Last Wednesday, April 21st, I had the pleasure of hosting a webinar on behalf of the US Spain Executives Community with the title ”Biden Era, Impact on US Spain relations”. We had the privilege of talking with Spain’s Ambassador to the US, Santiago Cabanas, and former US Ambassador to Spain, Alan Solomont. You can find a full description of the webinar, their bios and the complete video at the event web page.
The purpose of the webinar was to discuss the changes derived from the transition to the new Biden Administration and its impact on the bilateral relations between Spain and the US. It focused on economic and business aspects, including topics like multilateralism, immigration, trade, tariffs, business opportunities and other areas. Even though the focus was the bilateral relationship between Spain and the US, many conclusions can be extrapolated to the relationship with other EU countries and even other regions.
This article tries to summarize some of the conclusions that can be drawn from this conversation as they apply to international companies trying to enter the US market.
Before we start, let’s clarify that even though Ambassador Solomont is obviously not the current Ambassador of the US to Spain, his opinions are extremely interesting for multiple reasons. First, there is no current Ambassador yet, the position is currently held by Incumbent Conrad Tribble, Chargé d’Affaires ad interim since January 20, 2021 until an Ambassador is appointed by the new US Administration, a process that may still take some time. In addition, Mr. Solomont was the US Ambassador to Spain during the first four years of Obama’s presidency (2009-2013), and he has been involved in six presidential campaigns for the Democratic party. He is also a member of the Board of Directors of Avangrid, the US subsidiary of a major energy company from Spain (Iberdrola), and is chairman of the Spain-US Chamber of Commerce. For all these reasons, he was able to provide highly valuable insights about what can be expected from the Biden Era and its impact on international companies.
Ambassador Cabanas has been Spain’s Ambassador to the US since 2018 and previously served as a Political Counselor at the Embassy in Washington, DC and as Consul General in Miami, Florida. As a consequence, his knowledge of both countries is also profound.
Therefore, their experiences are complementary and this led to a fascinating conversation. These are the main conclusions that I would like to highlight:
- Significance of the change from Unilateralism to Multilateralism: As Ambassador Cabanas stated, the new era provides an “opportunity to build back better, with three main pillars: correcting the excesses of globalization, strengthening the democratic values and working with a renewed multilateralism.” In his opinion, this is illustrated by the return of the US to the Paris Agreement on Climate Change and its interest in becoming more involved with the World Health Organization and the World Trade Organization.
- Immigration: As Ambassador Solomont stated, Biden’s views on immigration to the US are radically different from those held by the previous President, as demonstrated by the end of the immigration suspension which took place at the end of March of this year. This will make it easier for international companies to transfer employees to US subsidiaries once the current travel ban ends and the long backlog of pending applications starts being processed.
- Travel Ban: Ambassador Cabanas indicated that at this point there is no clear information on when the existing bans will be lifted by the US. They impact travelers from the Schengen Area, as well as the UK, Brazil, China and South Africa. It is difficult to make any predictions on this area.
- Trade & Tariffs: Both Ambassadors agreed on the positive developments on this front as shown by the agreement announced on March 5th by the EU and the US to suspend the punitive tariffs that had been applied on each other as a result of disputes associated with public aid to Boeing and Airbus. These tariffs were impacting many European exporters of food and wine. Ambassador Solomont stated that a strong push towards an ambitious trade agreement with the EU, the Transatlantic Trade and Investment Partnership (TTIP), should not be expected in the short time given the current priorities but could be seen later down the road.
- Digital Tax and potential new US tariffs: The US Trade Representative Katherine Tai has been speaking recently about the possibility of applying tariffs on goods from 6 countries, including Spain, as retaliation for their digital services taxes which impact large US providers like Google, Facebook or Amazon. Ambassador Cabanas explained that there is an ongoing negotiation and that for the moment there are no plans for new US tariffs. He is hopeful that an agreement will be reached avoiding new tariffs.
- Infrastructure bill. President Biden is currently negotiating with Congress the “American Jobs Plan” which includes a massive investment in infrastructures and technologies preventing climate change, initially expected to be around $2.3 trillion (European billions). Ambassador Solomont confirmed that this bill, if enacted, could become a great opportunity for international companies that are highly competitive in sectors like construction, transportation (such as high-speed trains) and renewable energy. He acknowledged the difficulties in getting the US Congress to approve this complex bill, which will require a challenging negotiation. He stated that it may take some time to see it enacted and that it may be broken into smaller bills.
- US Market Entry: Ambassador Solomont, who serves in the Board of Directors of a major foreign-owned company, Avangrid, and is chairman of the Spain-US Chamber of Commerce, has a unique view of the challenges faced by international companies trying to get access to the US market. He recommended them to find good US-based service providers specialized in market entry and to partner with them. He highlighted the many opportunities for small and medium size businesses in the US despite the fact that it may be seem like a daunting market. Ambassador Solomont also indicated the importance for international companies to create strong roots in local communities and to partner with them to get the best guidance for their efforts.