Economic cooperation is currently the strongest pillar of Hungarian-US relations, and Hungary is counting of US companies to bolster ties between the two countries, the minister of foreign affairs and trade said in Budapest on Monday.
Speaking at a business forum organised by the American Chamber of Commerce (AmCham), Péter Szijjártó said the war in Ukraine had put an end to hopes of a calmer period after the coronavirus pandemic.
Although the war itself is a regional conflict, Europe is paying the price for it in “skyrocketing inflation, high food and energy prices and falling competitiveness.”
“Europe’s decision to compete with a leading military power, the United States, in providing defence aid to Ukraine, was a big mistake,”
Although the war’s consequences are global, they are felt the hardest in neighbouring countries, he added.
In response to the economic difficulties, the US has adopted an inflation reduction act, which is detrimental to European interests, he noted. At the same time, European measures such as the sanctions imposed on Russia primarily harm Europe itself without bringing about the end of the war, he said.
Meanwhile, the danger of escalation is higher than ever due to increased weapon deliveries and nuclear threats, he said.
Hungary’s pro-peace stance is in minority in NATO, but belongs to the “global majority outside that bubble”, he said.
One of the most grievous consequences of the war that blocks have started to re-form in the world, which has always been bad for central and eastern Europe, which has always lost out on conflicts between east and west, he said. The region’s interest is in dialogue and connectivity, he added.
European economic development has so far been based on western technology and cheap Russian energy resources, but those ties are being severed, and may deteriorate further as some players work to eliminate cooperation between Europe and China, he said. “That would knock the European economy out,” he said.
Hungary does not discriminate against companies of any states, and has so become a meeting point of eastern and western car manufacturing investments, which is key to long-term development, and a protection against uncertainty, Szijjártó said.
Hungary is home to facilities of all three major German automotive companies and three of the seven largest battery manufacturers, he said. Western companies have become fully dependent on eastern partners, and severing ties with China would be a “serious blow to the economy”, he said.
US companies are the second largest group of investors in Hungary, with 1,700 companies employing some 107,000 people, and bilateral trade jumped by 16 percent to record highs in 2022, he added.
Hungary’s government has supported 103 US investments in Hungary, with a total of some 2 billion dollars, over the last eight years, and is in talks with a further eight, he said.
Szijjártó also touched on the agreement against double taxation, and welcomed US Republican pledges to reinstate it, should they come to power at the next elections.
The “old” 1979 double tax treaty between the US and Hungary was a dinosaur and importantly did not include a limitation on benefits (LOB) provision, which is included in any more recent treaty to stop treaty shopping (abuse).
There is (and has been – for years) a new, draft treaty that was held up in the US Senate by a certain Republican Senator, Mr. Rand Paul … Chances of the “old” treaty being “reinstated” is about zero (0), Surprising that nobody at the Amcham corrected Mr. Szijjártó’s wishful thinking.
Our Politicians never aggressively pursued the adoption of the new US-Hungary Treaty, either – because it suited us just fine (read: companies with LOB challenges took their business to Hungary).
Good read if you’re trying to understand these things: https://taxfoundation.org/us-tax-treaties-senate-2019/