Window of opportunity
After the turbulent Trump years and the inauguration of Joe Biden as the 46th President of the United States, the corridors of Brussels are once more buzzing talks of a transatlantic „honeymoon“ and a „window of opportunity“. Though it may seem old wine in new bottles, this is in fact a refreshing change of pace. We clearly see that the transatlantic relationship is much more positive and there is a commitment from both sides to work together and explore new areas of cooperation.
USA is keen to renew strategic alliance
A good example was the coordinated action on 22 March from the EU, the US, Canada and the UK to sanction several Chinese officials in connection to human rights violations in the Xinjiang Province. The participation of President Biden in the March European Council meeting has been another strong sign that this US administration is keen to renew the strategic alliance with the EU and willing to engage in Transatlantic cooperation.
Aside from joint multilateral efforts, there has also been an easing of some of the existing bilateral EU-US trade issues. These last weeks, positive discussions have taken place between USTR Katherine Tai and Executive Vice-President Dombrovskis to find a long-term solution to the Airbus/Boeing dispute following a welcome four-month suspension of tariffs. Commerce Secretary Gina Raimondo and Justice Commissioner Didier Reinders are also intensifying talks to try to find a legal framework that can replace the Privacy Shield while complying with the European Court of Justice ruling in the Schrems II case.
However, many trade irritants remain unsolved. Four years with the Trump administration have left the transatlantic relationship with scars. It is not only a matter of broken trust: Trump-era duties on European imports of steel and aluminium are still in place. Unless a negotiated solution is found, they could again be a source of friction in June when the EU is expected to increase its countermeasures on some US imports. Another irritant could potentially emerge in the field of taxation. The USTR has launched section 301 investigations against Austria, Italy and Spain that could potentially lead to exports from these countries being subject to additional duties in the US. In turn, the European Commission is expected to present a legislative proposal in June that could lead to yet another USTR investigation.
In a speculative analysis over the direction the transatlantic relationship can evolve towards in the next few years, these are starting points to take into consideration. In addition, the EU and the US will have to deal with other priority issues like competitiveness, climate change and global supply chains. While the domestic debate over how to address them is ongoing, the degree of convergence of the respective policy choices may shape the transatlantic relationship – and beyond.
Competitiveness of domestic industry
How to boost the competitiveness of domestic industry will be a central thought on both sides of the Atlantic. In the US, trade will be lower on the priorities list than recovery, competitiveness and security of workers. Any trade policy measure will be weighed based on the contribution it can give to the latter two. Both the EU and the US have an interest and political will to ensure a level playing field with third countries, not only on social aspects, but also on environmental ones, and this may help in the fight against climate change. Finally, the pandemic has dramatically exposed how easily supply chains can be disrupted, so reforms on either side will be geared around increasing their resilience and sustainability.
Interestingly, none of these priority issues can be met with a sustainable and effective solution without the active participation of China in the shaping of said solution. China is too big an actor not to take an active role, just like it is too important a player in international trade to keep claiming a „developing country“ status. Far from proposing a position of „equidistance“ between the US and China, we think that China will need to be at the table when we discuss the rules governing international trade in the years to come. But we are not naive to think that China will accept easily a change in the status-quo that has been so favourable to its interests.
The challenges ahead are many, but thankfully so are the opportunities. It is important that the EU and the US manage to work together, even though reasons for occasional discontent may remain or arise. For example, in January, President Biden issued a „Made in America“ executive order that goes much further than the Trump Administration ever did and is at odds with the need to reignite economic growth worldwide to help our economies recovering faster from Covid-19.
This initiative is a worrying sign of domestic political concerns trumping strategic trade links with Europe and other regions. However, European business still expects an enhanced multilateral political cooperation and engagement with the US. And in this regard, the US rejoining the Paris climate agreement and the World Health Organisation are clear steps in the right direction.
EU and US want to walk together
The EU and the US have indicated they want to walk again together, but they have not yet chosen the path. The transatlantic business community pledges cooperation to the EU and US authorities on shared goals, including on digital, taxation and climate, responding to the pandemic, developing a common approach to protecting critical technologies, and enabling innovation.
On those areas where there is convergence of views and interests developing a positive transatlantic agenda is an urgent matter. Conversely, if the US and the EU fail to seize the opportunity for joint leadership and cooperation, leaving room for others, the loss will be on our citizens and our business. This would be a strategic mistake that cannot be pinned on past administrations. The responsibility – as well as the window of opportunity – is here and now. (fho)
