As prepared for delivery
I’d like to start with a quote from President Biden: “The U.S. and Europe and democracies everywhere are stronger when we work together to advance our shared values like fair competition and transparency.” This is a key quote for me, coming from President Biden’s first trip, to attend the G7, the NATO summit, and the U.S.-EU Summit. It shows the positive and affirmative vision of the world where we are stronger together when we promote transparency and competition.
You may know that this year we celebrate 100 years of bilateral relations, a milestone in our long and enduring relationship. One of our strongest connections is economic. A few points to illustrate our connectedness, based on currently available data:
Our two-way trade was recently valued at $7.4 billion. There are over 1,700 American businesses operating in Hungary, providing jobs to some 105,000 Hungarians. The United States is the second largest investor in Hungary and its second most important trade partner and number one export market outside the European Union.
Hungary is currently a great destination for American investment- its strategic location in Europe, access to EU markets, highly skilled and educated work-force, and sound infrastructure have led companies such as GE, Blackrock, UPS, Coca-Cola, National Instruments, Microsoft, IBM and many others to choose Hungary.
We see opportunities to build on this success. For example, from both an economic and a security perspective we would like to see further growth for U.S. firms in the energy sector. We believe it is vital for countries to have diverse sources of energy. Already, U.S. companies are some of Hungary’s largest domestic oil and gas producers. U.S. firms can also provide important options for Hungary: renewables, liquified natural gas (LNG), small modular reactors, and unconventional drilling could all help boost Hungary’s energy security and drive down energy costs for consumers.
These are all positives. We also have concerns. One, built on strong bipartisan consensus, is a concern about the PRC, and we saw this emerge during President Biden’s trip to Europe. Significantly, the United States and our European allies agreed to work together to challenge and counter China’s non-market practices that give China’s companies an unfair advantage. We created a Trade and Technology Council with the EU to develop tools and methods to look at what the PRC has been willing to do to take technological advantage. Whether that’s been stealing intellectual property or engaging in industrial espionage or forcing technology transfer.
There is a key distinction to make here. We recognize every country is going to have an economic relationship with China. It’s a major economy. It’s well integrated into the global supply chain. And commercial activity with market-driven firms is a normal part of relations. But we should also be clear-eyed. The principle here is transparency.
In a business environment a lack of transparency equals uncertainty. And uncertainty is bad for the business and the investment climate. 5G is the future. In Europe many countries have taken steps to implement either laws or policies to protect that critical infrastructure. We encourage all of our partners and allies to do this. And we stand ready to share our expertise and experience.
It is known that the PRC can order Chinese entities to share data with it, which is a potential vulnerability for sensitive information. It is important for us that Hungary and other NATO allies protect national security and strategic sectors. We want to help Hungary and Hungarian businesses understand the risks of doing business with different kinds of Chinese entities so that those risks can be handled appropriately. Risks like this create uncertainty, and uncertainty is bad for business.
Huawei is not the only question. There are, for example, the questions of the Budapest-Belgrade railway and Fudan University. The details of these projects are not transparent, which can cause problems. Maybe you read the article published two weeks ago in the New York Times about Montenegro’s “road from nowhere to nowhere,” a 25-mile stretch of highway that serves no practical purpose. Montenegro took out a nearly $1 billion loan from the PRC to hire a Chinese company to import Chinese workers. The interest rate was unfavorable and the debt has proved unsustainable, which has members of the government complaining it has affected finances at the national level. Further, terms dictate that China can seize the property in the event of default. The people of Montenegro are experiencing the effects of this deal.
To close, there’s very strong support in Washington for preserving the free and open international system that we’ve constructed with our allies, a system that is based on market competition and transparency. We’re working to uphold this system because it has underpinned the prosperity that we’ve seen around the globe over the past seven decades. And when that free and open system is challenged, we are going to work to defend it and its benefits.