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"Italy and the Midwest Business Connections"
In a speech at a confence on“Italy and the Midwest Business Connections,” organized by the Cleveland Council on World Affairs, Italian Ambassador Giulio Terzi defended Italy's economic status and promoted the Sistema Italia.
Terzi stated that “in a very difficult economic juncture, Italy’s banking and financial system has given proof of stability and our businessmen continue to find space and prospects for success also in competitive markets like the USA.” The Ambassador underscored that "the know-how and quality that distinguish Sistema Italia’s components are at the basis of new opportunities for partnership between Italy and the United States, citing the example of groups like Finmeccanica, Fincantieri, Bracco, Brembo, Italcementi, Mediaset, Prysmian Cavi, Sogefy, Luxottica, and, naturally, Fiat whose return to the USA and its partnership with Chrysler are injecting new life into Detroit’s economy.”
The injection of Italian capital and know how in Ohio and particularly in Detroit, has been much welcomed not only by local political leaders but also in Washington. According to recent statistics, the population of Detroit has plummeted 25 per cent over the past decade, due largely due to the auto industry's slump. Motor City's population fell to 713,777 in 2010, compared to 951,270 in 2000. Detroit's population peaked at 1.8 million in 1950, when it ranked fifth nationally. According to some news report, in 2010 Italy was Ohio’s 11th largest export market, with $ 611 million worth of products exported by local firms.
Ambassador Terzi also met with Ohio Governor John Kasich. The two discussed potential for new investments by Italian companies in the Midwest. On the occasion of the conference. , “Italy and the Midwest Business Connections” which was attended by a delegation from Italy led by Vicenza Mayor Achille Variati, a ceremony was held to award Cleveland Mayor Frank Jackson the honorary rank of Cavaliere dell’Ordine della Stella della Solidarietà.
Remarks by H.E. Giulio Terzi in Cleveland, April 7, 2011
Ladies and Gentlemen, distinguished guests, I am very pleased to have the opportunity to address prominent members and leaders of the business community in Ohio today. Through our Consulate in Detroit and our Honorary Consulate in Cleveland, the Italian Government works hand-in-hand with friends here to advocate for policies and initiatives conducive to business and economic growth in both countries.
I need not recall how much the long-standing bonds between our Peoples owe the vast Italian-American community in the United States which has always been, and will continue to be, such a pivotal component of American society. Italy’s sincere alliance - and privileged relationship - with the United States, is certainly also due to the role that this twenty-million strong community has played in forging and strengthening the connection between us. Ohio has close to eight hundred thousand people of Italian heritage; in Cleveland alone, 5% can claim Italian descent.
Despite the 2008-2009 crisis, the Italian banking and financial system has proved to be strong and our businessmen have successfully settled into a market as challenging and competitive as the U.S. one. We can take pride in Italy’s position as a global leader in design, innovation, science, and technology, not to mention our vanguard scientific research – a domain in which Italian-Americans traditionally excel in. A heritage of shared values joins our peoples and communities. It precedes even the birth of our two Nations.
On March 17th - the 150th Anniversary of the Unification of Italy - President Barack Obama solemnly stated in a Proclamation that “Italy and the United States are bound by friendship and common dedication to civil liberties, democratic principles, and the universal human rights our countries both respect and uphold”. He also recalled “the joint efforts of Americans and Italians to foster freedom, democracy, and our shared values throughout the world”, and encouraged all Americans “to learn more about the history of Italian unification and to honor the enduring friendship between the people of Italy and the people of the United States”.
These common roots developed through the parallel stories of great thinkers and artists in Italian and U.S. history: from Andrea Palladio to Thomas Jefferson, from Giuseppe Garibaldi to Abraham Lincoln. On our website, you may find a section dedicated to Italy@150 and the many events we have organized for this, with a special focus on just these links.
The presence here of the Mayor of Vicenza - Cleveland’s Sister City - Dr. Achille Variati, is a clear example of how historic and artistic influences have developed into flourishing economic ties.
I would like to spend a few words on Transatlantic relations first, and financial and monetary stability later, as together they provide the wider framework for Italian-US business to prosper.
Transatlantic relations and Italy’s presence in the US
No other economic relationship is as integrated as the transatlantic economy. The EU and the US economies account, together, for about half the entire world GDP. The EU and the US also share the largest bilateral trading and investment relationship. Transatlantic trade in goods and services amounts to over two billion dollars a day. Total US investment in the EU is three times higher than in all of Asia, and EU investment in the US is about eight times the amount of EU investment in India and China together. Trade and investments generate fourteen million jobs on both sides of the Atlantic.
Business between Italy and the Midwest is part of this broader picture.
Despite the economic and financial crisis, trade between Italy and the United States has remained vibrant in sectors such as mechanics, fashion, food and wine. In 2010, total value of bilateral trade reached 42.5 billion US Dollars. Italian exports in the US improved by 7.7 %, while our imports from the U.S. increased by 15.7%.
I would like to mention that 10% of Italian sales in the U.S are advanced technology products in sectors such as biotech, life sciences, and telecommunications.
These remarkable results have been possible also thanks to Italy’s robust and export-oriented manufacturing sector. These companies, mostly small and medium sized, focus on product innovation as the key to competitiveness and were able to take full advantage of the opportunities offered by the Euro.
Financial and monetary stability.
The stability of the Euro has strategic value in Transatlantic relations. Midwest companies dealing with counterparts in Europe are fully aware of the importance of currency stability.
In the past year, some analysts and commentators have described the Euro as a currency on the brink of a catastrophe. It is a line of thought which often questions the very foundations of the Euro.
It may be true that, from its inception, Europe could not be technically defined as an “optimal currency area”. The common currency was created anticipating a system of governance and fiscal coordination which economic theory believes to be the backbone of a monetary union. Indeed, the Euro was born on the basis of a political commitment to strengthen institutional integration. The European Central Bank transformed the ambitious Euro project into a successful reality in the first ten years of its life. More recently, the response to the financial crisis has stepped up the integration process, promoting structural reform at a national level and significant steps toward fiscal coordination.
The European Union has been able to take far-reaching, even unpopular decisions, in times of need. Caught in the perfect storm of a crisis unprecedented in our generation, European leaders have demonstrated their capacity to work together quickly to coordinate their policy response. The European Union has toughened budgetary rules and integrated economic policies further than anyone thought possible just a year ago.
A first example was the comprehensive package to restore financial stability and avert contagion from the Greek crisis; a more recent one is the “Pact for the Euro”, adopted by the European Council on March 25th as an exhaustive response to the current financial situation.
In the first place, on fiscal consolidation and structural reform, the European Council endorsed the following priorities: restore fiscal sustainability; enact labor market reforms to fight unemployment and take a pro-active stance to growth. Member States will present a consolidation plan in accordance with these principles.
Secondly, to achieve a new quality of economic policy coordination, Euro Countries will shortly announce a set of concrete goals to be achieved in the next twelve months;
Thirdly, the [European] Council strengthened stability mechanisms for the Eurozone so as to ensure support to countries facing financial difficulties. The lending capacity of the European Financial Stability Facility, the EU's emergency fund, was raised to 440 billion Euro. In addition, the European Stability Mechanism [which will replace European Financial Stability Facility in 2013], will allow for 500 billion Euro to be loaned to distressed markets.
It has been noted that Greece, Ireland and Portugal still pay a high premium for borrowing from financial markets, despite efforts at a national level in fiscal tightening. At the same time, however, thanks to the combined efforts of European leaders, the spectre of contagion is receding, as even The Economist noted this week.
Turmoil in North Africa and the tragedy in Japan will probably have an impact on European economic growth which is, as yet, very difficult to assess. There are visible consequences which will undoubtedly affect trade worldwide.
As an example, Tunisia's tourist industry was a major employer and accounted for 6.5% of the country's economic output and was a major source of foreign currency, with around 7 million tourists a year. The uprising in Egypt has already affected the country's infrastructures and its tourism industry, which amounts to 11% of its GDP and 10% of jobs. The present situation has stalled production to an extent that is a major cause of concern. Some studies estimate the total loss to the Egyptian economy at over 30 billion dollars. The biggest impact will likely be on Egypt's GDP growth rate. Until last December, analysts predicted 5.4% GDP growth in 2011, while most analysts now predict 1 to 2% growth this year, which is negative if compared with its demographic trends.
The Euro, on the other hand, weathered the storm well. Or again, the Euro has fared quite well against the Dollar over the last few months, which tells much of its intrinsic strength.
By ensuring low inflation and greatly boosting intra-European trade, the common currency has enabled European nations to compete more effectively in a globalised world. The Euro has enabled Italian companies, even during the financial crisis, to make the most of opportunities and to push the level of economic cooperation with the U.S. further than they had ever imagined possible.
Despite the rather unfavorable economic picture, Italian companies have decided to pursue aggressive strategies in the U.S. market, based on a positive assessment of opportunities. Over the last two years, several Italian industries have invested in the United States: Finmeccanica acquired DRS Technologies – a leading supplier of defense electronic systems. Fincantieri purchased the shipbuilding division of the Manitowoc Marine Group (Mmg) so as to consolidate its presence in the naval defense industry: indeed, it has now been awarded an important contract for the production of the Littoral Combat Ship. Investments have also been made by Bracco, Brembo, Italcementi, Mediaset, Prysmian Cavi, Sogefi and, obviously, FIAT - to name but a few.
Ohio is central in this strategy. Finmeccanica has three plants here, with activities spanning from aerospace to environmental systems; Luxottica, the world leader in eyewear, has set up its headquarters in Mason.
Italian firms, with high-level skills in many sectors such as transport, energy and machinery, are particularly interested in areas that have been identified as priorities at Federal and State level. These include infrastructure and high speed railroads, biotechnology and aerospace. The Midwest is a key area of interest, due to its industrial and hi-tech environment: this makes it a veritable gateway to the U.S.. There are many examples of Italian advanced technologies and research in the Midwest. American AGIP, with a distribution center in Medina, is a world leader in additives for lubricants. De Nora Tech, subsidiary of Industrie De Nora in Milan, with plants in Chardon and Fairport Harbor, is a global supplier for the electrochemical industry.
Ladies and gentlemen, allow me a final consideration. I have mentioned just some of the success stories in partnerships between our companies. Italy and the Italian business community are convinced that we need to substantially increase these numbers. How can we achieve this?
First and foremost, we have to go further in liberalizing trade and investment flows between the two sides of the Atlantic. The transatlantic relationship has an enormous potential which is far from being fully exploited. Given the low average tariffs (under 3%), the key to unlocking this potential lies in a substantial improvement of the policy and regulatory environment. Significant qualitative leaps can be achieved by widening common standard definitions between the EU and the US, harmonizing regulatory systems, reinforcing intellectual property protection and patent regime.
In 2009, a study was carried out for the European Commission which identified the most important Non-Tariff Measures (NTMs) that affect trade between the EU and the US, and estimated their economic impact. The main findings of the study were that the removal of half of these measures and regulatory divergences would, in 2018, translate into an increase of 163 billion Euros in GDP on both sides of the Atlantic. Other studies reveal that the unification of standards could lead to a 30% jump in trade, more than 200 billion USD in value.
A second dimension which can benefit from the solidity of the Transatlantic relationship is related to global issues such as financial regulations, the energy dilemma and its consequences on climate change. This is something that even the most casual observer can see as being related to our well-being and our prospects for sustainable economic growth. Energy is particularly important given that, according to the US Energy information Administration, by 2035 global energy consumption will grow by 50% and CO2 emissions will rise by 43%.
The EU and the US have their work cut out for them if they are to encourage all G20 Countries to adopt coherent, transparent and reliable regulations on financial markets and to pursue energy policies coherent with the urgency of controlling and lowering the CO2 emissions
which directly affect global warming. These matters concern Governments, companies and citizens alike. They pose an immediate challenge to economic growth, and a long-term one to its sustainability. And this is why all of us – and especially Europeans and Americans - must rise