Ambassador Sondland’s Remarks at the European Parliament ECR Group Discussion on U.S.-EU Trade

Ambassador Sondland’s Remarks at the European Parliament ECR Group Discussion on U.S.-EU Trade
(as prepared)
Tuesday, April 9, 2019
Brussels, Belgium

Hello, and thanks to Syed Kamall, Emma McClarkin, and the rest of ECR for having me here today.

At this point, I think most of you know where I stand on the key issues and the challenges in the transatlantic relationship.

In speeches and op-eds and during media interviews I have tried to be very frank in my assessments. Good friends should be frank; and though we share so many interests and values, it’s not constructive to sweep aside our differences. I truly believe that most people appreciate an honest exchange that moves the needle.

I think that many in this room hold opinions similar to my own, and take a strategic, long-term view when it comes to the transatlantic relationship. With that in mind, I am not here to complain or to lecture—I would rather take this opportunity to strategize.

Despite what you are hearing around town, the United States is open for business and actively working to improve the global trade environment in ways that will ultimately benefit both sides of the Atlantic.

You might not appreciate the tactics being employed or the bluntness with which this administration speaks, but the time for politely demurring and turning a blind eye has long passed. The United States intends to address the fundamental inequities at the heart of trade in the 21st century, whether that’s through fighting unjustified, protectionist barriers; the exploitation of gaps in WTO rules; or non-market, state-led industrial policy that distorts the market.

In the U.S., while we are launching and finalizing major trade deals, some public, some not, while the EU struggles to reach agreement on negotiating mandates. To put it bluntly, we need Brussels to get its act together.

We are hard at work reforming the WTO, and restoring that organization to its original vision and function so it can work efficiently and effectively on behalf of its members. For instance, the Appellate body was originally charged with a very narrow mandate – simply to “secure a positive solution to a dispute,” and “…to assist the Dispute Settlement Body in discharging its responsibilities…” That was its narrow mandate. Instead, the Appellate Body has strayed from its mandate, allowing for “advisory opinions” that go beyond issues that need to be addressed in order to settle a dispute and instead make new laws to which members have not signed up.

We reject that narrative that we are somehow not committed to the WTO. In fact, I assert that we are among the strongest defenders of the institution.

Our long record of leadership at the WTO, however, makes us clear-eyed about the challenges ahead. In our assessment, Members are in the early stages of grappling with our collective failure to confront problems that have been growing for years.

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.

While the U.S. and the EU are wasting time on what I call “small ball” and fighting petty skirmishes over things like money-laundering blacklists, the Chinese are snapping up valuable intellectual property.

Beijing is buying its way into strategic toeholds around the world, including in Europe. This will have far-reaching consequences. Despite this, the EU seems more intent on selling a bit more fromage in New York or preventing American steaks from reaching the tables of Berlin than focusing on the really important things.

We need the EU to take a strategic worldview, rather than an unhelpful, overly reactionary stance.

Regulations and other types of non-tariff trade barriers, including thinly veiled anti-Americanism like the exorbitant taxes on Google, is not a sustainable model if the EU wishes to remain a competitor on the world stage.

Barriers like these stifle innovation, growth, and job creation—and I mean both the operations of U.S. companies in Europe and indigenous EU start-ups. It’s no way to grow an economy.

I was just back in the United States at the end of March to meet with American businesses based on the West Coast, many of which have significant operations in Europe.

Some of these firms are growing through organic expansion, some through acquisition. But they are all creating jobs for Europeans and all are paying taxes in Europe. However, there are real concerns that doing business in Europe and with Europe is becoming more and more difficult.

On the flip side, hundreds of European startups have turned to places like Silicon Valley to grow or even relocate their business. Most of these companies needed access to financing to scale-up their businesses, and many moved to avoid growth-killing bureaucratic hurdles.

Just to provide an example, I’d like to highlight a recent winner of the U.S. Department of Commerce Innovation Challenge – Prodsmart. This company is a Portuguese start-up that recently moved their headquarters from Portugal to San Francisco. Prodsmart provides real time analytics for production lines and job shops. They’re a crowd-sourced Manufacturing Execution System (MES) that turns any shop floor into a digital smart factory, by using mobile devices to collect process data directly from the shop floor, eliminating paper, and providing real time analytics that allow for waste reduction and efficiency improvements.

This is only one example, European companies like Skype, Transferwise, Criteo, and PromoRepublic have all taken advantage of the innovation environment or the greater financing options so readily available in the United States.

This should be raising alarms here Europe. I want to work together with the EU to make innovation happens in Europe AND the United States. There is absolutely no reason for the United States to have a monopoly.

How will this happen? I think largely through more visionary leadership and a willingness to accept that defensive protectionism will not work in the Fourth Industrial Revolution.

In a minute, I will take some time to talk about trade and a few other parts of our relationship. But before I do, let me make one thing clear. While the United States and the EU sometimes disagree about tactics, we always, always share the same goal: to improve our mutual security and prosperity. Our differences make for exciting headlines, but what is very often overlooked is our cooperation.

Since I arrived in Brussels, I have tried to make one thing clear: the United States and the European Union work best when we work together.

Unfortunately, that simple idea is all too often lost in the noise as we go running to put out one fire after another—and these are fires of our own making.

At the same time, I have also made clear that nothing in this world is certain. If we don’t fix what are now small irritations in the relationship, before long we will risk them tearing the relationship apart.

We are good partners and this is an important relationship—too important to let drift. We need to work together to get things back on course.

At our best, the U.S. and the EU set global standards that ensure safety and health. We provide an example for fledgling democracies.

We collaborate to counter the threat of terrorists, we isolate rogue regimes, and we deliver developmental assistance and disaster response to those countries most at risk.

We confront China, Russia, and world actors who fail to share our vision or values and who are actively working against all.

At our worst, we are distracted by challenges that are readily solvable. We waste time locked in endless discussions that produce no results, despite the fact we seek the same goal.

Let’s look at trade, for example.

Forty trillion dollars combined GDP. A stock of $5 trillion in two-way foreign direct investments which fuels annual trade of a little over $1.2 trillion in goods and services, which supports 16 million jobs on both sides of the Atlantic. Let that sink in just a minute. It’s huge.

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, whether you like him or not, is a man of action, and it seemed as if things were happening.

Since then, we have made little progress—in fact USTR Lighthizer just told Congress our trade talks are at a complete stalemate.

One of the key sticking points is agriculture. Since I took office, I have heard about this redline over and over and over—as if food and culture were somehow uniquely sacred to Europe.

Our farmers and ranchers are just as important to us, and the issue is just as emotional in the U.S. Our farmers speak English, and some of yours might speak French, but their concerns and influence in government are just as great.

If our trade talks are to move forward, agriculture must be included. However, this isn’t a zero-sum game.

We simply need to agree to trade freely and fairly and let the market be the ultimate arbiter. Let the market decide. There will be winners and losers on both sides, in agriculture and other sectors. The key is for the playing field to be level.

I have spoken with many industry leaders in Europe who feel as though the EU is not taking their concerns to heart, and these are European business people, not American business people. And they urge us to reach an agreement in a reasonable amount of time to reduce market uncertainty and to forestall an escalation.

The most important elements the Trump administration brings to our trade discussions are seriousness and urgency. And, to be frank, the more the EU leadership plays the delay game, the more the resentment grows in Washington, DC.

Eventually, we will have no choice and will use leverage to realign the relationship. To be clear, that leverage is access to certain sectors of the U.S. market.

But no matter what I say some believe they can delay and wait out this President. The problem is that that tactic really doesn’t work because a President of either party is very likely to demand a realignment.

Let me give you a case in point: I recently had the opportunity to escort some of the Democratic party’s most senior leaders, including House Speaker Nancy Pelosi, to their meeting with EU officials. In those meetings it was crystal clear that while the Democrats disagree with the President on many issues, when it comes to fixing our trade imbalance with the EU there is no daylight between them. None.

In addition to trade, we will also continue to work with EU partners who are also NATO Allies to increase their spending in line with President Trump’s call for Allies to fulfill their commitment to spend 2 percent of GDP. A secure Europe is also one in which Allies and partners cooperate on military mobility.

NATO Allies and EU Member States must be able to quickly and reliably move military equipment and personnel to respond to threats. As the EU also deliberates where and how to make investments as part of its new defense initiatives, I am working to ensure the United States works closely with the EU to align its efforts with NATO security priorities but more importantly to open its tenders to U.S. companies.

The United States government will always seek out the best ideas and technologies regardless of whether they are domestic or from a trusted partner.

Just recently I heard a group of EU Ambassadors repeat a narrative they should know to be false: U.S. defense markets are closed to European companies. This is a narrative spun around since I’ve been here in July. It is not true. European companies are doing billions of dollars of business in the United States. This is how this notion is proliferating.

In fact, European firms make up the majority of exporters worldwide of military equipment to the United States.

In only the last year, the Italian firm 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, aka DARPA, just awarded Airbus a contract to participate in the new U.S. Blackjack satellite program.

So in conclusion: No one should seriously question the United States’ commitment to the transatlantic relationship.

The areas of close and likeminded cooperation are not going to change or be put on hold because we have a few disagreements in a few areas.

At the same time, we will not be content to maintain the status quo in areas that so clearly disadvantage the United States.

Thank you, and I would be happy to take questions.