As nations around the world deal with global economic volatility, the European Union’s ambassador to the U.S. visited Phoenix this week to discuss the future of the European-American trade relationship.

Ambassador Jovita Neliupšienė was a featured speaker at the Circular Economy Forum, which brought together business leaders and government officials from Southwestern states and Europe to discuss ways to improve energy efficiency while continuing to grow their economies.

Neliupšienė met with Arizona officials, including Gov. Katie Hobbs and Phoenix Mayor Kate Gallego, to talk about how both sides can work together to address critical issues facing their economies.

“Arizona is a global leader in technology and economic development. By promoting our competitive advantage with our European partners, we can continue attracting investments to build a more efficient and innovative economy,” Hobbs said in a statement. “Arizona is committed to growing our economy, driving innovation, and creating good-paying, family-sustaining jobs.”

Neliupšienė said the talks focused on how both sides can share expertise, like recycling and other technologies to restore watersheds and preserve water resources in the American Southwest.

“In Europe, we mostly recently invested and developed technologies, for example, in reusing critical minerals and rare earths,” Neliupšienė said, noting that recycling those materials can cut costs by 40% and reduce energy consumption by 80% to 90%.

Why Arizona?

Organizers chose Phoenix to host the second annual forum after partnering with Maryland Gov. Wes Moore for the inaugural event last year.

Neliupšienė said Arizona made sense because of the state’s already-strong trade relationship with the European Union.

“We are the second largest export market for Arizona after Mexico,” she said. “Our trade relationship is massive.”

According to the Arizona Commerce Authority, Mexico is Arizona’s largest export market, with $14.6 billion worth of goods and services sent to the country last year; followed by Taiwan ($4.5 billion); Canada ($2.8 billion); the Netherlands ($2.4 billion); and Germany ($1.6 billion).

However, the European Union market – including all 27 member states – eclipsed Taiwan with $9.8 billion in exports from Arizona during that time.

Much of those exports come in the form of aerospace products and professional, scientific and technical services, according to the European Commission.

Arizona also imported $6.8 billion worth of goods and services from the European Union last year, trailing only Taiwan and Mexico.

“Our trade relationship is massive,” Neliupšienė said.

European nations are also heavily involved in Arizona’s booming microchip and semiconductor industry.

“In order to produce the most advanced chips, you need European lithography machines, which ASML (manufactures),” Neliupšienė said, referring to a Dutch company that has a location in Chandler. “In order to build a data center, you need robots, which actually mostly come from European countries, namely Germany, French, Italian production.”

Unstable trade winds

Neliupšienė made the comments as the status of the European Union’s trade relationship with the U.S. is still in flux due to President Trump’s trade war against countries around the globe.

After the U.S. Supreme Court struck down many of Trump’s tariffs earlier this year, the president announced a 15% global tariff.

Trump has pointed to a trade imbalance with Europe to defend his tariffs, though Arizona actually has a $3-billion trade surplus with the European Union, according to the Arizona Commerce Authority.

Neliupšienė said the trade war’s unpredictability isn’t good for businesses on either side of the Atlantic.

“We don’t believe the tariffs are the most efficient policy of trade,” she said. “We believe that there are other options of how you actually make a profit or how you make mutually beneficial relations work.”

However, she expressed optimism after Secretary of State Marco Rubio signed a preliminary critical minerals deal with EU officials. 

EU officials are also currently finalizing legislation to codify a trade deal struck by the U.S. and European Union in Scotland last year.

Under that deal, the U.S. would impose a 15% tariff on most E.U. exports.

Neliupšienė said anything higher would be unsustainable.

“But I think that unless we are sure that we are keeping 15% of tariffs all inclusive, and it does not really go beyond that, so there’s still the business case there,” she said. “If we are back to this volatile situation where it’s changing with the day or within the couple of weeks, the unpredictability becomes a huge, huge, huge problem.”

Politico reported progress on finalizing the deal has been delayed by the desire to add safeguards from some European parties while the U.S. and Germany oppose making changes.