Competitiveness – a more holistic and multidisciplinary approach required

Competitiveness, innovation and investment attraction were centre stage at the 3rd US-Portugal-EU Transatlantic Business Summit organised by the American Chamber of Commerce in Portugal (AmCham) in Lisbon in October.

The overall theme of the summit was competitiveness, which was discussed at macro and micro economic levels, looking at the challenges and opportunities facing Portugal and its sectors and companies.

The all-day conference was divided into four panels, according to topics that ranged from talent and innovation to technology and sustainability.

In his introductory remarks, the President of the American Chamber of Commerce, António Martins da Costa highlighted the current geopolitical and geo-economic panorama of inflated world prices, the ongoing war in Ukraine, the recent event in Gaza and Israel with an “unexpected degree of barbaric violence” and the risk of the conflict escalating in the Middle East.

Then there are volatility of energy prices, inflation and interest rates that are still too high, the dependency of a few countries for access to critical raw materials, such as lithium and cobalt, as well as special components like semi-conductors, continuing unstable logistics and supply chains, promising developments in AI but with an unknown as to the full consequences, hegemonic competition between China and the US, and the pressure to create a new global order from the ‘global south’. (Brazil, India, Pakistan, Indonesia and China, Nigeria, South Africa, and Mexico)

“It is exactly at times like this that cooperation between states and businesses to develop the best possible assessment of the global situation, with discussions and analyses with experts from different areas and backgrounds, and decide on the best partnerships and strategies to follow in the short, medium and long terms with the agility and flexibility to adapt and change tack when circumstances change,” he said.

Changing competitiveness strategies

And, he said, it was important that these strategies for business continuity and growth are framed around environmental, social and economic sustainability (ESG) where the focus on competitiveness of the economic dimension without which the other two cannot exist.

“Competitiveness in a fast-changing environment in circumstances like today is necessarily different from the concepts used under more predictable times. Traditional strategies for competitiveness have been focused on lower production costs, a subject which touches the variables of productivity, occupation, resources and supply chains, and premium pricing for top quality products and value branding strategies.

“Today, other variables also have an impact on competitiveness, and these variables adopted by countries and companies mean they perform significantly better than those who don’t. A few of these variables that must be considered for investment decisions in international business include availability of talent in schools, reliability of infrastructures (logistics, telecommunications, energy, services, business schools, and engineering schools, etc), explained António Martins da Costa.

Also, access to tax incentives and grants, statutes of the legislative and judicial systems, as well as regulation, anti-corruption and ethics, safety and security situation, how human rights, diversity and inclusion issues are treated, the strength of innovation in R&D, technology ecosystems, energy transition and financial conditions were other variables. (Whether through capital markets equity, bond issues, or banking systems) where a country’s rating and risk has an impact on corporate financing costs.

“A more holistic and multidisciplinary approach is therefore needed to be competitive and there are good examples in the business relationship between the US and Portugal. António Martins da Costa highlighted that the US was the fourth main client state for Portuguese exports (€9Bn in 2022 and €5Bn in imports) of goods and services”, said António Martins da Costa.

The US was also the fourth largest source of visitors in 2022 (1.5 million/22% share) as well as being one of the top FDI providers in Portugal, especially in technology and real estate. (US$8.2Bn of FDI stock).

Portugal and the US – partnering to protect democratic institutions

The Ambassador of the United States of America in Portugal, Mrs Randi Charno Levine in her remarks on transatlantic relations pointed out that the US has the largest economic relationship in the world, accounting for one-quarter of global trade and 40% of global GDP.

She stressed that the partnership between the US and Europe was based on common democratic values and a common vision including a commitment to democracy, the rule of law, respect for human rights, economic opportunity and the pursuit of prosperity and security.

“The United States and Portugal have made significant strides in our common foundational issues, including Portugal’s conditional and continued support for Ukraine. “In the 21st century no dictator can come in and uni-laterally threaten the territorial integrity of another country”.

“I also want to thank Portugal for partnering us to protect our democratic institutions, in shaping the rules of the road on technology, cybersecurity, in trade and economics. The EU has raised awareness about the national security risks of using untrusted vendors, particularly in the 5G networks”, she said in a nod to China.

The ambassador also commended Portugal’s implementation of the Electronic Communications Law – in line with several other EU States – which provides general rules on competition regarding 5G networks.

Accelerating energy transition

On the climate change challenge the ambassador emphasises the transition to renewable energy. We must not create the kind of dependencies in sustainable energies as Europe did with Russia over fossil fuels”.

“We are working urgently to build resilient supply chains, particularly when I comes to key technologies and the critical materials that are needed to make them”.

The recently signed Inflation Reduction Act, a landmark United States federal law, which aims to curb inflation by possibly reducing the federal government budget deficit, lowering prescription drug prices, and investing into domestic energy production, while promoting clean energy, and is the single largest investment in climate change energy solutions in the US’s history offered “significant opportunities for European partners” and “benefits to the European energy sector” by accelerating energy transition and realigning clean energy supply chains to trusted partners.

“We know that major Portuguese companies are already taking advantage of the benefits that the IRA has to offer. US customs officials have told me that solar panel imports have reached record levels in 2023 due to the 24 month tariff waiver the Biden administration established in 2022,” said Mrs Randi Charno Levine.

The ambassador also met a trade delegation in the US of European companies along with aicep and AmCham focused on renewable energies, critical minerals, and electric mobility to New York and Washington DC to meet with financial institutions, policy makers, and to collaborate with other US companies.

Trade and investment growing every day

Mrs Randi Charno Levine said that trade and investment between Portugal and the US were growing. “Everyday I hear about new investments from US companies both large and small with Portugal”, including the news from Google about the Nuvem, a new transatlantic subsea cable system to connect Portugal, Bermuda, and the United States.

Named after the Portuguese word for “cloud,” Nuvem will improve network resiliency across the Atlantic, helping meet growing demand for digital services. The new cable path will add international route diversity and support the development of information and communications technology (ICT) infrastructure for the continents and countries involved.

Amkor Technology, a world-class provider of advanced semiconductor packaging, assembly and test, engineering and manufacturing services was also expanding to Portugal. ATEP offers in-house capabilities for the entire development chain, from design to multiple wafer level packaging and MEMS & sensor technologies to test solutions that respond to the most demanding customer requirements.

Amkor’s investments in the capabilities of its Portugal facility allow it to support local supply chain agility and are poised to help EU-based customers within its 500,000-square-foot, IATF 16949 certified Porto facility.

“Please, do not let anyone tell you that US companies are not here (in Portugal) and that the US does not show up. That is an old myth that I think we can all agree we are disproving every singe day.”

The ambassador added it had been a pleasure to reconnect with the “amazing folks from the Portuguese diaspora in “Little Portugal” — in the Ironbound district of Newark, New Jersey. “It was an honour to share the stage with President Marcelo as we work together to strengthen our economic and cultural ties for success on both sides of the Atlantic”.

And continued: “We are working to harness interest and investment from the Portuguese diaspora, especially in the energy sector, for example, the US-based Ethos Asset Management founded by the Portuguese entrepreneur Carlos Santos who has announced his entry into the Portuguese market, with capital of US$7.5Bn to finance projects focusing on the energy sector”.

Another example of private sector investment involving Portuguese companies was a series of transformative US investments in the Lobito Corridor in Africa to upgrade critical infrastructure and unlock economic benefits for several Sub-Saharan countries, with the involvement of a Portuguese construction company Mota-Engil, aimed at connecting Angola, the DRC, and Zambia.

The Lobito Corridor is a trans-regional infrastructure project connecting southern DRC and northwestern Zambia to global trade markets via Angola’s Port of Lobito. Initially, the US-EU partnership will support the respective governments in the launch of pre-feasibility studies for the construction of a new railway line linking eastern Angola with northern Zambia. The US has already provided financial support for the refurbishment of a line linking the Lobito Port with the DRC.

Thereafter, the US and EU will facilitate investment and development in critical minerals and clean energy supply chains; digital access and technology transfer; capacity building and workforce development; economic diversification and SME support; and agricultural value chains amid food security and production concerns.

“This project will develop 500 MW of power, a new port, new roads and rail lines, high speed internet and enough electricity power for 2 million people, cutting around 900,000 tonne of carbon emissions per annum and creating thousands of jobs for Africans, Portuguese, and Americans bringing copper and cobalt to global markets ,” said the US ambassador.

Emerging technologies

A similar approach involving European partners was evident in emerging technologies like artificial intelligence (AI) with voluntary commitments from seven tech companies – Amazon, Anthropic, Google, Inflection, Meta, Microsoft, and OpenAI  to develop safe, secure and trustworthy systems.

Threats from China

Separately, the European Commission is drawing up a list of new critical technologies that the EU wants to protect from threats. Four of these have been highlighted as particularly dangerous if they fall into the wrong hands or if the EU remains too dependant on autocratic regimes like China.

“We believe that these technologies require the effective development of an investments screening programme that looks at long-term national security before accepting investments, particularly from State-owned enterprises”.

“Now is the time for democracies like Portugal and the United Staes to come together to shape the international rules that will govern our future. We met work with like-minded partners to expand and strengthen transatlantic business relationships as one of the critical drivers for our economic property. We must cooperate to advance technology in areas such as cyberspace, artificial intelligence and biotechnology to ensure these technologies are used to uphold democratic values and not used for oppression. We all see how visioning has been used for mass surveillance in China, and has exported that technology to more than 80 countries. How China is advancing unlawful maritime land reclamation in the South China Sea, undermining peace and security, freedom of navigation and commerce. How china is circumventing and breaking grade rules, harming companies in the United Staes and around the world”, the ambassador concluded.

Photo: AmCham – L-R: US Ambassador to Portugal, Randi Charno Levine, Portuguese President Marcelo Rebelo de Sousa and AmCham President, António Martins da Costa.