North America

The United States of America

The new Administration under President George W. Bush took up office on January 21. The immediate aim was to demonstrate the ideal of national unity after the turbulence of the election campaign. President Bush swiftly implemented two of his election promises on education reform and tax reductions. One constant theme was the planned Missile Defense System, which conflicted with the 1972 anti-ballistic missile treaty with the then Soviet Union. After the terrorist attacks on September 11 the US government in December officially announced its renunciation of the ABM treaty, which it declared outdated. One of the first foreign policy tests for the Administration resulted from a mid-air collision between a US intelligence aircraft and a Chinese fighter. The detention of the US aircrew on the island of Hainan ended after a letter in which the Administration expressed its regret for the incident.

Differences in the positions of the United States and the European Union surfaced in the discussion of the Missile Defense System and the continued refusal of the US to accede or adhere to important multilateral treaties. These included the withdrawal from the ABM treaty and the Kyoto Process on climate protection; failure to ratify the Ottawa Convention on the prohibition of land mines, the Comprehensive Nuclear -Test-Ban Treaty and the statute of the International Criminal Court; delaying implementation of the convention on chemical weapons; and rejection of the convention on biological weapons, the conventions on the rights of the child, the convention on the elimination of all forms of discrimination against women, the international covenant on economic, social and cultural rights, etc. On the EU side there was growing concern that the United States would increasingly take unilateral decisions.

The terrorist attacks on the World Trade Center and the Pentagon on September 11 eclipsed every other political event in 2001. The US formed an international anti-terror coalition. In an effort to take into consideration the role of the United Nations, a payment of $1,500m was made to the UN, which reduced the accumulated US arrears of contributions to around $900m. Six NATO AWACS early-warning aircraft with NATO crews participated in Operation Noble Eagle to improve the defence of US territory. The comprehensive measures taken at domestic political level included an executive order to freeze terrorist funds, the appointment of a Director for Homeland Security, and the USA Patriot Act to combat terrorism. Civil rights organizations expressed concern over orders enabling conversations between lawyers and suspected terrorists to be recorded and non-US citizens to be tried before military tribunals.

The US economy was in recession from March, due to the collapse of over-valued share prices in the high-technology sub-sector. After 11 September this was aggravated by a drastic decrease in air travel and tourism, a crisis situation for airlines and insurance companies, a fall in turnovers and an increase in unemployment to 5.8 per cent in December. The economic damage resulting from the terrorist attacks is estimated at $100,000m for New York alone. The capital markets sustained losses exceeding those of the 1929 crash, but recovered surprisingly quickly, due mainly to consumer confidence. Bilateral diplomatic visits between Austria and the United States continued in 2001. Minister for Foreign Affairs Benita Ferrero-Waldner visited the US in May and Federal Chancellor Wolfgang Schüssel on 31 October - 1 November. President Bush expressed thanks for Austria's support and role in forming the anti-terror coalition, and was particularly interested in Austria's assessment of the Middle East situation. After September 11 Austria endeavoured to provide the US with the most effective assistance possible. Offers to provide search and rescue dogs were not taken up, because there were almost no survivors of the attacks, but were greatly appreciated as a demonstration of support. Permission for military overflying of Austria was granted on the basis of UN Security Council Resolution 1368. Austria signed the International Convention for the Suppression of the Financing of Terrorism on 24 September in New York, and ratified it on 28 February 2002, and has thereby signed and ratified all twelve existing UN Conventions against terrorism.

The US-Austrian agreement on 17 January on the remaining open questions concerning restitution for property confiscated during the National Socialist period, and the previously agreed Reconciliation Fund for forced labourers during the Second World War had a positive effect on bilateral relations. However, the US Department of State's Annual Report on International Religious Freedom again criticised the fact that different categories of religious communities in Austria exist with varying legal status.

Canada

The United States is Canada's most important foreign partner, while Europe's practical relevance is diminishing despite the existing institutional and emotional links. The European Union is the country's second most important trading partner, but both the volume and the intensity of trade are much less. Relations between the EU and Canada rest on the basis of the 1996 Joint Action Plan, with two summits and two meetings of foreign ministers annually. A Joint Cooperation Committee for economic questions and a Trade and Investment Sub-Committee meet annually. The business communities of both sides meet in the EU-Canada Trade Initiative and Canada Europe Round Table for Business and report their findings to the summit. The main developments in 2001 were the widening of the scope of the agreement on the mutual recognition of conformity test procedures including certifications of compliance, and further progress in negotiating a new agreement on wines and spirits that is of some importance for Austria.

The foreign policies of Austria and Canada have much in common: the United Nations; openness for matters affecting the Third World; similarity of approaches to international issues like peacekeeping, development cooperation, disarmament, anti-personnel mines, the International Criminal Court, small arms, etc. and increasing engagement in the respective regional integration processes. Austria therefore seeks the deepening of political cooperation with Canada, in particular within the framework of multilateral institutions and the Human Security Network as well as a dialogue on security policy within the framework of a redesigned transatlantic partnership.

The Transatlantic Dialogue

The 1990 Transatlantic Declaration, the 1995 New Transatlantic Agenda (NTA) and the 1995 Joint Action Plan EU-USA form the basis for the transatlantic dialogue between the EU, the US and Canada. The NTA is implemented through half-yearly summit meetings with corresponding quarterly preparatory meetings at senior level. The US, especially since the advent of the Bush Administration, has urged that the process be streamlined by reducing the frequency and scope of the talks. In March 2001 the European Commission accordingly issued a communication entitled Reinforcing the Transatlantic Relationship: Focusing on Strategy and Delivering Results, which foresees a fundamental reform of the dialogue.

Its main points are: the identification of "strategic themes"; reducing the EU-US summit to its original form of "leaders", possibly followed by a meeting of foreign and trade ministers; and possibly limiting meetings of heads of state to annual summits. The NTA summit in Gothenburg in June considered the proposals, but left the frequency of meetings open. Such a reform would have a considerably greater effect in Canada, which has a much smaller network of contacts with the EU than has the United States. Neither Canada nor the EU desires a reduction of bilateral meetings.

According to the European view, there are deficits in the partnership with the US as regards dealing with the causes of terrorism and other "soft security issues" like poverty, disease, human trafficking, or "failed states", which are particular priorities of EU policy. It has therefore proved useful, in addition to regular contacts at governmental level, to talk directly to members of the US Congress. In response to an Austrian initiative, the Gothenburg summit agreed to an intensification of the Transatlantic Legislators' Dialogue, with periodic contacts between the US Congress and the European Parliament.

On 14 May an implementing arrangement on energy (excluding nuclear energy) and a framework agreement with EURATOM were adopted within the framework of the Transatlantic Economic Partnership that was set up during the Austrian EU presidency. The so-called "people-to-people links" were also continued and deepened. The Transatlantic Business Dialogue in particular enjoyed enhanced support from Austrian firms in 2001.

The US and the EU are each other's largest business partners. The oft-mentioned trade disputes between them must be seen against the background that 98 per cent of transatlantic trade takes place with no friction whatever. In April agreement was reached on trade in bananas which gives the US firms a satisfactory share in the European market. Negotiations were proceeding on the question of compulsory noise-reducing "hush kits" for aircraft using European airports, which the US views as discriminatory. There was very little negotiation in 2001 over the EU ban on the import of hormonetreated beef, due to the foot and mouth disease and BSE crises in Europe; the EU Commission's compromise proposals did not meet US expectations. The EU won its cas e on foreign sales corporations before the Appellate Body of the World Trade Organisation, but in order to avoid further escalation a "gentlemen's agreement" was reached on the implementation of the verdict. Towards the end of the year the proposal to impose protectionist tariffs on steel imports disturbed relations between the US and EU. Austria, which had hardly been affected by the banana and hormone issues, could be affected by any such tariffs.

The North American Free Trade Area (NAFTA)

The treaty establishing NAFTA between Canada, the US and Mexico entered into force on 1 January 1994. Its special feature is the association of two of the richest countries of the industrialised world with a newly industrialising country of the south. US exports to its NAFTA partners have risen by 104 per cent since 1993, while trade with the rest of the world increased by only half. The volume of trade between the three member states more than doubled with an increase of 128 per cent. US-Mexican trade more than tripled and thereby exceeded the combined US exports to Germany, France, the United Kingdom and Italy. Unaffected by economic crises in other regions, these growth figures had an effect on the labour market. Employment in Canada rose by 16 per cent, in Mexico by 28 per cent, and in the United States by 12 per cent. Exports to Canada and Mexico now sustain 2.9 million jobs in the US, an increase of 914,000. The wages paid to these workers are up to 18 per cent above the US average.

Despite some delays in the implementation of individual provisions of the NAFTA agreement, the integration process is proceeding smoothly and on the whole according to plan. On 1 January 2001 another range of tariffs was abolished, representing a trade volume of $867m. This goal was achieved well before the originally planned end of the transitional period in 2008. Despite these impressive successes, however, NAFTA remains a subject of considerable controversy within the United States, due primarily to the country's exceptionally high trade deficit. NGOs criticize the further implementation of the agreement, since they are afraid of social and environmental "dumping". Since President Bush took office, additional bilateral free trade agreements as well as the realisation of the planned Free Trade Area of the Americas by 2005 have been prioritised.