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The FiscalNote Executive Institute partnered with the German Marshall Fund of the United States to host “Envisioning the Economic Future of the EU’s Transatlantic Trade Relationship in 2021,” an interactive virtual discussion featuring Susan Danger, CEO at American Chamber of Commerce to the European Union; Julia Friedlander, C. Boyden Gray Senior Fellow and Deputy Director, GeoEconomics Center at the Atlantic Council; and GMF Senior Fellow Jacob Kirkegaard. The closed-door discussion was moderated by Kate Smyth Haskins, Vice President for External Affairs at German Marshall Fund on January 28, 2021.

The program focused on how the U.S. government can repair the transatlantic relationship with the European Union, the use of economic statecraft, the role of green and digital transformation initiatives in the EU’s economic recovery, and other critical issues. Here are some key takeaways from the discussion:

It’s time to reset the transatlantic relationship and rebuild trust

The United States and the European Union share a long-established history of common values and global economic influence. The EU-US relationship alone supports a third of the world’s gross domestic product and trade and nearly 60 million jobs. It’s time to dial back on adversianism and focus on cooperation and rebuilding trust.

The “lobster deal,” an EU-US mini trade deal between the EU Parliament and the United States that focused on the elimination of customs duties on U.S. lobster imports, is a good example of this type of cooperation in action.

The United States should also take advantage of a watershed moment to break down politics and have conversations with foreign policymakers that focus on the details of forming stronger collaboration with the EU. Washington, D.C., is very fertile ground for emphasizing the common denominator, particularly in light of the emotive transition of moving from the insurrection in the U.S. Capitol to the presidential inauguration. As one speaker noted, it’s a time of “immense, intense opportunity and solutions.”

The EU must focus on its own economic recovery through a two-pronged approach of green and digital transformation initiatives. U.S. businesses should prioritize these two economic pillars of recovery in how they work with the EU.

The EU’s commitment to green initiatives will shape the transatlantic framework for 2021

In December 2020, the EU proposed establishing a comprehensive transatlantic green agenda, to coordinate positions and jointly lead efforts for ambitious global agreements, starting with a joint commitment to net-zero emissions by 2050.

The Biden administration demonstrated an immediate commitment to climate change through a slew of recent executive orders. The world will look at President Biden to follow through with strong legislative action. As one speaker noted, executive orders will not be enough, since a Republican president or a conservative Supreme Court could just scrap it. To be credible, legislative action is imperative. Even if President Biden cannot legislate in Congress, the federal government can get out of the way of states such as California, which sets its own rules in the absence of federal legislation.

The EU and the United States need to present objectives and actions for the intermediate goals by 2030. The EU will be rolling out quite a lot of reforms linked to the EU emissions trading system. Pricing of emissions will go up significantly, and there will be national carbon taxes.

EU/US engagement with China should be reciprocal, conditional, and help multilateral systems.

As one speaker observed, China is “too big to ignore” and represents significant business opportunities for both U.S. and EU businesses. But these opportunities should be reciprocal, conditional, and help multilateral systems.

Some speakers expressed cautious optimism about the recently passed Comprehensive Agreement Investment, through which China has committed to a greater level of market access for EU investors, including some new important market openings. According to the CAI, “China is also making commitments to ensure fair treatment for EU companies so they can compete on a better level playing field in China, including in terms of disciplines for state-owned enterprises, transparency of subsidies, and rules against the forced transfer of technologies. For the first time, China has also agreed to ambitious provisions on sustainable development, including commitments on forced labor and the ratification of the relevant ILO fundamental conventions.”

Other speakers felt more uncertain of the CAI, noting “the agreement does not open up market access, but locks in market access. This is what China wanted to have.”

The private sector needs to play a more active role in providing feedback to EU, US governments

Under the Biden administration, there will be fewer surprises in economic statecraft and more of a focus on multilateralism and consultations with businesses to actually assess the impact of different measures. Companies should still “focus more on becoming active players in providing feedback to the government and not sit and wait for the impact,” one speaker noted.

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