Remarks by Ambassador Ronald Gidwitz at the Cercle de Lorraine

“Security and Prosperity in a New Era of Geopolitical Competition.”

Remarks by Ambassador Ronald Gidwitz at the Cercle de Lorraine
January 24, 2019

Distinguished guests; ladies and gentlemen; good afternoon.

Let me begin by thanking Cercle de Lorraine for the invitation and for the opportunity to speak to you today about the Trans-Atlantic partnership.

I’ve now been the U.S. Ambassador to Belgium for a little over six months, and it’s been a remarkable experience, in remarkable times. I consider Belgium an old friend. I’ve been visiting Belgium for both business and pleasure since the 1960s.
Now, to be here as Ambassador and serve my country is a real privilege and honor.

New Era of Geopolitical Competition
The theme of my speech is, “Security and Prosperity in a New Era of Geopolitical Competition.” We’re at a critical moment in history. In the 1990s we celebrated the end of the Cold War. In the 2000s the world responded to the threat of international terrorism. It’s clear that in the years ahead, we face a new era: the return of great-power competition with an expansionist Russia, and an economically aggressive China. This new era brings opportunities and challenges for the West.

Europe is the central pillar of the United States’ international alliance system and is by far our largest economic relationship, with more than $1 trillion in bilateral goods and services trade. Belgium remains a crucial part of this partnership: In 2017, total trade between our two countries stood at around $55 billion. Belgium is the U.S.’s 12th-largest trading partner.

In order to preserve our partnership in this complex world, we have to recognize common threats and work together to find ways to counter them. We can do this through frank and open dialogue among friends and partners. We may not always agree on every issue, but it’s important to remember the success, prosperity and security of the United States and Europe is anchored in a history of strong cooperation across the Atlantic.

Shared History
Today I’ll focus my remarks on this critical intersection of national security and trade, and then address our recent efforts to reform global trade, and to advance U.S. – EU trade negotiations.

One element of this history is our heritage of shared sacrifice in times of war. We have just concluded the centenary of the end of World War I, and are on the eve of the 75th anniversary of the most pivotal moments of the Second World War. Our three U.S. military cemeteries in Belgium are the final resting place for more than 13,000 American soldiers from the wars of the last century. I highly recommend visiting the cemeteries at Flanders, Ardennes and Henri Chapelle – they are compelling reminders of the bond that unites Belgians and Americans. The team at the U.S. Embassy to the Kingdom of Belgium – along with our Belgian partners in government, business, civil society and more – build on this shared history every day.

Our trade and military relationship will continue to grow, thanks to Belgium’s recent decision to replace their F-16 fleet with the fifth-generation F-35 aircraft, a plane that has at least 30% European content. The decision speaks not only to our decades-long cooperation in air defense with Belgium, but also to our partnership with our European and NATO Allies. Belgium will be flying the state-of-the-art F-35 alongside many of its closest European partners. Those who have followed this issue closely over the past few months probably noticed a common narrative that somehow, choosing the F-35 disadvantaged Belgium’s defense relationship with the rest of Europe. Nothing could be further from the truth. Belgium’s partnership status on the F-16 has led to a robust aviation service industry in Belgium. As well, Belgium retains its close land forces relationship with France and its naval partnership with the Netherlands. And in a few years, Belgian pilots will be flying the F-35 next to other European F-35 pilots – from the United Kingdom, Norway, Italy, and the Netherlands. I’m confident more European countries will also choose the F-35, expanding its role as the most advanced and interoperable plane in the world. I see no contradiction in Europe’s quest for greater integration and cooperation in defense and other areas, and a dynamic, growing and close relationship with the United States.

The next really big purchase decision will be which 5G telecommunications technology will be chosen for the internet of things. Will it be a closed, proprietary Chinese system, with a clear pathway to I.P. theft, or will it be an open European/American one?

National Security
Then — and now — national security is a cornerstone of our partnership. Soon after the Trump administration took office, the White House released its National Security Strategy.

This document outlines our strategic thinking regarding the return of big power competition and signals a major shift of emphasis from previous post-Cold War and counter-terror U.S. foreign policy. The National Security Strategy acknowledges that big power rivals – China and Russia and to a certain extent Iran – are the greatest threats to U.S. national security, and to the security of our friends and allies – like Belgium – who share our fundamental values of democracy, rule of law, and free and open societies. It cautions that the United States and the West are unprepared to counter those countries; and urges the United States and her partners and allies to prepare for sustained military, economic and diplomatic competition with these rivals.

For my country, that preparation starts at home. If the United States is to be a worthy economic and security partner to Europe, we must rebuild the foundations of long-term American economic power, strengthen the manufacturing and defense industrial base, and reinvest in national defense. Reinvigorating America will not be possible if the U.S. continues to run sustained trade deficits as we have for many years. Last year the U.S. experienced a $450 billion trade deficit with China and a $150 billion deficit with the European Union.

The European Union’s GDP is nearly equal to that of the United States. European and American companies don’t need subsidies and non-tariff barriers in order to compete in the global marketplace. Subsidies create a disadvantage for U.S. firms who don’t receive the same treatment.

It is decidedly in all of our best interests to maintain open competition and to promote free, fair and reciprocal trade around the world.

The United States is committed to reforming the global trading system in ways that lead to fairer outcomes for U.S workers and businesses, and more efficient markets around the world. U.S trade policy is driven by a pragmatic determination to secure these objectives. U.S. trade policy rests on five major pillars: supporting U.S. national security, strengthening the U.S. economy, negotiating better trade deals, aggressive enforcement of U.S. trade laws, and reforming the multilateral trading system.

WTO Reform
When it comes to open markets, the U.S.-Belgium trade relationship is a success story. U.S. companies are important job creators in Belgium: the 900 majority- owned U.S. companies active here directly employed more than 126,000 people last year.

Likewise, total Belgian investment in the U.S. has increased more than 50 percent over the last few years, from $28 billion in 2011 to over $45 billion today. In terms of jobs, that makes Belgian firms the 10 th -largest foreign employer in the United States, supporting about 160,000 American jobs.

Our mutually beneficial trade relationship and shared commitment to open, fair and reciprocal trade underpins all the reasons why we need to undertake serious reform of the World Trade Organization.

Exemplifying our openness is the fact that the United States is the world’s largest single-country importer. We purchase goods and services that exceed the Gross Domestic Product of all but three countries in the world.

U.S. tariffs are among the lowest in the world. The current U.S. simple average tariff is 3.4 percent on an applied basis under the WTO and 2.4 percent on a trade- weighted basis. In 2017, nearly 70 percent of all U.S. imports, including those under preference programs, entered the United States duty-free.

U.S. service markets also remain open to foreign providers, and U.S. regulatory processes are transparent, accessible, and open to the public, including to non-U.S. citizens. As these figures underscore, it is no exaggeration to say that the openness of the U.S. economy to goods and services is one of the most important sources of global economic stability.

As you know, the United States traces our leadership role in the multilateral trade system back more than seven decades. Since 1995, the United States has been deeply engaged in every facet of work at the WTO.

However, we must recognize that the WTO that we helped create, and the WTO we seek, is in key respects not the WTO we have today. For years, the United States and other countries including Belgium have voiced concerns with the WTO system and the direction in which it has been headed. First, the WTO dispute settlement system has strayed far from the system agreed to by Members. The Appellate Body, which was created to resolve disputes, has been issuing advisory opinions that have changed WTO obligations. This isn’t about the U.S. “winning” in the WTO, but rather we are asking that the rules be followed. One of the most important cases at the moment is between China and the EU about the validity of EU anti-dumping protections. In its case, China cites two appellate body opinions, which the U.S. argues are unjustified. The EU now has to argue that the appellate body got its opinions wrong. That goes against the integrity of the WTO and what we agreed to in the Uruguay Round.

Second, the WTO is not well equipped to handle the fundamental challenge posed by China, which continues to embrace a state-led, mercantilist approach to the economy and trade that is incompatible with the open, market-based principles of this organization and its agreements. Third, the WTO’s negotiating arm has been unable to reach agreements that are of critical importance in the modern economy, undermined by certain Members’ repeated unwillingness to make contributions commensurate with their role in the global economy. And fourth, certain Members’ persistent lack of transparency have undermined Members’ work in the WTO committees to monitor compliance with WTO obligations.

The United States is not simply raising these concerns; we are taking important steps to address them. We were the first WTO Member to put forward a concrete proposal for WTO reform, in November 2017, with our proposal aimed at improving Members’ compliance with their notification obligations. We will continue to advocate for reform, transparency and increased cooperation in this most important multilateral trade institution.

The Trump administration is committed to negotiating free, fair, and reciprocal trade agreements and promoting fair market competition and trade liberalization around the world.

U.S. Trade Negotiations
The United States has been putting these words into action, vigorously pursuing agreements aimed at promoting more efficient markets and obtaining better trading terms for American workers, farmers, businesses, and ranchers. In late September, the United States, Mexico, and Canada reached an agreement to modernize NAFTA into a 21st century, high-standard agreement. The three Parties signed the United States-Mexico-Canada Agreement in late November. By addressing market access barriers and rebalancing the obligations among the Parties, the agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.

Additionally, in September, the United States and Korea signed final texts reflecting the outcomes of our negotiations to improve the United States-Korea Free Trade Agreement. The outcomes focus on improving automobile trade, in addition to other provisions including on investment.

In October, the U.S. Trade Representative notified Congress that the Administration intends to negotiate three separate trade agreements with Japan, the European Union, and the United Kingdom, seeking to expand trade and investment. These notifications followed a number of fruitful dialogues with each of these partners.

Earlier this month, the Office of the U.S. Trade Representative published specific objectives intended to establish a trade agreement with the European Union (EU).
We hope to move forward quickly to negotiate this agreement.

Protecting National Interest; Promoting Fair Trade
The enduring U.S.-Belgium partnership is based not only on business and trade, but also on military cooperation and political collaboration. It’s about two countries linked by shared values, sacrifices and common challenges. For these reasons it is critical for us to recognize that our continued common prosperity is also dependent on our joint security. Deterring potential security threats to Europe continues to be a priority for the United States, and our solemn pledge to you as a NATO ally. We welcome Belgium’s decision to procure the F-35 aircraft, which will continue Belgium’s leadership role as a NATO air power. We also welcome Belgium’s participation on the UN Security Council to address issues of our shared security. I have no doubt that these are challenging issues we must address, but I am equally confident in our ability to meet the challenges head on.

I look forward to your remarks and questions.