José W. Fernández: ‘Our supply chain can’t depend on just one country’

Cuban-born José W. Fernández has been Under Secretary of State for Economic Growth, Energy and the Environment in the Biden administration for a little over a year. He leads the State Department’s efforts to develop and implement international policies related to economic growth, energy, agriculture, the ocean, the environment, and science and technology. He also served in the Obama administration and was a partner at the Gibson Dunn & Crutcher law firm in New York where he specialized in mergers, acquisitions and finance in Europe and emerging markets, and advised US and foreign clients in the telecommunications, energy, water, banking and consumer sectors. He was also a director of the Spanish energy giant Iberdrola between 2015 and 2021.

Fernández gave a speech at a September 21 forum organized by EL PAÍS and the Spain-US Chamber of Commerce in New York (sponsored by Abertis, Baker McKenzie, Hiberus and Iberia, with the collaboration of the Organization of Ibero-American States) in which he highlighted the transatlantic ties between Spain and the United States, and their mutual, strong relationships with Latin America. Fernández believes that globalization and economic cooperation remain strong despite the war in Ukraine, but that supply chains cannot be so dependent on one or two countries, an apparent reference to China.

Question. How has the war in Ukraine affected US economic cooperation with Europe?

Answer. The Russian invasion has solidified our cooperation. For example, we’ve had great cooperation in the EU Trade and Technology Council, and every time we meet, the goals are increasingly ambitious on issues like supply chains, semiconductors and energy. We have also coordinated Russian export controls, which stems from our existing cooperation. Both sides have realized the potential of our cooperation and that is what we are seeing in our relations with Europe.

Q. What opportunities does the Inflation Reduction Act offer for foreign investors in the United States?

A. It’s a good opportunity, especially in the field of clean energy. What it demonstrates is the Biden administration’s commitment to meeting our goal of achieving a clean energy future by 2050. There is a very significant amount, almost $400 billion, allocated to clean energy. For the first time, we are doing something that China has done for many years, which is establishing an industrial policy to encourage this type of investment. For example, the law [Inflation Reduction Act] encourages the manufacturing of electric batteries in the United States and offers discounts to buyers of these cars. And this doesn’t just benefit US companies. As long as they [the companies] are here, we are going to provide that kind of support.

Q. Aren’t the laws that effectively require some products to be made in the United States somewhat protectionist? Some of the electric car provisions were not welcomed by the European Union.

A. This legislation took a long time to develop, but what we are trying to do is to fulfill our own commitments to achieving a clean future. Of course, some aspects can be criticized, but we’ve generally received favorable comments from our allies. I do understand that there are some reservations, but it’s something that we are going to continue discussing with Europe and our other allies.

Q. Has globalization taken a step backwards with the pandemic and the war in Ukraine, while economic nationalism in some countries has risen?

A. No, on the contrary. We are realizing that we are all connected. So, what’s happening? We have to recognize that globalization needs certain adjustments. We have to avoid a globalization that leaves many people behind and creates economic gaps in our respective societies. For example, the war in Ukraine has made the United States the top exporter of liquid natural gas to Europe, with more than 50%. This demonstrates that a solution for one continent may be found in another continent, so this is what we have to pursue. At the same time, we must clearly recognize that globalization has left many people behind, so the challenge is to find a way to incorporate these parts of society. It’s difficult, but we’ve all realized that it is not simply a question of globalization. We must also include more sectors of the population and make sure that the production and supply chains are more diversified and secure than they were. Our supply chain can’t depend on just one or two countries.

Q. Has the United States neglected its relationship with Latin America somewhat because of China’s influence?

A. Our ties with Latin America, in my opinion, have become closer in recent years. There are more Spanish speakers in the United States than in Spain. We are the leading investor in Latin America and the largest trading partner of the vast majority of Latin American countries. And something very important that’s not often talked about is that trade between China and Latin America consists of maybe a dozen products, mostly natural resources. Trade between the US and Latin America consists of hundreds of products – it’s a much broader and deep-rooted trade relationship that we want to expand even more.

Q. Many health, education and economic alliances were presented or announced at the Summit of the Americas. Is there a feeling that these lofty plans will never becoming a reality?

A. That’s the challenge. Diplomacy is not only about making such announcements, but also about making them happen. We have a very strong foundation – 200 plus years of common history with the independent Latin American countries. We are talking about human relationships that, in my opinion, are the envy of many countries. We have the luxury of sharing borders with our two best allies. Much of the world would like to have these types of relationships, and we want to continually reinforce them even though we have a very strong foundation. In terms of the announcements [in the Summit of the Americas], people can criticize us for being ambitious. But the challenge – and both Secretary of State Antony Blinken and President Biden have made this very clear – is to make things happen. That’s what we intend to do.

Q. How do you assess the presence of Spanish companies in the United States?

A. I know Spain well. I lived and studied there, and keep up on events in Spain. I’m always amazed by the evolution of the Spanish economy and Spanish exports. It’s not just olives and wine. Spain exports transportation equipment, energy, technology… it’s at a whole new level. We can expand our trade with Spain as well. The United States has become a very important destination for Spanish investors who have done well here, just as our companies have had very good experiences in Spain in many sectors. Why? Because what companies anywhere in the world want is a secure, stable legal system, and governments that want to attract their investment. And the United States and Spain have both welcomed foreign investment.