Digital Press Briefing: Under Secretary of State for Economic Affairs Jacob Helberg

MODERATOR: Good morning from the State Department's European Regional Media Center, or the Brussels Hub. I would like to welcome everyone joining us for today's virtual press briefing. Today we are very honored to be joined by Jacob Helberg, Under Secretary of State for Economic Affairs.

Finally, a reminder that today's briefing is on the record, and today's call is focused on emerging technologies, economic and regulatory issues. And with that, let's get started. Under Secretary Helberg, thank you so much for joining us today. I'll turn it over to you for your opening remarks.

UNDER SECRETARY HELBERG: Thank you so much. It's great to be with everyone who dialed in. I'm very excited to get a chance to share some high-level thoughts on how the U.S. sees the current moment between Europe and America. We are here today at a time when there's obviously the juxtaposition of a lot of different dynamics in our relationship. From an economic and technological standpoint, we're really at an inflection point, and Europe is - has obviously been home to some of the world's most cutting-edge innovation for almost 2,000 years; it was home to the first Industrial Revolution. And the Trump Administration has real concerns about the lasting power of European technological prowess.

My mother worked at the European Commission here in Brussels. I remember the pride that she took in that work - not just professional pride, but something a lot larger, and the sense that she was part of something truly historic. And like a lot of other Europeans, she wanted to believe in that project, and she did. And ultimately, 26 years later, what we see today is that for that project really to thrive, it has to be willing to face certain hard realities that don't get easier the longer you wait to name them.

So part of what I'd like to do in this conversation is help unpack a little bit some of the key issues that we see as really areas of opportunity to rejuvenate European economic growth as well as the vitality of our bilateral economic relationship.

MODERATOR: Thank you, Under Secretary. We will now turn to the question-and-answer portion of today's briefing. And our first question goes to Nikkei. Under Secretary, the question is: "You argued in The Wall Street Journal on Monday that the U.S. risks being without powerful allies in a race against Chinese dominance. How concerned are you that the EU is spending too much time on regulation and too little time on addressing the challenge posed by China?"

UNDER SECRETARY HELBERG: Well, thank you for the question. And I'm very concerned about this. And let me just zoom out and share a little bit on how I see the broader context in which we're having this conversation about regulation versus AI-led growth. Western Europe has not had meaningful economic growth in over a generation, and the Draghi report laid out in very plain language that Europe largely missed out on the digital revolution of the 2010s; the platforms, the cloud infrastructure, the foundational AI models were built elsewhere, scaled elsewhere, and valued elsewhere. And now in AI, as AI reshapes every economy on Earth, Europe is increasingly accruing a lag that will be very, very hard to reverse and probably not reversible in years but could potentially take a generation to undo.

So we see that fundamentally as not really a policy disagreement; we really see this as a civilizational emergency. And so for us, it's - it is a time that's puzzling and confusing to see the quietude around this in a lot of European corridors, almost like a resigned shrug, as though 0 percent growth in a world growing at 3 percent is simply a normal part of the European condition now and something that should be managed rather than fought. And that indifference we really see as a soft defeatism of perpetually lower expectations, and that's the thing that really worries me the most - not the stagnation itself, painful as that is, but the accommodation to it.

The regulations have really strangled the European economy for over a generation now, and we want to be a helpful partner in working with our European counterparts to help seize opportunities of the future, secure our supply chains, facilitate joint ventures, offtake agreements, but Europe really needs to help itself by creating a business environment that actually makes risk-taking and the allocation of private capital a lot easier. We want to be partners. We are always happy to share our thoughts and our ideas. We have many. Ultimately, the decision on how to run Europe is really - solely lies in Europe, but as a close friend and longtime ally, we are here to be a helpful resource.

MODERATOR: Thank you, Under Secretary. The next question is from Adnkronos: "The EU would have to change the AI Act and other digital rules to be able to join Pax Silica?" And that's a question.

UNDER SECRETARY HELBERG: So the EU would not have to change the AI Act in order to join Pax Silica, thought I will say we have - we do have serious concerns about the AI Act, and the concerns are basically - are specifically that the AI Act does not in effect really protect European citizens. What it does is it protects the European market from foreign AI companies while ensuring that European AI development remains permanently behind. We see that as an unintended consequence of the AI Act that is very concerning because we believe AI is one of the most transformative economic revolutions since the Industrial Revolution, and the AI Act's stifling effect on AI development in Europe means that Europe is on the precipice of missing this revolution, which could really have significant reverberations at a macroeconomic level on the way that Europe ranks among the world's nations internationally.

So it's not a precondition, though we obviously have concerns about its effect. We do want to resolve ongoing issues with the Digital Markets Act. The Digital Markets Act is increasingly consuming more - a greater and greater share of the bilateral relationship between Europe and the United States. We have - Europe and America have a very multifaceted, comprehensive partnership, and so - but ultimately we view the DMA as really being one of the - one of the biggest impediments to and obstacles to having a strong and vibrant economic transatlantic partnership.

So we're confident that if we can work through those sets of issues, we can actually get back to having a very, very robust, comprehensive economic agenda. I have been very encouraged in my conversations with Ambassador Puzder and our counterparts in the European Commission this morning, where I'm very confident that we will be able to engage in a process and a dialogue that will allow us to actually table some of the areas of disagreements on the DMA specifically. And I'm hopeful that we will actually get to a place that is certainly more propitious for continued - the continued deepening of our economic partnership.

MODERATOR: Thank you, Under Secretary. There's a related question from Euractiv: "The commission did not get its negotiation mandate on Pax Silica on March 27th. How do you analyze this situation?"

UNDER SECRETARY HELBERG: I'm not going to attempt to provide commentary on the internal workings of the European - processes of the European Commission. We have offered for the European Commission to join since December. Ultimately, we view this as fundamentally in Europe's interest. Being part of the AI supply chain is fundamentally in the European interest.

So we would like them to join. We do have outstanding substantive differences between the U.S. and Europe that are worth noting, particularly on the DMA. And ultimately, being part of Pax Silica is really about deriving value from the AI supply chain, from every layer of the AI supply chain, and actually being a partner to win the AI race. And so we believe that Pax Silica will provide a product-driven approach to supply - to supply-chain security that leverages a coalition of capabilities and that European countries have a lot to offer. So for instance, just a few weeks ago, I was at an Ericsson factory in Dallas. I've had conversations with the heads of German companies. Germany, South Korea, and Japan are home to some of the world's most advanced German industrial machinery companies.

So we do view the - and tomorrow I'll be in the Netherlands and visiting executives of ASML. So we do view the relationship - we do view Europe's participation in Pax Silica as being highly strategic. However, we want to do it right. We don't want to rush it. We recognize that we have substantive differences that are really worth noting. For example, with India, we signed a joint statement on AI opportunity that actually has a lot of important clauses on AI - on promoting a pro-innovation agenda on AI. And we need to iron out whether that basic principle is something that can be consistent with Europe's approach moving forward.

We want a pro-innovation agenda on AI, and we believe that is in our interest, in Europe's interest. And so we look forward to engaging in a dialogue with the European Commission to iron out these different issues and ultimately getting to a successful conclusion.

MODERATOR: Thank you, Under Secretary. Now we'll move over to a few live questions from the journalists on the call. First up, Radio Free Europe/Radio Liberty, please ask your question. Radio Free Europe, if you can hear, you're unmuted.

Okay, maybe you just add it into the chat. And I'll hand over to Politico for a live question.

QUESTION: Hi, could you hear me now? This is Alex from Radio Free Europe - Alex Raufoglu.

UNDER SECRETARY HELBERG: Yeah.

QUESTION: Yes, thank you so much for doing this, Under Secretary. Going back to your opening statement, which is certainly in line with the statements that we just heard from the President and the Secretary just a couple of hours ago, is this really a burden-sharing problem? And if so, what should Europe do differently in the couple of days, months, weeks to remain a credible partner to Washington?

Second question: Do you worry that visible fractures in U.S.-EU relationship could create openings for adversaries, mainly rivals like China and Russia, to exploit? Thank you so much.

UNDER SECRETARY HELBERG: Sorry, the first part of your question, was that in - are you referring to something in our economic relationship or are you referring to the Middle East and Iran?

QUESTION: Both, actually. The President's - given the President's statement and also the Secretary's statement that we will be reconsidering our relationship, could you help us understand where - what exactly is this all about?

UNDER SECRETARY HELBERG: So I don't have the full context of the statement that you're referring to right in front of me, just as given that I'm on the road, but what I will say from an economic standpoint is, as you know, there are ongoing trade negotiations with Europe that are actually being - taking place in a very productive way. We have the critical minerals agreement that's underway that is also maturing in a very constructive way. We are having very constructive conversations around Europe joining Pax Silica.

So from an economic standpoint, from our viewpoint, we're actually making progress on a number of different fronts. With that being said, as you point out, our comprehensive with Europe is extremely multifaceted and therefore, while we're making progress on a number of different areas, there are areas of divergence that remain. And as I said earlier, the biggest single source of friction in the U.S.-EU relationship from an economic standpoint is the recurrent fines - very onerous, punitive fines - instated on U.S. companies. And we are very concerned to hear public reporting that there could be another round of fines instated on U.S. companies shortly ahead.

So these fines generally, but the DMA specifically, really is an issue that we believe needs to be defused and ironed out in partnership with the European Commission in order to regain as broad - as broad of a terrain as possible in our economic relationship to really make faster headway on all of the other fronts.

This morning I had incredibly productive conversations with - on supply-chain security. We discussed a number of different European companies who play an integral part of the global supply chain. We really view that as opportunities for collaboration. I believe we would be moving a lot faster if we didn't also have to simultaneously address the sources of the friction that directly stem from the DMA.

MODERATOR: Thank you, Under Secretary. And now we'll go over to Reuters for a live question, please.

QUESTION: Hi, this is Toby Sterling; I'm based in the Netherlands. So I'm just curious - you're going to go meet ASML tomorrow. Is the U.S. kind of satisfied with the current package of restrictions that are on ASML and what they export to China?

UNDER SECRETARY HELBERG: Thanks for the question, Toby. So as I pointed out earlier, I mean, I meet with them tomorrow, so I'm going to reserve my feedback. I'm going to make - give them the opportunity to hear my feedback directly from me rather than from Politico. But I will definitely share that information with them and with the full space of trust and confidence in a private setting, and if there are public comments that are appropriate after I speak with them, I'll make sure to follow up.

MODERATOR: Thank you, Under Secretary. Politico, over to you for a live question.

QUESTION: Secretary, Nick Vinocur from Politico.

QUESTION: Okay. Yeah, just a quick one. So the U.S. has some sanctions in place on some of the people behind the digital regulations that you were talking about earlier. I just wanted to ask you about an update. Do you think those sanctions are still appropriate? There are discussions we know between the two sides on getting them lifted. And then in general, I know it's a little bit outside of your wheelhouse, but we had these comments from the Secretary of State overnight about NATO and sort of what's the point of it if we can't use the bases. Do you think that the transatlantic relationship is really in a dangerous place right now because of this?

UNDER SECRETARY HELBERG: Well, I'm not going to comment on military affairs and the ongoing operation in the Middle East. But what I will say is I'm not aware of any changes to our current sanctions regime. I - as you point out, there are - and as I pointed out earlier, there are ongoing negotiations in the U.S.-EU trade agreement. So we - those negotiations are being spearheaded by the U.S. Trade Representative, and my team plays a supporting role in those negotiations, and we're very happy to support as well as excited to see the progress that they're making. And ultimately, we look forward to those negotiations hopefully reaching a successful conclusion very soon.

QUESTION: Thank you.

MODERATOR: Thank you, Under Secretary. We have time for one more question, and it will go to Western Arc in France. And the question is: "EU and French regulators are increasingly tightening controls on digital speech and online platforms. What actions can the United States or aligned actors take to support European initiatives defending free expression?"

UNDER SECRETARY HELBERG: Well, so this I think - I believe this would be an issue that would really be - so let me actually break down that question into two parts. I think there is the question of how do we support free speech, and then the sort of connected and related question of how do we support the impact that these regulations have on the cost of doing business and the economic impact. The first question is really a political question, which is the impact that these regulations have on political freedom; and the latter is a question that's really more purely economic.

The political freedom one is really an issue set that has been championed by my colleague Sarah Rogers. I think she, like I, have both been very vocal about these regulations. Ultimately, we're very concerned about the impact that these regulations have if not in intent, in effect. Certainly from an economic standpoint, what we have seen is Europe's share of global GDP decline gradually year after year after year. And we have also seen a pattern whereby the European Commission has, regulation by regulation, arrogated more and more power away from sovereign national governments in Europe to a point where the European Union started as a common market of coal and steel, and today the coal is gone, the steel is gone, and what we're left with is a bureaucratic architecture that is really strangulating the European economy.

And so we have been very vocal about the DMA because it directly targets and punishes American companies, but I think it's fair to say that the fines were on American companies but the people who actually pay the cost of these regulations are European citizens. Because these regulations have had an enormous chilling effect on private investment in Europe. There is an enormous amount of private capital that would have otherwise been invested in Europe that has not been because Europe, through these regulations, has built an international reputation for being unhospitable to private investment.

And so we want to be honest about these issues. We think it's really important. If - we think that being silent is really a form of abandonment, and we reject the idea of accommodating - we're seeing an ally that has 0 percent growth in a world that's growing at 3 percent, and we think that pretending like that's normal is actually the soft defeatism of lower expectations. And so we view it as a form of caring to actually be totally honest, even if it's uncomfortable, even if sometimes people don't want to hear it, to share our concern that Europe has every element at its disposal to do a lot better and to perform - to actually achieve 3 percent growth and get back to full employment and be economically strong again.

We - as Secretary Rubio said in his speech in Munich, we want a strong Europe and we view it as fundamentally in the American interest to have a strong Europe. And ultimately, right now what we are concerned about is Europe drifting farther and farther out onto the periphery of the global economy, and ultimately the periphery of history. And we don't want that to happen.

Today at 2:00 p.m. I'll be at the German Marshall Fund delivering a speech, and would invite all of you to tune in because it'll be an opportunity for me to unpack a lot of these issues, and I think a number of you will find them hopefully quite interesting but hopefully they'll help answer a number of your questions as well.

MODERATOR: Thank you, Under Secretary. Unfortunately, that is all the time we have for today, unless, Under Secretary, you would like to make any final remarks for the group.

UNDER SECRETARY HELBERG: I appreciate everyone for taking the time. I - as I mentioned earlier, I'll be at the German Marshall Fund at 2:00 p.m. and my remarks will also be livestreamed online. I will deliver remarks followed by a fireside, so I will - I think it'll be a good opportunity to have - unpack a lot of these questions in a long-form format.

MODERATOR: Thank you very much, Under Secretary, for joining us today. It's a real honor to have you with us. And thank you to all of the journalists for joining and for your questions. Shortly we will send the audio recording of the briefing to all the participating journalists and provide a transcript as soon as it is available. We'd also love to hear your feedback and you can contact us anytime at [email protected]. Thank you again for your participation and we hope you can join us for another Brussels Hub press briefing soon. This ends today's press briefing. Thank you.