We had the honour to interview Susan Danger, CEO of AmCham EU. Great talk on the challenges for global companies operating in the EU market and the economic situation of the transatlantic relation.
What’s more in the trade bubble? The EU re-opens FTA talks with Thailand and tries to break the stalemate with Mercosur, while good news for trade rise from the Far East.
One Big Thing.
The transatlantic trade relations mood at AmCham 60th birthday
Susan Danger, named by POLITICO as one of the top 20 women influencers in Brussels, is CEO of the American Chamber of Commerce to the EU, recently voted Best EU Trade Association of the year by BestinBrussels. AmCham speaks on behalf of American companies committed to Europe on trade, investment and competitiveness issues.
How concerned is AmCham EU and its members that the EU’s tsunami of regulation (e.g. the Foreign Subsidies Regulation, the Carbon Border Adjustment Mechanism, International Procurement Instrument) may be detracting from the attractiveness of Europe?
The competitiveness of Europe is a serious concern for American companies in Europe. The volatility of the external environment – high inflation, energy prices, congested supply chains and skills shortages – impact everyone doing business on this side of the world. In some sectors, this leads to difficult trade-offs to ensure the continuity of their operations.
Our member companies also report struggling with the sheer volume and speed of regulation in Europe. While companies support the objectives and scope of most initiatives, they experience challenges with compliance with so many new pieces of legislation introduced simultaneously. This can also create contradictions between specific requirements in different policy areas.
The EU has identified the regulatory environment as a top priority of its Green Deal Industrial Plan. We very much support this focus on the ‘ease of doing business’. The Single Market needs to be strengthened, as it continues to be the main driver of foreign direct investment into Europe. A simpler and more predictable framework can go a long way to strengthening the EU’s investment proposition in the global economy.
What will be the big themes at your Transatlantic Conference today?
With the current global challenges, the world needs transatlantic leadership more than ever. We will dive into the issues that are driving the conversation on both sides of the Atlantic, including how to best navigate the geopolitical environment, foster cooperation in energy, support the green and digital transitions and stand up for our shared values. The conference also marks the release of the 20th edition of the Transatlantic Economy 2023 report, the annual survey of transatlantic jobs, trade and investment. Despite the geopolitical turmoil, the study reports strong economic results in 2022. The transatlantic partnership continues to be the most interconnected, robust and resilient of its kind in the world.
You are celebrating your 60th anniversary this year. Looking ahead, how do you see the role of American business evolving in Europe, given the rise in protectionism on both sides of the pond?
American companies are committed to and invested in Europe. Through their investments in Europe, they have always been among the strongest supporters of EU integration. They have contributed first-hand to the tremendous achievements the European economy has brought to citizens and companies: jobs, capital, intellectual property, innovation and growth. They are an integral part of the European fabric and industrial base. Think of the goods and services they produce or supply, the partnerships they build with European entities, the added value they create, the local communities they support. Our 60th anniversary as an organisation is a testament to the long-standing contributions of our members.
It is critical to recognise the importance of alliance-building to overcome global issues, including the fight against climate change. The EU and the US are each other’s staunchest allies and they should continue to advance their partnership and work together. American companies will have a key role to play in strengthening these ties, and delivering on the innovation and technology we need to address the challenges of our time.
Second in line.
Next Stop: Bangkok
On 15 March, the Commission announced the resumption of trade negotiations with Thailand. Two things to note here: the first is the EU’s continued ambition to broaden its engagement with the Indo-Pacific. The negotiations with Thailand, along with Malaysia and the Philippines were written into the EU’s Indo-Pacific Strategy back in 2021. The EU is Thailand’s 4th largest trading partner with a total of €42 billion trade in goods and €8 billion in services. According to the Commission, although EU’s FDI in Thailand are significant, there is room for improvement in key innovative sectors, like clean energies, electric cars and microchips. It sounds familiar, as the Commission tries to build partnerships that could also help the EU’s green transition. Secondly, there is an emphasis in sustainable trade, as promised following the Commission’s 2021 trade review. The two sides promise to conduct the negotiations swiftly, which includes striking a deal on environmental and phytosanitary provisions. No mean feat, especially since the EU will conduct a Sustainability Impact Assessment which could add time to the negotiations. It will also be worth monitoring the debate around the usual hot issues, like agricultural goods and geographical indications. In any case, this is a development that will likely go towards strengthening the EU’s presence in the Indo-Pacific.
Trading with kiwis: FTA advances
Things are moving forward on the ratification of the trade agreement with New Zealand, which was concluded on June 30, 2022. On Friday February 17, the Commission officially passed the text to the Council for its approval. Next, the EU and New Zealand can sign and send it to the European Parliament. The goal is to have the agreement ready and in force before the end of the legislature in 2024. Now the ball passes to MEPs and Member States. Although there is general favour for the deal, lobbying efforts against it could intensify, particularly from European farmer associations, which complain about what they see as competition from New Zealand’s agri-food sector. On the other hand, the Commission foresees €4.5 billion growth of EU exports through a cut in New Zealand duties, as well as a potential 80% increase in EU investments in the country. This means new business opportunities. But the FTA was also hailed for its record-high sustainability provisions – both environmental and social – which companies have to keep in mind.The parties can even potentially sanction each other, in case either violates sustainability requirements. What is sure is that this is the most advanced FTA in the Commission agenda.
EU-Mercosur is one of those agreements for which the stars have not yet aligned – despite approaching a ripe 24 years since the negotiations started, it’s still vying for approval of domestic EU farmers and environmental campaigners. Some have been more vocal than others, with French and Austrians first in line to dismiss the deal between the EU and a group of Latin American countries. But doubts are cropping up on both sides – Uruguayan president Luis Lacalle Pou expressed his lack of faith in the conclusion of the agreement due to issues in the Amazon, a reason the deal was not ratified back in 2019. Others seem more optimistic; Germany’s Economy and Climate Minister Robert Habeck and Agriculture Minister Cem Özdemir are currently spreading the message of hope across South America about the agreement’s prospects. Between China eyeing a FTA with Uruguay and a high volume of upcoming meetings involving EU and Mercosur negotiators, von der Leyen’s visit to Brazil and EU-LatAm summit in July, the race to ratification line is on.
Pro-trade Signs from the Far East
In good news for multilateralism in trade, Japan joined the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). It is a temporary alternative to the WTO’s Appellate Body, the court that is supposed solve trade issues but has been in a stalemate since 2019, as the US has been blocking the appointment of new judges due to sovereignty concerns. This has made dispute resolutions harder, leaving more room for unilateral and protectionist actions. The judicial limbo is also one of the reasons behind EU’s rush to prepare “trade defence tools,” and it was the EU itself that has promoted the MPIA initiative. As an economic giant, but with limited political power, the EU has a lot to lose from trade fragmentation and a lot to gain from multilateralism. Another pro-trade sign came from the Far East. Japan and South Korea struck a deal on their historical dispute over compensation for forced labour during WWII. As a consequence, Tokyo lifted the export controls it imposed on Seoul in 2019 on chemical inputs for the chip industry. Again, the EU welcomed it as an important step towards broadening its partnerships in the Indo-Pacific.
Raw materials: Bye-bye China Dependence?
The EU has rolled out the Critical Raw Materials (CRM) Act, a legislation designed to reduce Europe’s reliance on China for essential resources. This move aims to boost the EU’s strategic autonomy and secure a sustainable, reliable supply chain for vital materials like rare earth elements, lithium, and cobalt. The CRM Act sets up a holistic framework covering the entire value chain, from digging up resources to processing and recycling. It’s all about investing in domestic mining and processing industries, pushing for green technologies, and championing the circular use of resources. Stricter due diligence requirements are in play for importers of critical raw materials, ensuring transparency and ethical sourcing. The CRM Act isn’t just a leap towards hitting the EU’s climate goals; it’s a power move to strengthen EU’s position in the global market. Policymakers and the EU bubble, keep your eyes peeled for the Act’s implementation and its potential ripple effect on international trade, especially with China.
On our radar.
22 Mar I AmCham launches its Transatlantic Week, picking apart the relationship between the EU and US – trade, politics and everything in between will be on the agenda
22 Mar I Open strategic autonomy has become an EU trade buzzword over the last few years, but what does it mean for the Single Market? Join the ECIPE webinar to find out
23 Mar I Civil society is welcome to grill the European Commission and Singaporean government representatives on sustainable development aspects of the EU-Singapore FTA at the second public stakeholder
23-24 Mar I European Council in full speed – expected to discuss the Green Deal Industrial Plan
4 Apr I Still in the mood for Strategic Autonomy? Egmont hosts a discussion on strategic foresight in Energy, Healthcare, Food, and Digital Technology
What we’re reading.
Still in a transatlantic mood? AmCham just published its yearly Transatlantic Economy Report, a key study to gauge the performance on an area that represents 1/3 of global GDP.
How to bring trade opportunities out of the new Commission’s plan for raw materials and the net-zero economy? SAFE, a US-based energy security organisation, gives its assessment.
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Brussels veterans looking to make a move would be happy to know that we are still on a hunt for a Government Relations Consultant to deal with all things trade, customs and external relations.
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