Ambassador Sondland’s Remarks at the Centre for European Reform Luncheon

Ambassador Gordon Sondland’s Remarks at a luncheon
hosted by the Centre for European Reform and Clifford Chance
(as delivered)
Tuesday, June 20, 2019
Brussels, Belgium

Good afternoon. Thank you Agata. Is the mic working? Okay we’re good. Thomas, Clifford Chance, and Paedar — thank you for putting this together. If I sound a little jetlagged, I literally just got off the plane from Washington, D.C. This post really does require a great deal of consultation with both the Secretary, the President and other senior officials in Washington in order to do the job effectively. So if you’re an investor in United Airlines, I would go long on the stock, given my cost of tickets going back and forth. It’s breathtaking. But thank you for having me here.

I have a fairly broad range of issues to cover, but I’m going to through them quickly, because what I really want to do is hear from you and take your questions.

I was originally scheduled to speak with CER at an event in May but had to reschedule again due to a meeting with the President, so I’m pleased to be here today to layout our long-term vision for U.S.-EU transatlantic relations.

I have been asked many times lately- what is the status of or direction of transatlantic relations? I can assure you it’s not the desperate and bleak picture you read about in the headlines. In some ways, our transatlantic relationship has never been stronger.

That said, the U.S. and the EU have differences, as do all partnerships in government and the private sector. What steps are we taking to address these differences?

Have we become complacent with the status quo? Are we prepared to have conversations that will have a positive effect and lead to a strategic renovation of our partnership?

President Trump is ready, Secretary of State Mike Pompeo is ready, and I am ready to have frank, constructive conversations. These conversations are necessary to strengthen our partnership.

We need to work together to reform the liberal international order and its institutions so that they serve both the interests of American people and European citizens.

The analogy that I continue to use is that of an old married couple. They both know they have underlying issues they need to work out, but they continue to avoid having the difficult conversations they know will lead to a more stable, long-term relationship. They’re not going to get divorced, they’re still in love, but they need to have these conversations.

I was being interviewed last week, and the journalist asked me if I saw myself as more of a traditional diplomat, or more of a disrupter. I immediately answered that I see myself as a “disruptive diplomat.”

So if it appears like I am trying to disrupt the stagnant and circuitous way in which the U.S. and the EU have dealt with issues of mutual concern such as impacting our national security and economic prosperity, you’re right. But we have to.

The stakes are too high not to. And I believe that by doing so, our working relationship will be stronger than ever before.

We face major geostrategic challenges, and we must face them together. The time has come to realize that the hopes we had after the Cold War — that embracing China and Russia in a rules-based international order would accelerate their domestic metamorphoses towards democracy — have not been fulfilled.

This year we celebrate the 30th anniversary of the fall of the Berlin Wall and mark the 30th anniversary of the Tiananmen Square massacre.

Much has changed in the past thirty years, including the democratization and integration of much of Central and Eastern Europe into the European Union, and freedom of movement for tens of millions of people living in the former Eastern Bloc.

However, one thing has not changed: Russia and China are still threats to the world order.

We hoped China’s inclusion in organizations like the WTO would hasten their evolution toward democracy and temper their actions toward their neighbors.

Instead, China engages in unfair trade practices by exploiting loopholes in the WTO, steals intellectual property, threatens its neighbors in the South China Sea, and persecutes its ethnic and religious minorities.

The government in Beijing has built itself up over the last 30 years through the theft of intellectual property, forced technology transfer, and artificial currency devaluations. They did it the old-fashioned way. They took it.

And we do not do that to each other. And we don’t want the world operating that way. So, I think when the United States and Europe stand together as partners in dealing with China, we are much stronger.

As the world becomes more and more reliant on 5G technology, which it will, entire countries will begin to devote their infrastructure to 5G. Telephones, cell phones, cars, airplanes, buildings, hospitals, schools, governments, and militaries will come to depend on 5G. Everything will be interconnected.

We cannot let the Chinese Communist Party burrow into the data of billions of internet users through companies like Huawei and ZTE. The internet of tomorrow must be vetted, it must be based on western values, and we cannot cede it to China.

Look. We respect the fact that our allies and partners must make their own choices about 5G. But because they are our allies and partners we must absolutely express our concerns.

And to the extent that our friends want to be as closely interconnected with us as they are today, and they are very closely interconnected today, we cannot risk being interconnected with partners using technology that makes us susceptible to security threats.

I do understand that the industry is developing a global standard – a Code of Conduct – of what they think any country should consider as a checklist before doing a tender or procurement of any 5G technology.

That list will be circulated globally. So, if you supply or manage 5G technology, and you are in compliance with that list, no matter where you are, you will be good to go.

In fact yesterday, when I was in Washington, Secretary of Commerce Wilbur Ross and I met to move the production of that list along. We’re working with esteemed companies like Nokia, Airbus, Samsung, Cisco, and others to provide a framework where we never have to say the word “China” or “Huawei” again. We simply use this code of conduct and say ‘buy your equipment, have your equipment managed, any source you wish as long as they comply with this code of conduct. If they do, we can connect with you.

The United States and the EU should leverage the WTO’s resources to return the appellate body to its original form and purpose, and to bring China into compliance with WTO rules.

We are pushing hard to turn China into a responsible member of the international trading community because we know that the long-term gains will far exceed any short-term disruptions to our economy. Again, we should do this together.

Let us now turn to Iran.

Rather than looking back at whether it is better to be in or out of the flawed JCPOA, we should focus on how to solve the underlying problem of Iran’s malign behavior and its destabilizing efforts in several countries in the Middle East.

Iran seems keen on expanding their nuclear program. We continue to call on the Iranian regime not to obtain a nuclear weapon, to abide by their commitments to the international community.

The JCPOA did not fix Iran’s behavior or make it a more cooperative member of the international community. The JCPOA financially empowered the regime to sow mischief in the region and beyond, including right here in Europe.

A clear example of this was seen on June 13 when Iran attacked a commercial tanker near the Strait of Hormuz.

Let me ask you: How many ships need to be blown up before the world acknowledges that Iran was responsible?

I can tell you what is not productive is this rhetoric going back and forth, particularly in some of the news media, where despite the existence of clear video showing ships being mined by Iranian mines there are still questions about who caused that. And all that does is it gives Iran a great deal of leeway. One of the things that I took it upon myself to do when I was in Washington yesterday — because I wanted to be in a position to look folks like you in the eye – without the benefit of being able to share the specifics and the sources and methods, I asked our intelligence agencies to read me in to the highest level of classification on Iran issue. I read, I saw, I looked. There is no question Iran did this, in my mind. Absolutely none. I wish I could share more — I can’t for obvious reasons — but I am satisfied that I can look someone in the eye and assure them this was Iran and no one else.

When I talk about the willingness to have tough conversations, the JCPOA is an example of what I am referring to. The U.S. will never accept the premise that doing something differently from the EU is inherently wrong.

If we are party to a bad agreement that does not work, we will either fix it or we will leave—and our strong preference is to fix it. We tried to do that with the JCPOA. We still need to work together to address the root of the problem.

Unlike many of their Eastern Bloc neighbors, Russia chose not to reap the benefits of the end of the Cold War. Instead they have occupied Ukraine and Georgia, perpetrated chemical weapons attacks on EU soil, and attempted to interfere in elections in the United States and in Europe–including the most recent European Parliament elections in May.

Russia’s campaign aims to undermine core institutions of the West, such as NATO and the EU, and to weaken faith in the democratic and free-market system.

The United States has sought to deter further Russian aggression through the projection of strength and unity between the U.S. and our European friends, and by building resilience and reducing vulnerability among allies facing Russian pressure and coercion.

A strong U.S.-EU partnership is more important than ever as Russia becomes more brazen in its efforts to sow disinformation and destabilize its European neighbors.

Russia also seeks to exert leverage over Europe by controlling its energy supply. U.S. opposition to pipelines like Nordstream 2 and Turkstream is well known. These pipelines increase Russia’s dominance- over the European energy market, which is of very grave concern to the United States.

The United States is now in a position to help Europe break its addiction to Russian gas as more American LNG comes on line. In May, Vice President Šefčovič and I traveled with President Trump on Air Force One to attend the opening of an LNG terminal in Louisiana – in fact, this is why I had to reschedule our last meeting.

As allies, we are natural partners to deliver more safe, reliable energy to Europe – as President Trump and President Juncker agreed we would do when they met last summer.

As allies and friends, the security of Europe matters to the United States. So whether it’s a NATO asset or an EU asset, when a conflict breaks out you’re going to want them all to be able to operate harmoniously.

So we support EU defense initiatives as long as they are not protectionist in nature, are not duplicative, and do not create competition between the EU and NATO.

And if European member states and the EU as an entity are developing weapon systems or transportation systems or whatever that are not NATO compatible, then what you’re doing is essentially creating a whole parallel system, which in our lifetimes will never have the time-tested capabilities that NATO has.

The European Defense Fund – EDF – as it’s written, excludes U.S. companies from competing to participate in defense R&D funded by the EU. This is not simply a technical matter of an uncompetitive trade practice, which it is. It is a bad idea. Europe and the United States – and our defense industries – should work closely together to create the best systems possible that will defend all of us.

Before I continue, allow me to eliminate the notion that U.S. defense markets are closed to European companies – that is categorically false, we have been and will always be open to the European Union and its member states.

Companies like Leonardo, BAE Systems, Rheinmetall, and CMI Defense have all secured or are close to securing multi-billion dollar defense contracts in partnership with U.S. firms. And on R&D, the U.S. Defense Advanced Research Projects Agency (known as DARPA) awarded Airbus a contract to participate in the new U.S. Blackjack satellite program.

The U.S. defense market will always be open to European businesses as it has been for decades. But if the European defense market closes, as President Trump has said, we will need to take reciprocal action.

It is true that the EU stepping up activity on defense projects is something that Washington has been asking for a long time. But it can’t be at the cost of those member states who are also members of NATO, not meeting their Wales and Warsaw commitments to spend 2% of their GDP on defense, and it cannot be at the cost of interoperability with NATO.

Let me turn to trade briefly, before I finish. Forty trillion dollars combined GDP. 16 million jobs. $5 trillion in two-way foreign direct investments. The transatlantic economic relationship is incredible – just think for a moment about those numbers.

I arrived in Brussels last July highly optimistic. I came to government service from the business world, and I was pleased that, after years of deadlock, Presidents Trump and Juncker met in Washington on July 25, 2018.

On that day, both men pledged to make the wildly imbalanced U.S.-EU trade relationship freer, fairer, and more reciprocal. President Trump is a man of action, and it seemed as if things were happening. Unfortunately, [USTR] has informed [Congress and] me recently that trade talks with the EU are at a standstill.*

The President and I have said this many times- our relationship needs to be recalibrated.

The trade relationship that we are pushing for is one that is freer, fairer, and more reciprocal. I and the U.S. administration are pushing to remove inequities in the trade relationship and in fairness that were established long ago – many since World War II – to help Europe’s economy recover.

Europe is now a mature economy and one of the strongest in the world. We need to update our trade relationship to recognize that reality. We need to eliminate barriers to trade.

If after they are torn down the trade imbalance is not addressed, and this is important, if after the trade barriers are torn down, and the trade imbalance is still not addressed, then this becomes an internal U.S. economic issue, or a private sector problem for not being competitive enough to absorb opportunities in the European market.

If in other words there is still a trade deficit after Europe drops its nontariff barriers that is our problem, not Europe’s.

When Europe creates barriers to entry for competitive U.S. businesses that offer goods and services unrivaled by any other competitor around the world, they gradually begin to remove themselves as a competitor on the world stage.

These obstacles suppress innovation, stunt job creation, and generally stymie overall growth. This applies not only to U.S. companies in Europe; it also applies to native EU start-ups.

I will put it this way, we have 13.7 percent of the EU market and they have 22.5 percent of ours. Simply put, we are trying to rebalance that.

During my tenure as Ambassador, I have spoken with an array of leaders within the EU institutions and Member States, and every single individual I have spoken with wants to start on a fresh page and on a new footing with the United States.

The United States and the European Union work best when we work together.

The USEU relationship needs to be at its strongest so that we can effectively work together on the real global challenges: Russia, Iran, and China.

But we need to recalibrate the USEU relationship – especially through our trade relationship – so that the transatlantic relationship can meet its full potential.

As the new Parliament and the new Commission take shape, I do plan to work constructively with them.

I’m also really looking forward to working with the Finnish E.U. presidency. I was recently in Helsinki and met the President, new PM, and other Finnish leaders. We have a full agenda and I know we are going to have as great a relationship with them as we did with the Romanian presidency.

Thank you so much for having me today, and I would be happy to take questions.