Luxembourg-US Trade Relations Discussed at AMCHAM Event

On Wednesday 27 November 2024, the American Chamber of Commerce in Luxembourg (AMCHAM), together with Deloitte, held an event dedicated to "Transatlantic Trade and Investment", which included the presentation of the 2024 Annual Transatlantic Trade analysis data papers.

Speakers at the event, held at Deloitte in Cloche D'Or, were: Chairman and CEO of Deloitte Luxembourg, Francisco Da Cunha; AMCHAM Chairman and CEO, Paul Schonenberg; Luxembourg’s Deputy Prime Minister and Minister for Foreign Affairs and Foreign Trade, Xavier Bettel (via video); United States Ambassador to Luxembourg, Thomas Barrett; Consul General and Executive Director of Luxembourg Trade and Investment (LTI) New York, Luc Decker, (via live video); Director of Public Affairs at AmCham EU in Brussels, Thibaut l’Ortye.

Francisco da Cunha opened the evening event by welcoming the United States Ambassador and guests on behalf of Deloitte. He spoke of the importance of transatlantic trade in enabling economic growth on both sides of the Atlantic and highlighted the role of AMCHAM in facilitating the relationship between the United States and Luxembourg. He noted that trade between the US and Europe is the second largest free trade zone in the world and wondered what effect the recent US election results will have on global trade and tariffs.

Paul Schonenberg explained that all AMCHAM chambers in Europe work together to analyse transatlantic trade, and five of those, including Luxembourg, fund the annual report that was carried out by Daniel Hamilton and Joseph Quinlan, from the Foreign Policy Institute of the School of Advanced International Studies at Johns Hopkins University and the Transatlantic Leadership Network.

He then introduced Minister Bettel, who joined the event via video link. Minister Bettel expressed his appreciation of AMCHAM’s work in Luxembourg. He spoke of how the US-EU relationship is based on mutual friendship, trust and respect, and of how he is looking forward to working with the incoming US administration. He referenced the sacrifices of the US servicemen in the liberation of Luxembourg and spoke of the upcoming 80th Anniversary of the Battle of the Bulge.

Ambassador Barrett stated that there was no subject as topical as the question of what will happen between the US and its trading partners in Europe and around the world, following the US elections. He stated that documents have been signed by the outgoing and incoming administrations in the United States to allow for the orderly transfer of information. He stressed that this was a significant step forward. Ambassador Barrett spoke of the 5,000 US servicemen who are buried in the military cemetery in Luxembourg-Hamm and of all those who lost their lives fighting for the country’s freedom. He assured the audience that the strong bond between the countries will remain so and will continue to strengthen due to their historical links. He stated that 68% of the trade between the two countries was in the financial field and these strong economic ties should not be as affected by trade/tariff changes. He emphasised the shared values between the countries: democracy, open government, transparency and respect for individuals.

He continued by discussing NATO and the increase in defensive spending seen since the start of the Russian invasion of Ukraine. The Ambassador applauded the Luxembourg government which is aiming to achieve the goal of spending 2% of GDP on defence. He described how the figure of 3% of GDP is now being discussed and of how this would have an impact in Luxembourg and throughout Europe.

Ambassador Barrett expressed concerns about the relationship between China and Russia. 70% of Russian military tools come from China. According to the Ambassador, the current war in the Ukraine is the greatest threat to Europe since World War 2 and China’s support for Russia is a grave threat to US security and global prosperity. He emphasised that countries have a duty to pursue growth and development responsibly while assessing risks soberly. He concluded by saying that as long as both Luxembourg and the United States stay true to their core values they will continue to prosper.

Luc Decker then joined the event from New York via video link. He underlined the importance of trade relations between the United States and Luxembourg. The US is the number four trading partner of Luxembourg and the only non-European country in the country’s top ten trading partners. He mentioned US companies based in Luxembourg which continue to invest in the country and stated that US industry in Luxembourg is growing. He spoke of the role of US financial institutions in the country and mentioned there are ten large US banks and over 40 asset managers in Luxembourg. This was reiterated by Paul Schonenberg who stated that three of the top ten companies in Luxembourg are American.

Thibaut l'Ortye then presented the 2024 Annual Transatlantic Trade analysis data. Addressing “two tales of the transatlantic relationship”, Mr l'Ortye emphasised that the US is committed to and invested in Europe and wants to maintain and strengthen the transatlantic relationship. All AMCHAM chambers can be resources for the EU and stand for trust, expertise, excellence and transparency. There are both political and economic factors at play in the transatlantic relationship.

A short video shown by Mr l'Ortye showed US-Europe trade in goods as breaking all records in 2023. Profits of US companies in Europe amounted to $350 billion, while those of European companies in the US amounted to $190 billion. Russia’s war in Ukraine, economic uncertainty, US relations with China, energy transformations and supply chain disruptions are factors affecting trade, but the transatlantic relationship remains resilient. The relationship between the US and Europe was described as the world’s largest and most integrated partnership.

He then presented “five facts about the EU-US economy”. The EU and US are each other’s geoeconomic base, responsible for the creation of  sixteen million jobs, two-thirds of global foreign investment stock and close to one-third of world GDP in terms of purchasing power.

Trade must not be looked at in isolation, he noted. Investment must also be considered in the relationship between the two economies. US foreign direct investment in Europe is four times more than its investment in the Asia-Pacific. A range of metrics can be used to measure transatlantic trade and though one may think only of goods, factors such as affiliates and services must also be considered.

The transatlantic energy landscape is also changing, influenced by Russia’s war in Ukraine. This has led to the US becoming an important energy supplier in Europe and to growth in the carbon neutrality sector.

He continued by discussing strategic dependencies and the need to reduce risk factors.  Countries must work together to make supply chains more resilient, thereby limiting dependencies.

The final of the five facts Mr l'Ortye mentioned was EU trade relations with China, which he described as being overplayed in the media. He stated that 48 out of the 50 US states export more to Europe than to China, which emphasises the importance of transatlantic trade.

Finally, the trade relationship between the US and Luxembourg was discussed. Foreign direct investment (FDI) by the US in Luxembourg reached $605.3 billion in 2022 and FDI by Luxembourg in the US amounted to $323.7 billion. US goods exports to Luxembourg in 2022 stood at $1.7 billion, while imports from Luxembourg totalled $0.7 billion. Similarly, US services exports to Luxembourg totalled $9.8 billion and imports from Luxembourg amounted to $2.5 billion in 2022.

In conclusion, Mr l'Ortye stressed that rather than talking about what might happen to the trade relationship because of the forthcoming change in US administration, the focus should be on what is known. US companies in Europe and European companies in the US have key roles to play. Shared objectives should be examined and considered to allow for continued growth in trade relations. Different viewpoints might emerge on occasions but by recognising the importance of an open economy, a positive era for transatlantic trade can be charted. He stated that even if there are testing times ahead there will be opportunities for growth.

Paul Schonenberg brought the event to a close by discussing the role the US has played in Luxembourg, from helping to liberate and rebuild the country to investing in Luxembourg’s financial sector. He stated that Luxembourg’s financial centre is the second largest in the world after New York City. He concluded by announcing he acquired Luxembourg citizenship three weeks ago and stated how proud he was to present the study that shows the close ties between both his countries.