governments, usually ministers, legislate for the EU, set its political objectives, coordinate national policies and resolve differences among their governments and with other EU bodies. Legally speaking, there is only one Council, but it meets in nine different formations, depending on the matters on its agenda. Foreign ministers usually meet at least once a month in the General Affairs and External Relations Council (GAERC), which deals with major foreign policy issues and plays a coordinating role. Ministers for the Economy and Finance (ECO-FIN) and ministers responsible for agriculture also hold monthly meetings Ministers for Justice and Home Affairs (JHA) hold regular meetings to coordinate policies within their competence.

The Council holds formal sessions in its Brussels headquarters, except in April, June and October, when all sessions take place in Luxembourg. Most formations of the Council also meet informally (tasking no legally binding decisions) in the country holding the EU Presidency, usually once in the course of the Presidency^’s six-month term. The most prominent of these informal meetings is the so-called “Gymnich” meeting of foreign ministers, named for a town in Germany where the first such meeting took place.

The Council takes most decisions under the Community Pillar by qualified majority voting (QMV) but endeavors to reach the broadest possible consensus before approving legislation. Unanimity is required for a number of specific areas related to economic integration (e.g. taxation), constitutional matters such as amendments to the treaties, the launching of a new common policy, the accession of a new Member State, and matters falling within the EU's Common Foreign and Security Policy, European Security and Defense Policy, and aspects of law enforcement and judicial cooperation. The number of votes cast by each Member State when the EU Council votes by qualified majority voting was determined by the Nice Treaty and roughly correlates to the size of its population.

The European Parliament

Members of the European Parliament are directly elected by EU citizens for five-year terms; elections follow national election procedures. Members do not sit in national delegations; rather, they sit in groups according to political affiliation (including Socialists, Christian-Democrats/Conservatives, Liberals, Greens, etc.).

Parliament's powers have gradually grown with the entry into force of the Single European Act (1986), the Maastricht Treaty (1993) and the Treaty of Amsterdam (1999). Parliament shares decision-making power on an equal footing with the Council in many areas under the Community Pillar to which the “co-decision procedure” applies. The European Parliament is one of the two branches with budgetary authority—the Council is the other. The signature of the EP president brings the overall EU budget into effect.

The European Parliament also plays a role in the process of selecting the President and other members of the Commission. The European Council's nomination of the President is subject to approval by the Parliament. The EP holds U.S.-style public hearings of Commission nominees before taking a formal vote to approve the nomination of the Commission as a body. Parliament has the power to censure the Commission, but the Treaties do not allow for the dismissal of individual Commissioners by Parliament.

The European Court of Justice

The European Court of Justice (ECJ) ensures uniform interpretation and application of both the Treaties establishing the European Communities and the secondary legislation and other law adopted under their authority. To enable it to carry out that task, the Court has wide jurisdiction to hear various types of cases. For example, the Court has the authority to hear and issue binding judgments in lawsuits that seek to annul a law adopted by the EU, to compel an EU institution to act, or to require that a Member State comply with EU law. The ECJ may issue clarifications of EU law (in response to a request for a preliminary ruling from any Member State court) and hears appeals on legal questions arising out of cases at the Court of First Instance. The ECJ currently has 25 justices and eight advocates-general, who are appointed by common accord of the governments of the Member States and who hold office for six-year renewable terms.

U.S.-EU RELATIONS

The United States and the EU are important partners who maintain a robust agenda of cooperation in areas such as the Middle East, Balkans, Ukraine, Central Asia, and Africa.

In pursuit of Middle East peace, the United States and the EU cooperate, with the United Nations and Russia, in the “Quartet.” The EU has made significant contributions to the goal of promoting good governance, democracy, and strong civil societies throughout the Middle East. The United States and the EU also work together in promoting reform throughout the Middle East.

The United States and EU share a commitment to a free and democratic Iraq. The United States and EU supported preparations for Iraq's January 2005 elections and are cooperating to support Iraq's continuing political transition. The United States and EU co-hosted an International Conference on Iraq in June, 2005 in Brussels that marked the creation of a new international partnership to support the Iraqi Transitional Government.

In the Western Balkans, the United States and the EU are working together to strengthen democracy, ensure stability, and promote the region's integration into Euro-Atlantic structures, and are urging all parties to meet their obligations to cooperate with the International Criminal Tribunal for the Former Yugoslavia. The United States and EU also cooperate closely in the process intended to culminate in resolving Kosovo's future status.

The United States and the EU share a commitment to promoting democracy throughout Eurasia. The United States and the EU cooperated closely during the presidential election campaign in Ukraine, and especially following the flawed November 2004 second-round vote. In Afghanistan, the EU is a close partner with the United States in supporting democratic development and reconstruction. A combination of NATO security forces and EU civilian rule of law assistance are contributing to the stabilization of a democratic Afghanistan. Most notably, in 2003 the EU pledged $1.3 billion to Afghanistan over a five-year period to support reconstruction and development.

The United States and the EU cooperate on many African issues, including supporting efforts by the African Union to restore peace in the Darfur region of Sudan. The United States welcomed the EU's peacekeeping mission in Africa's Great Lakes region and supported its joining the Tripartite Commission as an observer. The United States consults regularly with the EU on assistance programs, including efforts to combat HIV/AIDS throughout Africa.

ECONOMY

The institutions of the European Union were originally created to oversee the operation of the several economic communities that later became the Single European Market. Even as the EU's political integration has continued, the area of greatest integration has always been in the economic sphere: goods, capital, and labor move freely between Member States (with some exceptions), businesses in all Member States are increasingly subject to common basic rules, and thirteen of the 27 Member States use a common currency, the euro. The twelve euro-area countries share a common monetary policy administered by the European Central Bank in Frankfurt, Germany. The EU strives to eliminate internal barriers to the free flow of goods, services, labor, and capital, and to promote the overall convergence of living standards. Internationally, the EU aims to strengthen Europe's trade position and capitalize on the political and economic leverage that a large, unified market brings.

Growth

The EU is the world's largest economic area (the U.S. is second) with a 2006 GDP of $13.08 trillion; however, growth in many of the EU's Member States in the recent past has been slow. Between 2001 and 2003, the overall growth rate dropped from 1.8 percent to 1.0 percent. The EU economy staged a modest, short-lived recovery in 2004, and increased to 3.2% in 2006. Within the euro area, growth varies as much as 4.5 percentage points between the fastest and slowest-growing economies. In 2005, many of the EU's largest economies, including Germany, France and Italy, will grow by less than two percent. Outside the euro area, growth is forecast to remain strong, particularly in the Central and Eastern European countries that joined the EU in May 2004.

In spring 2000, the EU committed to a ten-year strategic goal of transforming the EU into a more competitive, knowledge-based economy capable of sustaining higher levels of growth. Focusing on labor market reform, macroeconomic and fiscal policy, and promotion of e-commerce and entrepreneurship, the EU's “Lisbon Agenda” was an attempt to stimulate growth while remaining committed to the EU social model. Some suggest that it has so far failed to achieve its goals in large part because national governments (which retain authority over employment policy, immigration, large public sector workforces, entitlement programs and pensions) have not completed the necessary reforms. With euro area unemployment at 8.6 percent, generous social programs continue to strain national economies. The European Commission re-launched the Lisbon Agenda in March 2005, promising three percent growth and six million new jobs by 2010. The revamped strategy focuses on developing political consensus within Member States to make the changes necessary to complete elimination of barriers in the internal market, reduce the regulatory burden on business, improve labor market flexibility, provide incentives to work and increase investment in human capital.

Fiscal and Monetary Policy

Introduced in 1999, the euro is currently the official currency of thirteen of the 27 EU Member States. United Kingdom, Denmark and Sweden chose to retain their national currencies, and newer EU members have yet to adopt the euro. Prior to the euro's launch in 1999, national currency exchange rates of countries intending to join the euro were fixed within an Exchange Rate Mechanism. Following the January 2002 introduction of euro notes and coins into general circulation, national currencies were removed from circulation. Each of the euro area countries agreed to abide by a shared fiscal policy rule book known as the Stability and Growth Pact (SGP). This agreement generally obliges national governments to limit government budget deficits to 3 percent of GDP and established a target debt-to-GDP ratio of below sixty percent. Although enforcement actions have been forgiving—France and Germany, for example, avoided sanctions despite missing SGP targets—countries violating the SGP are technically subject to sanctions by the European Commission. As of March 2005, national governments have been granted budget leeway to achieve structural reforms and to combat prolonged stagnation, negative growth or other factors, such as the cost of German reunification or state pensions. The revised standards still require deficits to remain close to the targets; they may only temporarily exceed the three percent limit. The ten Member States that joined the EU in May 2004 may adopt the euro after complying with the SGP targets and meeting other applicable criteria.

The euro area's monetary policy is set by the European Central Bank (ECB), which must devise a monetary policy to accommodate a wide range of domestic policies and economic conditions within euro area Member States. The Treaties require that the ECB's primary objective be to maintain price stability (i.e., to keep inflation low). Euro-area national governments have sometimes criticized the ECB for guarding against inflation at the expense of interest rate flexibility that could enable struggling economies to gain traction. The ECB's consistent overnight interest rate of two percent has been credited with creating favorable conditions for growth in Spain and Ireland, but has been blamed for hindering growth in France, Germany, Italy, and Portugal.

Trade

The EU is the world's largest exporter of goods and services. In 2006, excluding internal EU trade, the EU exported $1.33 billion worth of goods to non-EU countries, compared to $987 billion in 2003. The EU's exports grew rapidly between 1996 and 2000 but have grown more slowly since. Except for 2002, the EU as a whole has posted a trade deficit every year since 1999; it was $62 billion in 2004. The EU is a major exporter of chemicals, transport equipment, and industrial machinery. The EU has large trade deficits in raw materials and energy, and a small deficit in food and drink.

The U.S. is the EU's main trading partner by a wide margin. In 2006, the U.S. consisted of 13.8% of all imports to the EU. U.S. goods and services exports to the EU reached $283 billion in 2004, while U.S. goods and services imports from the EU totaled $388 billion. Asian economies such as Japan and China, however, account for an increasingly important share of EU trade. The EU's two-way merchandise trade with China grew to $223 million in 2004, while merchandise trade with Japan was $149 million. Internal trade between euro area and non-euro area countries was down one percent in the first quarter of 2005, but the EU's external trade was up four percent, particularly with Russia and Norway.

Member States have given almost exclusive authority to the EU to negotiate trade treaties that bind the Member States. The European Community (EC) is a full member of the World Trade Organization and plays an active role in the Doha Development Round to foster international trade in services and agricultural products. Bilaterally, the EC maintains framework agreements to facilitate trade flows with thirty-five countries worldwide, mostly elsewhere in Europe, in North Africa, and in the Middle East.

Foreign Direct Investment

The EU is both a major destination for foreign direct investment (FDI) and a major source of FDI. U.S. foreign direct investment in the EU totaled $83.3 billion in 2004; EU FDI into the U.S. totaled $46.6 billion. Following strong year-upon-year growth in the late 1990s, however, inward and outward flows of FDI have contracted since 2001. The EU is a net recipient of FDI from Japan, receiving $81 billion in 2003. Conversely, the EU is a net investor in Canada ($86 billion in outward investment in 2003), and China ($29 billion in out-ward investment in 2003). Growth of intra-EU FDI has increased rapidly in recent years and has increased much faster than FDI in non-EU countries.

The pattern of foreign investment by European firms reflects deep commercial ties with the United States. U.S. and EU businesses invest heavily and operate profitably on both sides of the Atlantic. U.S. affiliates in Europe accounted for 56 percent of the aggregate output of U.S. affiliates worldwide. European firms were the largest foreign investors in 44 U.S. states and the second largest foreign investor in the remaining six. Sales by U.S. affiliates in Europe totaled $1.5 trillion in 2002, more than double those of U.S. affiliates in the Asia/Pacific region. European affiliate sales in the U.S. were $1.2 trillion in 2002, more than three times the value of U.S. imports from Europe.

Intra-firm trade involving foreign affiliates is particularly important to the transatlantic trade and investment relationship. Approximately 58 percent of U.S. imports from the EU in 2004 involved trade between related parties, as did 30 percent of U.S. exports to Europe in 2003. This high level of intra-firm trade has contributed to the persistence of the U.S. trade deficit with Europe even as the dollar has lost value against the euro since 2002.

Budget

The EU's budget is essentially made up of Member State contributions. Equivalent to roughly one percent of the Member States’ combined gross national income (GNI), it will be approximately 129.2 billion in 2008. The UK receives a rebate on its contribution. In June 2005, the EU failed to agree on a budget plan for 2007 through 2013, due in part to a disagreement between the UK and France over the persistence of the UK budget rebate and the funding of the Common Agricultural Policy (CAP). Costs attributable to the CAP constitute the EU's largest annual budget item, benefiting farmers across the EU, especially in France. Payments to net-recipient Member States, designed to reduce economic and social disparities among EU countries and regions, are another budget item which has become more contentious with the accession of ten new states poorer than the EU average.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

2007 U.S.-EU SUMMIT

April 30, 2007

General

The leaders of the United States of America and the European Union, met on April 30, 2007 in Washington to deepen the strategic partnership between the two entities. Some of the actions taken at that meeting are listed below.

The leaders adopted a framework on transatlantic economic integration which lays a long-term foundation for building a stronger and more integrated transatlantic economy, in particular by fostering cooperation to reduce regulatory burdens and accelerating work on key “lighthouse projects” in the areas of intellectual property rights, secure trade, investment, financial markets, and innovation. The leaders also reaffirmed a strong desire to reach a prompt agreement in the WTO Doha Development Agenda (DDA) negotiations that is ambitious, balanced and comprehensive and creates meaningful new trade flows in agriculture, industrial goods and services among and between developed and developing countries.

The leaders adopted a declaration on political and security issues, including commitments to concrete actions to strengthen liberty, prosperity, security, peace and human rights and address regional challenges, in particular regarding Kosovo, Afghanistan, the Middle East, Iraq, Sudan, Latin America, and efforts to combat terrorism and the proliferation of weapons of mass destruction, and to work towards visa-free travel for all EU and U.S. citizens by creating conditions by which the Visa Waiver Program may be expanded.

The leaders adopted a joint statement on energy security and climate change that underlines mutual interest in ensuring secure, affordable, and clean supplies of energy and tackling climate change. The leaders pledged to broaden and reinforce activities to improve energy security and reduce pollution and greenhouse gas emissions, while supporting economic growth.

The leaders welcomed the signing of a first stage Air Transport Agreement which is an historic advance in liberalizing transatlantic air traffic. This agreement will bring real benefits for consumers and airline companies on both sides of the Atlantic. The leaders reaffirmed a commitment to pursue, as a matter of priority and no later than 60 days after March 30, 2008, negotiations to conclude a second stage agreement in order to achieve further liberalization.

2007 U.S.-EU Summit Economic Progress Report

At the 2006 U.S.-EU Summit in Vienna, leaders committed to redouble their efforts to promote economic growth and innovation and reduce the barriers to transatlantic trade and investment by implementing all aspects of the 2005 Initiative to Enhance Transatlantic Economic Integration and Growth (2005 Economic Initiative). The U.S. endorsed the new Action Strategy for the Enforcement of Intellectual Property Rights, and agreed to build on progress of the High Level Regulatory Cooperation Forum and expand implementation of our Roadmap for U.S.-EU Regulatory Cooperation and Transparency. The U.S. pledged to intensify efforts to conclude a first stage Air Transport Agreement.

The U.S. agreed to reinforce our strategic energy cooperation to support diversification of energy sources and supplies, secure our energy infrastructure, promote market-based energy security policies, speed development of new lower-pollution and lower-carbon technologies, and accelerate investment in cleaner, more efficient use of fossil sources and renewable sources. The U.S. and EU agreed to conduct an annual strategic review of U.S.-EU energy cooperation. The U.S. and EU also agreed to establish a U.S.-EU High Level Dialogue on Climate Change, Clean Energy and Sustainable Development to build on existing initiatives in the areas of climate change, biodiversity loss and air pollution and to advance implementation of the G8 Gleneagles Plan of Action for Climate Change, Clean Energy and Sustainable Development.

The U.S. and EU welcomed progress in these areas and discussed ways to intensify efforts on intellectual property rights, innovation and removal of regulatory barriers to trade and investment at the second informal U.S.-EU Economic Ministerial in November 2006 in Washington.

This report notes areas of progress made over the past year to implement our multi-annual, broad economic program under the Economic Initiative, per our agreements on energy and climate and in other areas of transatlantic cooperation.

Key Accomplishments

After four years of negotiations, on March 2, the U.S. and EU concluded a comprehensive, first-stage Air Transport Agreement, which will create benefits for carriers, airports, workers, consumers, communities and economies on both sides of the Atlantic. The U.S. and EU have made significant progress on the implementation of the Roadmap for Regulatory Cooperation, including advancing the OMB-European Commission Dialogue on good regulatory practices, namely work on impact assessment, and advancing cooperation on pharmaceuticals, medical devices, automotive safety and consumer product safety. The U.S. and EU led negotiations on a substantial revision of the text of the WTO Agreement on Government Procurement (GPA), which was provisionally approved by the WTO Government Procurement Committee on December 8, 2006.

The U.S. and EU also made major strides in strengthening energy and climate cooperation, holding the first High Level Dialogue on Climate Change, Clean Energy and Sustainable Development (HLD), launching working groups on biofuels and energy efficiency, finalizing renewal of the U.S.-EU ENERGY STAR agreement, and holding the first annual review of our strategic energy cooperation, which examined shared geopolitical energy security goals, energy technology cooperation, and the potential for new work on biofuels, energy efficiency, carbon capture and storage, promotion of supply diversification, and cooperation to increase energy security in third countries.

Regulatory Cooperation

Since the June 2006 Summit, the U.S. has focused cooperation primarily on intensifying work on a broad range of sector-specific activities identified in the 2005 Roadmap for Regulatory Cooperation and Transparency and deepening the dialogue on good regulatory practices between the U.S. Office of Management and Budget (OMB) and the European Commission. Implementation of the Regulatory Cooperation Roadmap resulted in significant progress in a number of key areas. On pharmaceuticals, the U.S. Food and Drug Administration and the European Commission together with the European Medicines Agency intensified cooperation on vaccines, pharmacovigilance and counterfeit medications and both sides agreed to pursue a confidentiality arrangement to permit the sharing of regulatory information on medical devices and cosmetics. The U.S. National Highway Traffic Administration and the European Commission initiated a dialogue to streamline the adoption of global regulations, and agreed to promote a global regulation on electronic stability control systems, to increase auto safety. The U.S. Coast Guard and the European Commission agreed to a two-way alert system on unsafe marine equipment and to expand the product scope of the Mutual Recognition Agreement. The U.S. Consumer Product Safety Commission and the European Commission established a program for sharing information on recalls of unsafe consumer products. The High Level Regulatory Cooperation Forum, launched in 2006, developed a set of Best Cooperative Practices to guide regulators in the conduct of more effective collaboration. The OMB-European Commission Dialogue advanced its discussions among experts, including completion of a joint comparison of our respective impact assessment guidelines A more detailed report on specific progress on regulatory cooperation can be found at Joint Report on the Roadmap for US-EU Regulatory Cooperation.

Financial Markets

Given the consolidation underway globally and trans-Atlantically in financial markets, it is important to take steps where appropriate towards the convergence of regulatory standards around high quality principles. In this regard, work has continued to progress in various areas including: accounting and auditing, banking, insurance and securities. Since the U.S.-EU 2006 Economic Summit, both sides have continued to make significant progress under the U.S.-EU Financial Markets Regulatory Dialogue, begun in 2002, and in bilateral discussions between regulators. Positive developments included: the SEC's adoption of a new deregistration standard which provides significantly greater flexibility to EU and other non-U.S. companies to exit U.S. markets; constructive discussions of further steps toward implementation of Basel II on international capital adequacy standards, and proposals being considered by the National Association of Insurance Commissioners to revise reinsurance collateral requirements.

In addition, the Chairman of the U.S. Public Company Accounting Oversight Board (PCAOB) and the EU Internal Market and Services Commissioner agreed to work on furthering cooperation in auditor oversight. The goal is to move toward full reliance on each others’ oversight systems by 2009.

The SEC is in the midst of implementing a “roadmap” on the acceptance of IFRS without need for reconciliation to U.S. Generally Accepted Accounting Standards (GAAP) in the United States. Similarly, the EU will make a final decision on the acceptance of U.S. GAAP in EU markets by the end of 2008. The SEC hosted a roundtable on its “roadmap” in Washington to solicit the views of U.S. market participants on the acceptance of IFRS in U.S. markets in March 2007 at which Chairman Cox and Commissioner Charlie McCreevy gave opening remarks in support of further sustained progress in this area, and affirmed the goal of acceptance of IFRS and U.S. GAAP in both markets no later than 2009. The SEC is completing its review of the first set of filings by EU issuers using IFRS, and the EU is in a similar position with regard to the first full set of published financial statements using IFRS. A second review round of financial statements using IFRS will commence with filings due for submission to the SEC in the summer of 2007.

In January 2007, the SEC and the College of Euronext regulators signed a memorandum of understanding on cross-border stock exchange mergers. The MOU creates a structure for discussions on enhanced cooperation, particularly in light of NYSE/Euron-ext merger.

Energy Security and Climate Change

At the U.S.-EU Summit in June 2006, the U.S. agreed to reinforce strategic energy cooperation to support diversification of energy sources and supplies, promote market-based energy security policies, secure our energy infrastructure, speed development of new lower-pollution and lower-carbon technologies, and accelerate investment in cleaner, more efficient use of fossil sources and renewable sources. To monitor and guide this process, the U.S. agreed to conduct an annual strategic review of U.S.-EU energy cooperation. The United States and EU also agreed at the Summit to establish a High-Level Dialogue on Climate Change, Clean Energy and Sustainable Development (HLD) to focus on the nexus between climate, energy, and environmental cooperation. The United States and EU held the first HLD in Helsinki October 24-25, and strategic energy cooperation meetings in Washington October 26-27, to act upon our Summit commitments and further advance the 2005 G8 Gleneagles Plan of Action for Climate Change, Clean Energy and Sustainable Development. At the HLD the two sides committed to further cooperative work on promoting commercial deployment of clean coal and other technologies, promoting energy efficiency in transportation and buildings and appliances, supporting research and development of second generation biofuels, and developing a roadmap towards compatible biofuel specifications.

At the October 26-27 strategic energy cooperation meeting, participants produced workplans on biofuels and energy efficiency, agreed to explore cooperation on clean coal and carbon sequestration, and discussed collaboration to strengthen energy security policies in third countries such as China, India, and Ukraine. Both sides began to implement the biofuels and energy efficiency workplans and carry out specific activities regarding third countries.

Among specific undertakings, the U.S. and EU jointly finalized renewal of the U.S./EU ENERGY STAR agreement (December 28, 2006), reviewed our respective biofuels R&D agendas and examined opportunities for collaboration under the U.S.-EU Science and Technology Agreement (February 9, 2007), discussed progress during the Washington visit of the Head of private office of the European Commissioner for Energy (February 9), cosponsored with the International Energy Agency (IEA) a major conference on gas transit issues in South-eastern Europe and the Caucasus (February 14), held a second biofuels working group meeting (February 26), participated together with industry and NGOs in a joint EU-CEN conference on international biofuels standards (February 26-28), and began to exchange information on efficient buildings.

In the framework of the visit of the European Commissioner for Energy to the United States, we held the first strategic energy cooperation annual review on March 26 at which we discussed progress on our biofuels and energy efficiency cooperation, examined ways to intensify our work on clean coal and carbon capture and storage, energy security and diversification of energy supplies, and reviewed possibilities to work together to strengthen key third country energy security policies, particularly in Ukraine, the Caspian and Central Asia.

In addition, U.S. and EU climate experts met March 27 to work together on an implementation plan to continue to guide follow-through on the Helsinki HLD outcomes in the future and to begin to explore the broader principles that shape cooperation on climate and clean energy.

Intellectual Property Rights

The 2006 Summit endorsed the Action Strategy for the Enforcement of Intellectual Property Rights. In following up, the IPR Working Group has worked on a number of enforcement initiatives, most notably on customs cooperation, providing technical assistance to third countries, and addressing concerns in key countries, such as China and Russia, through closer policy coordination and information exchanges. The U.S. and EU diplomatic missions in Beijing and Moscow have intensified their cooperation on IPR and have encouraged implementation of effective measures to protect and enforce intellectual property rights. The EU and United States have also worked closely with IP right-holders to improve public-private cooperation on enforcement education, public awareness and business practices. In February 2007, the Working Group agreed to give greater attention to IPR problems in transhipment areas of Latin America, the Middle East, and Southeast Asia. In working on joint border enforcement initiatives, U.S. and EU customs officials have shared best practices and agreed to share enforcement information. The two sides have agreed to explore ways to use technology to increase the efficiency of information-sharing; details following the Summit will be at stopfakes.gov.

The EU and the United States agreed to strengthen cooperation on achieving harmonization in the patent area. In particular it was decided to work towards more streamlined patent systems through substantive patent law harmonization. Both the EU and the US should intensify their bilateral contacts to facilitate the success of the “Alexandria process.”

Innovation Initiative

At the 2006 Summit, the United States and EU agreed to further our cooperation on innovation and the impact of innovation on our economies. Over the past year the two sides have:

• concluded a workshop on metrics to better measure the impact of innovation on our economies;
• included two European Commission experts in the review of U.S. e-accessibility standards and guidelines for public procurement, and agreed that U.S. government experts will participate in the execution of the European Commission's mandate to the European Standardization Organizations on European accessibility requirements for public procurement of products and services in the ICT domain;
• hosted an EU delegation of innovation experts to study innovation policy in three states in the United States;
• held a full-day workshop on innovation policy in the United States, hosted by the Department of Commerce.

Services

After four years of negotiation, the United States and EU concluded a comprehensive, first-stage Air Transport agreement. The agreement significantly expands the potential for transatlantic travel and cargo, allowing U.S. and EU airlines to fly between any point in the EU and any point in the United States, with no restrictions on the number of flights, aircraft, routes, or pricing. It will create a new template for international aviation, removing decades-old restrictions on a sector integral to global commerce. This pro-growth, pro-competition, pro-consumer accord is a major breakthrough in transatlantic economic relations and a harbinger of what the United States and EU can accomplish working together to achieve market liberalization on an unprecedented scale.

European and American architectural professional organizations submitted to EU and US competent authorities a joint recommendation for a Mutual Recognition Agreement for Architects. The European Commission and the U.S., in cooperation with relevant regulators and professional associations, have begun to consider options to promote progress towards a mutual recognition arrangement in the field of architectural services in accordance with each side's legal systems.

Investment

At the 2006 Summit, the United States and EU recognized the importance of maintaining open investment regimes that can create new economic opportunities and build prosperity. Interests in an open investment climate were reaffirmed at the U.S.-EU Economic Ministerial in December 2006, and both sides agreed to have discussions on topics of mutual interests to address any remaining significant obstacles to investment flows between us.

Procurement

The United States and EU successfully led negotiations on a major revision of the text of the WTO Agreement on Government Procurement (GPA), which the GPA Committee provisionally approved on December 8, 2006. The United States and EU will continue to work together to complete market access negotiations and reach final agreement on the revision to the GPA. We will cooperate to expand membership in the Agreement, in particular to expedite China's accession to the GPA.

2007 U.S.-EU Summit Political Progress Report

The United States and European Union continue to put strategic partnership to work. During the past year, the U.S. and EU have concentrated on specific issues, and our effective dialogue—often in advance of policy formulation—has led to convergence on key issues. the U.S. and EU can identify genuine progress in several areas, including those targeted by the joint declarations adopted at the 2006 Summit.

Key Accomplishments—Regional issues

In a world of global threats and challenges our security and prosperity increasingly depend on an effective multilateral system. The United Nations Charter is an essential pillar for international relations, and the EU and the US will strive for a strong, credible and effective United Nations. Strengthening the United Nations and equipping it to fulfill its responsibilities is a joint priority.

The U.S. and EU have collaborated actively, including in Geneva, on priorities for the Human Rights Council, such as mandate review, agenda setting, universal periodic review and a Special Session on Sudan. We successfully cosponsored UN 3rd Committee resolutions on Belarus, Burma, Iran and North Korea. The U.S. has supported the active participation of the European Community in various bodies of the Peace Building Commission (PBC).

Building on strong collaboration over the previous year, the U.S. and EU agreed on specific actions to undertake to promote peace, human rights, democracy and the rule of law worldwide.

There has been a period of rising tension in the Middle East, including the war between Israel and Lebanon in summer 2006, Iran s continued defiance of the international community in pursuit of its nuclear program and continuing Iranian and Syrian interference in Lebanon and Iraq. But there has also been promising change with the formation of a Palestinian National Unity Government, the relaunch of the 2002 Arab Peace Initiative and security and reconstruction developments in Iraq. The United States and the European Union have held regular consultations, in particular within the United Nations framework and the Quartet, on the evolving situation.

The U.S. welcomed the EU initiative to launch, under the auspices of the Quartet, a Temporary International Mechanism (TIM) to provide direct emergency assistance to the Palestinian people and the 240 million contribution so far into TIM from the European Union. The U.S. supported Palestinian President Abbas efforts to form a Palestinian government whose policy and actions reflect the Quartet principles and will continue to closely evaluate the performance of the new Palestinian National Unity Government in that respect. The U.S. also worked to promote implementation of the Security Sector Transformation (SST) plan, including implementation of the November 2005 Agreement on Movement and Access through the EU Border Assistance Mission to the Rafah crossing, and efforts to improve the Karni/al-Mintar commercial crossings between Gaza and Israel.

The United States and the European Union helped bring an end to the summer 2006 war between Lebanon and Israel, aided in particular by substantial European Union member state contributions to the UNIFIL peacekeeping force in Lebanon. The U.S. and EU worked together to provide significant humanitarian assistance to those affected by the conflict, enabling the bulk of the hundreds of thousands displaced to return to their homes and begin to rebuild their lives. The U.S. and EU welcomed the $7.6 billion in pledges of international assistance for Lebanon made at the Paris III donors conference in January 2007, including $770 million in loans and grants from the United States and $2.9 billion in loans and grants from the European Union ($535 million from the European Community budget). We called on Syria to end its interference in Lebanon and urged full implementation of UN Security Council resolutions 1680 and 1701. We urged Syria to end destabilising activities and play a more constructive role in Lebanon, Iraq, and the Palestinian territories, as well as to reconsider its relations with Iran; we issued statements calling for the release of Syrian political prisoners.

The United States and the European Union have urged the government of Egypt to proceed with the fundamental political and constitutional reforms it announced. For example, we have specifically called on the Egyptian Government to fulfill the aspirations of the Egyptian people for democracy and meet the standards of openness, transparency, and reform that they have set for themselves. U.S. bilateral assistance aims to strengthen Egyptian efforts at political and economic reform. The EU, in its joint European Neighborhood Policy Action Plan with Egypt, has made greater participation in political life, an enhanced role for civil society, and greater respect for human rights and fundamental freedoms a policy priority. Support for the implementation of the Action Plan is a main priority of the EU s financial and technical assistance to Egypt.

The United States and the European Union have worked closely together at every stage to address the concerns raised by Iran's nuclear program. The U.S. and EU offered Iran a set of far-reaching incentives to cease its domestic uranium enrichment activity. Given Iran s rejection of that offer, we successfully led efforts in the UN Security Council to pass resolutions 1737 and 1747, which call for Iran to suspend uranium enrichment and negotiate on the basis of the aforementioned incentives package, and which impose financial, travel, and other restrictions to pressure the Iranian regime to comply with its international obligations. The U.S. and EU have implemented those resolutions, and have taken additional steps to further encourage Iran to cooperate with the international community.

To support the economic reconstruction of Iraq, 19 European Union members have concluded agreements to forgive from 80% (Paris Club terms) to 100% of Iraqi official debt, and the United States forgave 100% of its outstanding official debt to Iraq. The United States and European Union actively engaged in ongoing support for the Iraq Compact process. The United States and twenty-five of 27 EU members have established relations with the Iraqi Government, and 16 (along with the European Commission) have set up resident missions. Total U.S. reconstruction assistance since 2003 approaches $25 billion, while the European Union and its member states have provided a total of 13.6 billion including debt relief—to date and will make further contributions in support of the Iraqi people and the International Compact for Iraq.. The European Union is also conducting a successful Rule of Law training program called EUJUST LEX for Iraqi officials.

The United States and European Union continue to be among the primary contributors to Afghanistan reconstruction, through participation in the Joint Coordinating and Monitoring Board and in support of the Afghan government. At the January 26 NATO informal foreign ministerial, the United States announced a two-year supplemental request for $11.8 billion for Afghanistan. In December 2006, the European Union completed its pledge to contribute 1 billion for Afghan reconstruction between 2002 and 2006. For the same period, the combined contribution from the EU budget and by EU Member States to Afghanistan reached 3.7 billion. The EU s new budget includes another 610 million for 2007-2010. The EU has been a main donor to the Afghan National Police, helping cover the salaries of some 62,000 police officers with a contribution of 135 million so far. In February, the EU General Affairs and External Relations Council approved the deployment of a police training mission to Afghanistan that will initially include 160 officers and other experts. The EU police mission will build on the efforts of key partners that have trained extensively over 18.000 officers and non-commissioned officers over the past few years. In December 2006, the European Union approved 10.6 million for the support of provincial governance projects by Provincial Reconstruction Teams (PRTs) led by or with considerable participation of EU member states. The U.S. maintains about 500 police trainers and advisors around the country, in addition to U.S. military police. The United States has trained more than 70,000 members of the Afghan National Police since the fall of the Taliban. Over 50,000 members of the Afghan National Police have completed specialized training courses in areas such as firearms, crowd control, investigative techniques, and domestic violence. The United States has also trained more than 4600 Afghan National Auxiliary Police in ten-day courses to provide them essential skills as they help the Afghan National Police fight an urgent battle in southern and eastern Afghanistan against Taliban fighters. As part of a major pay and rank reform program, the United States and international partners are helping the Afghan National Police leadership build a merit-based leadership and discipline structure to assure that the police become widely respected public servants and officers of a society based on the rule of law.

The United States and European Union have consistently supported UN Special Envoy Ahtisaari s approach to determining the future status of Kosovo and his timeline for successfully concluding the Kosovo status process. The U.S. and EU are committed to working towards furthering NATO-EU contacts to ensure smooth planning for Kosovo s post-status security. Pending a status resolution, The U.S. and EU have worked within the international community to support UNMIK efforts under UNSCR 1244 to build stability and meaningful self-government in Kosovo. Having cooperated through the Stability Pact for South Eastern Europe since 1999 to build peace and prosperity in the region, the US and EU have been working together closely to ensure the successful transition of the Stability Pact framework to regional ownership under the auspices of the South Eastern European Cooperation Process (SEECP). The U.S. and EU have been united in the view that successful resolution of Kosovo's status will help accelerate the region's Euro-Atlantic integration.

The U.S. and EU have been engaged with Russia on many international issues, such as energy security, relationships with neighboring countries, and cooperation in multilateral fora. The U.S. and EU have participated in dialogue with Russia on many political matters, including democratic freedoms and the need for the application of the rule of law, an independent judiciary, human rights, a free and independent media, and a strong civil society.

The U.S. and EU have welcomed and supported democratic and economic reforms in Ukraine, and have assisted its efforts to achieve better energy efficiency and effective energy independence.

The U.S. and EU have closely cooperated on Belarus to support democratization, local civil society and other democratic forces. The U.S. and EU urged the authorities of Belarus to release all political prisoners and to stop all human rights abuses. To encourage positive political change on behalf of the people of Belarus, The U.S. and EU have imposed further travel restrictions and targeted financial sanctions against members of Lukashenko s regime. The U.S. and EU have issued coordinated statements on political arrests, local elections, energy security and persecution of independent NGOs.

The U.S. and EU have achieved increased cooperation and a unified approach in our efforts towards peaceful solutions of separatist conflicts in Moldova and the South Caucasus, which would assure these states territorial integrity within internationally recognized borders. The U.S. and EU have been cooperating inside the Minsk Group, jointly promoting the set of Basic Principles.

Together the U.S. and EU have supported democratic and economic reforms, human rights, freedom of expression, and the rule of law in Central Asia. We have promoted regional cooperation to advance security, prosperity and stability. We have shown our support for strengthening democratic institutions in Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan. We worked with the government of Uzbekistan to enter into an effective dialogue on human rights, and we have sought to establish an independent international investigation into the tragic events of Andijon.

Throughout the year, we have consulted on Latin America, and in this context also on Cuba, including the prospect for democracy in the future. In mid-2006, the EU renewed its Common Position on Cuba. Meanwhile, the United States released the second report of the Commission for Assistance to a Free Cuba (CAFC). On Haiti, we have worked together to support a strong MINUSTAH presence in Haiti, to maintain high-levels of international assistance and financial support for Government of Haiti development priorities, and to improve donor coordination for the delivery of humanitarian assistance.

The United States and European Union members worked closely together to ensure adoption of UNSCR 1706, and to make progress on transition to a more robust hybrid UN/AU peacekeeping force, as major steps towards ending the atrocities in Sudan. As demonstrated by the high-level U.S. and EU participation in the February 2007 Liberia Partners Forum, we are committed to ensuring the success of important infrastructure, community reintegration, and good governance initiatives in Liberia. Working with the UN and other key donors, the European Union and United States played an integral role in helping the people of the Democratic Republic of Congo conduct successful presidential elections, including with the EU s successful ESDP mission to help ensure stability during the elections. The U.S. and EU joined in supporting the renewal of the MONUC mandate, due to expire on April 15. The targeted restrictive measures have exerted pressure on regime leaders responsible for the critical political and economic situation in Zimbabwe. The U.S. and EU have consulted extensively on Somalia, and provided substantial resources to help support political dialogue between the Transitional Federal Government (TFG) and key Somali stakeholders, development of effective governance and security institutions, and rapid deployment of African peace support mission. The U.S. and EU are also seeking to coordinate our efforts in terms of support to African Union capacity-building including for peace keeping and further development of the African Standby Force.

The United States and European Union successfully cosponsored 3rd Committee (human rights and social affairs) resolutions on Burma and the DPRK. The European Union used the ASEM Summit to press the Burmese regime to adopt a more inclusive political process and introduce a timetable for democratic reform. The U.S. and EU continue intense exchanges on Burma at all levels.

Together the US and EU continued to support global efforts to mitigate the impacts of important infectious diseases and through the Global Fund to provide financing in support of developing countries efforts to fight the spread of HIV/AIDS tuberculosis, malaria, and polio.

Security

The U.S. Coordinator for Reconstruction and Stabilization has consulted with EU interlocutors in Brussels and Berlin. In addition to high-level consultations, we have organized technical consultations to implement coordination on cross-training, information sharing, and other areas of crisis management. The European Union participated as an observer in Multinational Experiment 4 (MNE-4) crises simulations led by U.S. Joint Forces Command, and is currently participating as an observer in MNE5.

The United States and (European Union s Judicial Cooperation Unit) Eurojust concluded an agreement to facilitate cooperation, coordination, and the exchange of information between investigators and prosecutors, including the posting of a U.S. Liaison Prosecutor to Eurojust. The U.S. and EU continue to make progress toward ratification and entry into force of the U.S.-EU Extradition and Mutual Legal Assistance Agreements and the implementing instruments between the U.S. and EU member states.

Continuing to take steps to strengthen the security of our borders, expert-level discussions have begun between the United States and the European Union on mutual recognition of the EU Authorized Economic Operator provisions and the U.S. Customs-Trade Partnership Against Terrorism. The U.S. and EU have produced a Joint Threat Assessment for Weapons of Mass Effect and will work to disseminate this to the World Customs Organization for its members. A pilot project at the Port of Southhampton has been undertaken under the U.S. Secure Freight Initiative to further improve detection and response capabilities for high risk container traffic.

The United States and European Union concluded an interim agreement on the processing of Passenger Name Record data in October 2006. Recognizing a mutual interest in the alignment of our aviation security efforts, we are studying the comparability of our airport assessment programs.

The United States and European Union continued to improve procedures for information sharing and pro-actively implement Financial Action Task Force s Special Recommendations, including by enforcing cash declaration regulations for travelers and by engaging private sector financial institutions to develop partnerships to improve implementation of asset freeze measures. The U.S. and EU continued to exchange information and best practices in expert-level discussions. Conferences on terrorism finance and money laundering issues were held with sanctions implementers (September, 2006 and April, 2007), analysts (October, 2006), and prosecutors and investigators (December, 2006). The U.S. and EU are working together to develop a public outreach statement on the issues of fairness and transparency in the implementation of sanctions regimes.

The U.S. and EU have engaged in detailed discussions on the legal framework governing the common fight against terrorism, and have agreed that the fight against terrorism must be conducted with respect to the rule of law and in conformity with international law including international human rights law, international refugee law and international humanitarian law.

In critical efforts to stop the proliferation of weapons of mass destruction (WMD), we continued to coordinate and strengthen our individual and collective efforts to implement the disarmament and nonproliferation regimes and reaffirmed the value of continuing consultations in this area. These consultations have continued in a variety of ways and fora, including the dialogue on verification and compliance that was established between the U.S. and EU at the 2005 Summit, endorsed at the 2006 summit, and continues to be productive. The last such meeting was held in Brussels last Fall, and yet a third meeting has been scheduled in early June of this year as the U.S. and EU continue to discuss verification and compliance challenges and identify opportunities for joint initiatives.

The United States and European Union affirmed their commitment to strengthening the Nuclear Nonproliferation Treaty (NPT). Both have shown their full support for the Additional Protocol (AP). The EU AP is in force and the U.S. recently passed implementing legislation.

29 April 2007 marked the 10th anniversary of the Chemical Weapons Convention, a unique treaty that requires irreversible destruction of an entire class of WMD under international verification and within specific timelines. The United States and the European Union welcome progress that has been made in the destruction of CW-stockpiles and recommit themselves to strengthening the treaty and working towards fulfillment of all treaty obligations by all states parties. We worked to make the UN Security Council resolution 1540 an effective tool to prevent the proliferation of dangerous materials and WMD to both state and non-state actors. In close co-operation with the 1540 Committee, we have supported full implementation of the Resolution including in the context of OSCE and ARF.

The United States and European Union worked together to obtain the UN Security Council s unanimous adoption of UNSCRs 1718, 1737, and 1747 which require the Democratic People s Republic of Korea (DPRK) and Iran, respectively, to abide by the will of the international community. We took actions to implement the requirements set out in the resolutions to ensure we did not aid DPRK and Iran nuclear and ballistic missile programs through supply, financing, or other support.

Due in large measure to U.S. and EU cooperation, the Sixth Biological Weapons Convention (BWC) Review Conference in November 2006 was a success, with parties agreeing to an intersessional work program 2007— 2010 which will focus in 2007 on ways and means to enhance national implementation, including enforcement of national legislation and regional cooperation. The Parties also agreed to establish an Implementation Support Unit to provide administrative support as well as to prepare documentation and serve as a clearinghouse for reporting of confidence building measures, including a secure website on CBMs.

The U.S. and EU also worked together to promote consensus within the CD on a work program, in particular on commencing negotiations in the Conference of Disarmament of a Fissile Material Cut-Off Treaty banning the production of fissile material for use in nuclear weapons.