ERIK BRATTBERG
Four months into U.S. President Joe Biden’s administration, rumors of the death of the transatlantic relationship appear greatly exaggerated. A full-throttled U.S. diplomatic reset with the European Union is well underway to repair and rebuild damaged ties after Donald Trump’s presidency. Many European diplomats are already infatuated with Biden and pleased with his team’s level of engagement and messaging, as well as the stated desire to raise the level of ambition in U.S.-EU relations after four years of mostly quarreling and putting out fires. The new, more positive tone is certainly a welcome change, but it has yet to deliver any tangible policy breakthroughs either in terms of resolving bilateral irritants inherited from the Trump administration, making progress on other thorny issues, or producing any new major policy initiatives.
While the diplomatic groundwork has been laid, the proof is still in the pudding as to whether a more ambitious transatlantic agenda is possible. Inevitably this will take more than just better diplomatic relations and policy coordination between Washington and European capitals. As U.S. and EU officials will meet in Brussels in June for a bilateral summit, the next few months will critically determine whether more amicable transatlantic ties under Biden can actually translate into not just restoring but also reinventing the traditional transatlantic agenda to better address key evolving issues—including trade, technology, climate, and China—or whether recent years’ transatlantic tensions in fact had more to do with deeper structural flaws in the relationship.
BIDEN’S TRANSATLANTIC DIPLOMATIC RESET
A committed transatlanticist going back decades, Biden has been keen both to declare that “America is back” after Trump’s turbulent presidency and to reforge the transatlantic alliance, which he labeled “a cornerstone of all that we hope to accomplish in the 21st century” in February during his virtual Munich Security Conference address alongside German Chancellor Angela Merkel and French President Emmanuel Macron. In sharp contrast to Trump, who frequently lambasted NATO and predominantly viewed the European Union as a competitor and a “foe,” Biden and his advisers have gone out of their way to reaffirm strong U.S. commitment to Europe and to seek to display emotional intelligence. In the words of Secretary of State Antony Blinken, and consistent with post–Cold War U.S. foreign policy tradition, the administration’s overarching goal is a “Europe whole, free, prosperous, and at peace.”
Rhetorical reassurances aside, and despite a somewhat slow diplomatic start marked by COVID-19 and delays in the appointment and confirmation of new officials serving in the administration, the intensity of the Biden administration’s recent diplomatic push has even taken some European diplomats by surprise. Ticking one diplomatic box after another, Blinken has already participated in the EU Foreign Affairs Council meeting in Brussels in February, where a wide range of topics were discussed, in two NATO ministerial meetings, and in the G7 ministerial meeting in London in person. Blinken and his colleagues have also actively engaged in smaller bilateral and regional formats with individual European countries. And in an extraordinary move, Biden even dialed into the EU Council meeting in March—the first time a U.S. president had participated in such a meeting since George W. Bush in 2001. An EU-U.S. summit at the leaders’ level—the first one to be held since 2014—will take place in June in Brussels after the NATO and G7 summits.
Besides recommitting the United States to the transatlantic partnership, Biden is also busy reengaging at the global multilateral level—one of Europe’s chief criticisms about the Trump administration. In addition to reentering the Paris climate agreement and ongoing efforts to salvage the Iranian nuclear agreement, Biden has already rejoined the World Health Organization and joined the COVAX global vaccine initiative, restored U.S. funding to the UN Population Fund, lifted Trump-era sanctions on International Criminal Court officials, reentered multilateral arms control arrangements with Russia, and reengaged in multilateral fora such as the G7 and the G20. Blinken has called the multilateral system “vitally important” and referred to the UN as an “anchor of the multilateral system.” He has further pledged to step up engagement in multilateral formats, including rejoining the UN Human Rights Council, but not to do so uncritically. The EU is keen to work with the Biden administration on addressing global challenges and multilateral reform and has called on the two sides to “join forces in strengthening the multilateral system on the basis of our common values.”
Biden’s vision is to gather U.S. allies and partners to shape the international system to compete with authoritarian powers “from a position of strength.” He is more prone than the EU to see the multilateral system as a playing ground for strategic competition against China (though Special Envoy John Kerry has recently engaged Beijing on climate). In practice, this has already manifested itself in putting more emphasis on smaller plurilateral groupings such as the Asian Quad with Australia, India, and Japan. As with Biden’s upcoming Summit for Democracy, the United States will continue to promote ad hoc multilateral formats outside of the traditional international institutions. While the EU is open for deeper cooperation with the United States and other likeminded partners, especially on issues related to the democracy-technology nexus, most European capitals still favor multilateral engagement with Beijing and are watchful of becoming mere instruments in the U.S. competition with China. They will therefore be reluctant about fully embracing Biden’s so-called free world agenda.
Though there are still isolated areas of diplomatic tension between Washington and European capitals—such as over the EU’s Comprehensive Agreement on Investments with China, the Nord Stream 2 pipeline, complaints about U.S. vaccine nationalism, and the still active Section 232 tariffs imposed by the Trump administration—there is no doubt the Biden administration’s repair-and-rebuild campaign with Europe has already proved effective. European diplomats, most of whom are already highly familiar with Biden and his advisers, are so far generally pleased by the level of U.S. diplomatic engagement and think the administration is off to a good start, both in terms of messaging and creating the right atmosphere for the relationship. Good indications that policy coordination between the two sides is working better than in recent years are the recent coordinated sanctions against Russia for the poisoning of opposition figure Alexei Navalny and against China for human rights violations in Xinjiang.
At the same time, European officials are quick to point out that there are few concrete steps taken yet and that the U.S. administration has ignored most of the proposals the EU put forth shortly after Biden’s election win last year. Biden administration officials argue that a number of policy initiatives are still under review and are being prepared to roll out over the coming months. U.S. officials also complain in private that some European capitals are not reciprocating the bonhomie coming from Washington, and they point especially to Berlin’s and Paris’s timid responses to Biden’s call for joining hands against China.
It is clear that Biden has managed to make the United States magnetic again and tap into the strong transatlantic undercurrent that still exists across Europe, making it harder for those in the EU who wish to maintain a degree of distance from Washington. To its credit, the Biden team also has a firm grasp of the internal political dynamics within Europe and knows how to leverage these to its own advantage. At the same time, distrust in the U.S. political system and the specter of a possible return of an “America First” administration in 2025 has some European voices continuing to argue that the EU should hedge against uncertain U.S. leadership and be careful about aligning itself too closely with Washington despite Biden.
STATE OF EU-U.S. RELATIONS
TRADE: KEEPING AMBITIONS IN CHECK
As one of the transatlantic policy areas most affected during the past four years, trade is unlikely to prove easy under the Biden administration. But given Trump’s economic nationalist agenda—including his administration’s imposition of Section 232 national security clause tariffs on European steel and aluminum producers and excessive use of extraterritorial sanctions against some European entities—resetting relations with the EU inevitably requires dealing with these bilateral trade irritants first.
While Biden administration officials have spoken of the need to end “artificial trade war” with Europe, so far progress has been slow. The only meaningful achievement to date is a temporary four-month suspension in introducing additional tariffs in the Airbus-Boeing dispute, a symbolically important issue that may eventually set the stage for a comprehensive resolution of the long-standing WTO trade dispute over illegal subsidies. The new U.S. Trade Representative Katherine Tai has signaled strong commitment to resolving this issue and has struck a positive tone in her conversations with EU counterparts who are also hopeful progress can be made. But for now, the Section 232 steel and aluminum tariffs (which are popular among steelworkers’ unions whose support Biden is keen to have) remain in place, ostensibly until the problem of global excess production capacity is addressed, much to the chagrin of European diplomats who see the tariffs as offensive and unfair. Unless a quick solution is found, the EU plans to go ahead with doubling its own retaliatory tariffs on June 1, just weeks before the EU-U.S. summit in Brussels.
Rather than crafting an ambitious joint trade agenda, much of the current focus is devoted to resolving bilateral trade irritants and ensuring that remaining disagreements do not end up clouding the overall U.S.-EU relationship as was frequently the case throughout the Trump years. Biden’s proposed global corporate minimum tax has been well received by most Europeans and is a good example of smart U.S. global economic leadership. The G7 summit in the UK in June also provides an opportunity to relaunch the trilateral U.S.-EU-Japan track for reforming the World Trade Organization—an issue that the EU’s own trade review also recently stressed—though this process is unlikely to yield any immediate results.
Consequently, European officials hardly expect Biden to be a transformative partner on trade even if relations will be less antagonistic. Though small sectoral trade agreements, regulatory cooperation on rules and standards, and a global corporate minimum tax could be within reach, a return to comprehensive transatlantic free trade talks like under Barack Obama’s presidency is all but ruled out. In fact, Biden’s own talk about a “foreign policy for the middle class” and his “Buy American” agenda, with its strong emphasis on reshoring American jobs and little mention of trusted partners, has Europeans worried that Trump’s protectionist leanings are here to stay. Even Biden’s massive infrastructure plan could be problematic because access to the U.S. public procurement market for European companies was a major sticking point during the failed Transatlantic Trade and Investment Partnership negotiations under Obama.
The EU is accordingly keeping its expectations low while at the same time recognizing that it, too, will likely direct most of its trade focus elsewhere. The key test for both sides at the EU-U.S. summit in June will be whether they can manage to remove bilateral irritants and stabilize the transatlantic trade relationship, insulate areas where disagreements persist to prevent them from affecting other areas, make substantial progress on WTO reform, and address systemic trade challenges stemming from China in a coordinated or at least complementary way.
DIGITAL AND TECHNOLOGY: SHARED CONCERNS BUT DIVERGING APPROACHES?
Whereas transatlantic cooperation on digital and technology issues was a low priority for the Trump administration, the Biden administration has signaled plans to give this area greater attention. There are obvious opportunities for enhanced EU-U.S. cooperation here but also some possible minefields. On the one hand, the Biden administration is expected to see regulation of online platforms and antitrust rules for “Big Tech” as bigger domestic priorities, thus bringing Washington and Brussels closer together than before.
The EU, for its part, has expressed strong interest in engaging the Biden administration on digital and technology issues. High Representative Josep Borrell and European Commissioner Margrethe Vestager have both touted the need for a “tech alliance” with Washington, while European Commission President Ursula von der Leyen, during her World Economic Forum speech, called for a common transatlantic “rulebook” to rein in the power of large tech companies and to fight the spread of disinformation. To advance high-level dialogue on digital issues, the EU has pitched establishing a new Transatlantic Trade and Technology Council to promote joint innovation and standard setting on emerging technologies.
Yet despite such positive early signals, the transatlantic digital agenda is far from straightforward. An early test case will be whether the two sides can manage to resolve their differences over digital taxation. Notwithstanding recent positive signals about U.S.-French digital taxation talks, the Biden administration is reportedly preparing to introduce retaliatory tariffs against Austria, Italy, Spain, and the UK in response to their digital services taxes. However, Biden’s proposed global corporate minimum tax, if successfully implemented, would eliminate the need for a narrower but also more discriminatory digital services tax, thus removing this transatlantic irritant from the agenda. Another immediate challenge is whether a new framework for transatlantic data transfers can replace the collapsed EU-U.S. privacy shield.
Moreover, the growing EU narrative around digital sovereignty and the commission’s recent proposals for regulating online platforms and revamping competition policy against Big Tech could complicate transatlantic cooperation. Whereas the EU’s Digital Services Act may offer a useful starting point for conversations between American and European regulators about how to counter online hate speech and disinformation, the Digital Markets Act is potentially more contentious if it creates an impression among some in the U.S. administration and in Congress that the EU is deliberately targeting large American technology companies. The EU’s new AI strategy, however, appears to be well received by the Biden administration, but transatlantic AI dialogue remains in its infancy.
After months of bureaucratic squabbles, the Biden administration is reportedly open to accepting the EU’s proposed Trade and Technology Council. Yet time is limited, and the administration must quickly figure out how it plans to organize itself to address digital and technology issues at home and how to respond to the latest EU proposals. Until these things are resolved, it is too early to predict what transatlantic cooperation in this area can realistically amount to in the near term.
CLIMATE: BURNING WITH ENTHUSIASM
Whereas Trump abandoned the Paris Agreement and reversed domestic environmental regulations, Biden has pledged to make climate a focal point of his administration’s agenda both at home and internationally. The announcement on his first day in office about rejoining the Paris Agreement, the appointment of John Kerry as the special envoy for climate, new ambitious U.S. domestic climate goals, and Biden’s successful Leaders’ Summit on Climate in April have certainly gone a long way in reassuring European leaders that Washington is indeed back as a key partner on climate issues again. Even so, Europeans are not fully sold on the notion of American global leadership on climate diplomacy given Trump’s recent legacy and many Republicans’ continued climate denial as well as the EU’s own leadership ambitions in this area.
There is much enthusiasm from both sides for deeper transatlantic climate cooperation. The EU’s proposed agenda with the Biden administration released shortly after his election victory last year listed “emissions trading, carbon pricing and taxation” as priority issues. A joint EU-U.S. statement during Kerry’s visit to Brussels in March where he met with, among others, Von der Leyen and European Commission Executive Vice President Frans Timmermans, declared the two sides committed to “renewing our strong alliance in the effort to deal with the climate crisis.” Notably the statement mentioned both sides’ shared commitment to net-zero carbon emissions by 2050.
Notwithstanding the positive tone, there are few concrete joint initiatives on the table yet. While European officials are delighted to have the United States back at the table, skepticism prevails of U.S. emissions-reducing ambitions, though Biden has recently endorsed a 50 percent CO2 emissions target by 2030, only slightly lower than the EU’s 55 percent, pending support in Congress for his massive domestic infrastructure bill. Even so, Biden’s way of getting there, by relying heavily on a market-driven approach and private sector innovation, differs from the EU’s more regulation-heavy approach and reliance on mechanisms like emissions trading.
Moreover, one of the EU’s flagship proposals—a carbon border adjustment mechanism—appears to be a no-go for the Biden administration for now, despite positive initial signals and apparent interest from the president himself. Citing its potential impact on economic competitiveness, Kerry has said he is concerned about the EU’s plans and urged leaders to wait until after the COP26 summit to move ahead with a new tariff. Washington is also not on the same page with Brussels when it comes to the EU’s proposed taxonomy for sustainable investments and has indicated plans to go its own way, despite calls from European counterparts for a joint transatlantic approach.
Biden’s climate summit in April, the G7 summit and the EU-U.S. summit in June, and the G20 summit in October will present opportunities for American and European officials to take stock of progress ahead of the COP26 summit in Glasgow in November. There are plenty of opportunities for enhanced transatlantic climate cooperation—for instance around green tech, sustainable finance, resilience, and transitioning to a green economy—but the most significant progress could simply come from ensuring that both sides’ domestic climate plans are as aligned and complementary as possible.
CHINA: RALLYING OR DIVIDING THE TRANSATLANTIC ALLIES?
During the Trump administration, cooperation between the United States and the EU on China frequently fell short due to conflicting policies, diverging interests, and low levels of trust. Although there is a high degree of continuity in terms of viewing China as the top systemic challenge, Biden has pledged to make forging a joint approach with allies and partners such as Europe a centerpiece of his campaign to better compete against China.
The EU has also expressed interest in working with the Biden administration on matters related to China but is careful about overly taking sides in the growing U.S.-China competition. An early sign of the EU’s inclination to go its own way was its willingness to proceed with concluding negotiations with Beijing on a Comprehensive Agreement on Investments (CAI) in December, despite a plea from Biden’s incoming National Security Adviser Jake Sullivan to first consult with Washington. The deal was strongly backed by Merkel and Macron, who both offered comments suggesting reluctance to join a Biden-led campaign to confront China.
While the EU’s decision to proceed with the CAI disappointed some in the Biden camp, it has not prevented the administration from actively engaging Europe on China. On the contrary, Biden officials have adroitly made the case for a joint transatlantic approach by avoiding the appearance of bullying and forcing Europe into making a binary choice. During his meeting with European foreign ministers in Brussels in March, Blinken reassured that Washington “won’t force allies into an ‘us-or-them’ choice with China” but also stressed the need to “push back on China together and show strength in unity.” As a result, Europeans generally feel reassured about the Biden administration’s overall approach toward China in which they see similarities with the EU’s own outlook of describing China as a “partner, a competitor, and a systemic rival.”
Despite a somewhat wobbly initial start, transatlantic alignment on China appears to be falling into place. For starters, the CAI’s future looks increasingly uncertain with prominent members of the European Parliament now openly voicing skepticism about it. China’s hostile counter-sanctions against members of the European Parliament and other entities was seen as a major escalation and has been a watershed moment, making European leaders even more pessimistic about the prospects of working with China and further reducing the likelihood of the CAI becoming ratified anytime soon. Moreover, the joint Western sanctions on March 22 against China over human rights violations in Xinjiang were a potent example of close transatlantic coordination, not only between Washington and Brussels but also Ottawa and London. Illustrating this new mode is a recent EU strategic review document that takes a more dim view of China and the prospects for cooperation.
Transatlantic deep consultations are underway both at the working level between the United States and the EU as well as individual member states and as part a reactivated formal EU-U.S. strategic dialogue on China, which was first set up by Borrell and former U.S. secretary of state Mike Pompeo but never really took off. The key test will be whether the two sides can align their respective approaches to things like foreign investment screening, technology export control, curbing Chinese subsidies and theft of intellectual property, pushing back against economic coercion, diversifying supply chains, holding China accountable for its human rights violations, and coordinating how to respond against malign Chinese influence in international organizations. At the same time, potential flashpoints down the road might include whether the U.S. and EU can agree on a joint approach toward participating in the 2022 Winter Olympic Games in Beijing or how Europe would respond if asked by Washington to take a firmer stance in support of Taiwan should conditions in the area continue to worsen.
THE ROAD AHEAD: BUILDING BACK THE TRANSATLANTIC AGENDA
There is little doubt that the Biden administration is off to a solid start when it comes getting the transatlantic relationship back on track. Biden and his competent team of advisers have unequivocally recommitted the United States to NATO and cooperation with the European Union and are actively engaged in various diplomatic formats to restore confidence in U.S. leadership after the turbulent Trump presidency.
However, repairing the relationship after Trump was always going to be the easy part—the real question is whether the transatlantic partners can capitalize on their improved diplomatic relations to both remove bilateral irritants inherited from the Trump administration and deliver a series of quick policy “wins” during Biden’s first year in office. Doing so would send a strong message that the Trump years were an abnormality and that a more cooperative U.S. approach under Biden can deliver better results. Conversely, a failure to do so would be a huge missed opportunity. Given the upcoming election seasons in both Germany and France in 2021 and 2022, respectively, as well as the U.S. midterm elections in 2022, kickstarting the EU-U.S. relationship needs to happen now before key leaders become preoccupied and more inwardly focused.
While the EU must urgently consider what it can quickly offer Biden—the most transatlanticist American president in decades—and dispense of the notion that hedging their bets constitutes a prudent strategy in an age of strategic competition against Russia and China, Washington too must get moving. This requires the Biden administration to not let staffing shortcomings or competing priorities get in the way of offering up an ambitious response to the EU’s list of proposals for deeper transatlantic cooperation from last December. In particular, Washington should consider four immediate areas to move relations with the EU from rhetoric to practical progress at the summit in June.
First, Biden must seek to resolve key bilateral trade irritants. Though a heavy lift, the big-ticket item here is finding a permanent resolution in the Airbus-Boeing dispute, not just kicking the can down the road with another temporary extension. Moreover, the U.S. trade representative should without delay make good on removing the Section 232 steel and aluminum tariffs against the EU once and for all, as these are symbolically loaded, prevent alignment on other issues such as China, and reinforce European concerns about U.S. protectionism. Finally, Biden should clarify that his domestic “Buy America” plan does not mean shutting the door to European companies operating in the United States.
Second, the U.S. administration should address legitimate European complaints about U.S. vaccine nationalism and seek to immediately make available U.S.-produced COVID-19 vaccines to the European market so as to allow European vaccinations to pick up speed and to prevent the European economy from falling further behind. At the same time, both the United States and the EU should redouble their efforts to provide global leadership when it comes to assisting those countries hit hard by the virus such as India with vaccines and other critical medical equipment.
Third, the United States must quickly figure out how to best engage with and respond to the EU’s latest proposals for legislating AI, moderating online content, and regulating Big Tech. To make progress on pressing digital issues like data transfers, the Biden administration should take the EU up on its offer to establish a Transatlantic Trade and Technology Council and come with ideas to shape its remit and agenda in order to have an effective structure to resolve disputes and develop a common strategy around high priority tech issues. A top priority for such a body should be aligning EU and U.S. legislation on artificial intelligence.
Fourth, Biden should work with the EU on joint climate initiatives ahead of the COP26 summit in November, starting with engaging on the EU’s carbon border tax plan. If the transatlantic partners can manage to agree among themselves, they would be in a strong position to bring on others to set new trade rules fostering a low-carbon economy. Moreover, Biden should clarify how his domestic Build Back Better agenda is open to European companies, and the two sides should discuss potential overlap with the EU’s own Green Deal. Finally, the Biden administration should work closely with the EU on pursuing a joint approach toward engaging China on climate issues in the lead-up to COP26. Doing so would also help reassure Europeans that the administration’s broader China strategy is not just seeking confrontation with Beijing.
On top of these short-term steps, the Biden administration must also engage the EU on sketching out the parameters of a more ambitious future transatlantic agenda for the next three and a half years, to be rolled out at the EU-U.S. summit.
There is no time to lose. Just getting along better again cannot be an end goal on its own.
Courtesy: (carnegieendowment.org)
