- The Washington Times - Friday, February 20, 2009

NEWSMAKER INTERVIEW:

The European Union is using “creeping regulation” to undercut the overseas competitiveness of American businesses that range from software companies to chicken farms, the recently retired top U.S. diplomat for Europe said Thursday.

“They’re trying to get the world to dance to their tune and follow their regulations,” C. Boyden Gray told reporters and editors of The Washington Times. “They think they will gain a competitive advantage over us.”

Mr. Gray, who served as President George W. Bush’s ambassador to the European Union from 2006 until last month, said he also is worried that U.S. policy toward Europe is too centered on the NATO military alliance, and he urged American and European leaders to consider creating an equally powerful body to address the economic, energy and climate interests of their two continents.

“Today, issues have migrated from being primarily military to being primarily economic,” he said, adding that NATO is not equipped to deal with energy issues or climate problems.

“You need a forum for public discussion of economic and energy-related issues,” Mr. Gray said. He urged the United States and the European Union to significantly expand the clout of the Transatlantic Economic Council, which was formed in 2007 based on a proposal by German Chancellor Angela Merkel.

Referring to software firm Microsoft, Mr. Gray said, “All the high-tech-dominant cases are now brought in the EU. The U.S. courts are not very hospitable to these cases,” he said, adding that there is hardly ever a European company among the complainants.

However, the European Commission, which recently ruled against Microsoft’s practice of combining its Internet Explorer browser with its Windows operating system, began its investigation a year ago after receiving a complaint from Norwegian browser maker Opera Software ASA.

Mr. Gray also detected a “protectionist tint” to European chemical regulations, which reduced U.S. exports of cosmetics to Europe.

Another European regulation rejected the use of chlorine to wash U.S. chickens, which are no longer exported to Europe, he said. Europeans use chlorine to wash medical instruments, purify water and clean fruits and vegetables, he said, but their regulations ban chlorine-washed chickens because the process was bad for the environment - even though it would have been America’s environment, not Europe’s, that was being damaged.

European regulations for airline emissions amount to a backdoor effort to compel airlines and their suppliers, including Boeing Co., to pay for European inefficiencies in its air traffic control system, he said.

The United States and the European Union enjoy “a very close relationship that ought not get compromised by this creeping regulation,” Mr. Gray said.

Mr. Gray noted that Europe has been hammered by the worldwide recession. Germany is suffering a major contraction, Britain’s housing bubble was worse than America’s and Eastern Europe was losing its export markets as global demand plunged.

“I’m not saying the EU will unravel,” Mr. Gray said, “but the center is going to weaken a bit.” He expressed concern over restrictions involving the free movement of goods, services, labor and capital.

Europe’s failure to develop a coherent energy policy hasn’t helped its economic situation, he said. As a result, he said, Europeans have “subjected themselves to some leverage from the Russians, which is not good for their economies.”

The Russia-related energy problem is “very, very serious,” Mr. Gray said. To address it, he said, Europe needs to build pipelines that can deliver natural-gas reserves directly from the Caspian Sea to Europe, bypassing Russia. Europe also must integrate its energy markets much better so it “do to Russia’s Gazprom natural-gas monopoly what [the EU] did to Microsoft.”

Mr. Gray did not expect the European role in Afghanistan to increase in the short run.

“Militarily, they’re just not going to do it,” he said. “We would be in much worse shape if the Europeans were not [in Afghanistan].”

Despite the short-term severity of Europe’s energy and economic problems, the former ambassador to the European Union offered an optimistic long-term assessment.

The European Union ultimately will evolve into what its founders envisioned, he said. Mr. Gray predicted the eventual formation of the United States of Europe, which would include Britain.

“They’ll get there, not in our lifetime,” said the 66-year-old diplomat. “But they’ll get there.”

In the meantime, the U.S.-EU relationship will continue to have its difficult moments, thanks in part to “a certain amount of envy, jealousy,” Mr. Gray said. “It’s below the surface.” After all, he said, America did bail out Europe twice in the past century.

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