US Secretary of State Antony Blinken, US Secretary of Commerce Gina Raimondo and Margrethe Vestager, Vice President of the European Commission.
(Photo: Reuters)
At least outwardly, the mood between the US and the EU is good. At the meeting of the Transatlantic Trade and Technology Council (TTC) on Monday, agreement was reached on new cooperation, for example in securing supply chains. “The most important thing is that we stand together,” said EU Commission Vice President Margrethe Vestager.
The Council is currently the most relevant forum for transatlantic talks. And as long as top-class figures from the US government and the EU Commission take part, there is hope that the round will not degenerate into a council of empty promises.
However, the initial euphoria has been followed by realism. A year and a half after it was founded, the realization remains that the USA alone decides on important economic issues. It is also clear that differences, such as how to deal with China, cannot be resolved in a few working groups.
The meeting was overshadowed by the dispute over billions in American subsidies in key ecological sectors. In less than four weeks, the US government wants to introduce new tax advantages for buyers of electric cars. However, they only apply if the vehicles were assembled in North America and a certain proportion of the battery parts come from the USA.
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European manufacturers fear disadvantages in the American market and job losses, Brussels is pushing for an exception rule. So far, Washington has made no concrete promises, and the TTC hasn’t changed that either.
The Europeans were surprised by the rapid introduction of the subsidies. At the same time, the US government’s protectionism is highlighting the global competition for innovative, modern industries and cutting-edge technologies.
In Germany and Europe, Biden’s green billions are rightly arousing fears that their own locations will become less attractive if low energy prices lure them elsewhere and money is thrown after future industries.
The US has opened a new front of problems
There are also barriers on the European side, and Washington has not forgotten that. Plans for a digital tax against American big-tech companies, an import ban on hormone meat, a closed agricultural market and import duties on cars – the EU is also protectionist in certain areas and acts primarily in its own interests.
But the Biden offensive is unprecedented in volume and pace. His consistent “Buy American” strategy puts the European partners under pressure to set up their own subsidy programs. The fact that the EU Commission is now open to this is a correct and necessary step. A complaint before the World Trade Organization WTO and a new trade war with the USA cannot be in the interest of the EU states.
Nevertheless, the USA’s unilateral action has opened up a new front of problems: It is driving a wedge between EU states that support a freer market approach and those that promote interventionist policies.
Globally, programs worth billions like that of the USA divide the world into two groups of states: Some can afford expensive investments in research and development. The others cannot do this and threaten to slip into new dependencies.
Nevertheless – or precisely because of this – more initiative is essential on the European side in order to support a sustainable and profitable economy. The US has lowered the bar for protectionist intervention. But the EU can use this wake-up call to make the most of it.
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