European Perspective on Transatlantic Relations: The Calm Before the Vote?

On 20 October 2023, U.S. President Joe Biden, Commission chief Ursula von der Leyen and Council President Charles Michel meet in Washington. This summit is slated to take place against the backdrop of heightened international volatility and increased competition with China and Russia. At first glance, there is ground for optimism. Transatlantic relations appear to be at their highest point in recent memory with administration on both sides of the pond demonstrating great willingness to compromise on contentious economic issues, as well as to maintain unity around a still embattled Ukraine and around the escalating flare-up in the Middle East following the terrorist attack in Israel. However, this cordiality is already under pressure, for instance around responses to climate change. In addition, upcoming elections on both sides of the Atlantic in 2024 threaten to further rock the boat by bringing less conciliatory leadership to power.

Never had it so good?
Europeans saw the election of Joe Biden in November 2020 as a welcome reprieve. After four years under the Trump administration, they had come to seriously question the enduring nature of transatlantic ties in the 21st century. The Biden administration’s focus on alliances and willingness to compromise has soothed those concerns, and both sides of the Atlantic have grown closer and more aligned on most major issues over the past years.

For instance, the pivot to Asia, initiated under the Obama administration and endorsed with a far more confrontational spin during the Trump era, had left Europeans worried that the United States was disengaging from their continent in favor of other global hotspots and economic power centers. The Russian invasion of Ukraine in February 2022 reshuffled the deck and saw the Biden administrations renew its country’s commitment to NATO and to European security. At the same time, Europeans’ growing awareness of the challenges posed by China’s geopolitical agenda have facilitated transatlantic cooperation on Asia.

Even issues that might at first seem intractable are in fact evidence of both partners’ proximity. By prioritizing environmental issues, rejoining the Paris Agreement in 2021, and supercharging green investment and industries via the 2022 Inflation Reduction Act (IRA), the Biden administration is throwing the gauntlet for Europeans. While they recognize the value of this new U.S. approach, Europeans also worry that the tools contained in the IRA to decarbonize the U.S. economy will have negative externalities for the EU.

In particular, they believe that the IRA risks triggering a subsidy war, as Brussels and Washington bid against each other to attract investments and manufacturing capabilities. These concerns have already contributed to the EU’s decision to increase its support for, and accelerate its own ecological transition, for instance via the Net-Zero Industry Act proposed in March 2023. The question is now: can we build a level playing-field while preserving international coordination to efficiently fight against climate change?

No matter the cost?
With the US having demonstrated its enduring commitment to European security via its stalwart support for Ukraine, the EU as a whole has come closer to Washington over the past five years. This opens the door for potential productive conversations on issues such as trade, critical materials, green technologies, as well as regulation of online platforms and artificial intelligence.

The resolution of the conflict over steel and aluminum tariffs imposed by the Trump administration in 2018 demonstrates this willingness to engage in good faith to solve longstanding transatlantic disagreements. The Biden administration suspended these tariffs for Europeans in 2021, with the expectation of reaching an agreement by October 31, 2023, a self-imposed deadline since pushed back to January 2024 to give negotiations the best possible chance of success. Talks are ongoing but the plan to create a joint tariff zone and impose duties on imports from non-market economies is rapidly taking shape. This move also plays into a broader effort to strengthen the transatlantic alliance’s ability to protect European and American industries from unfair competition.

The steel and aluminum negotiations highlight the complexity of transatlantic relations. Amid the backdrop of global restructuring and increased competition from China and Russia, there is a need for greater transatlantic unity. However, concluding concrete agreements between the United States and the EU risks generating tensions. The potential costs of such agreements notably include the possibility of breaching World Trade Organization (WTO) rules that prohibit discrimination against countries with most-favored-nation status, as well as alienating other close partners notably in NATO or the G7. Breaching WTO rules also comes with the risk of further contributing to the dilution of the international rules-based order and its institutions.

Economic turmoil and upcoming elections further complicate an already delicate negotiating exercise, as public stakeholders are eager to support domestic economic development, and want to show concrete results as regards investments, businesses and jobs. The EU is likely to seek as lenient a U.S. stance as possible to avoid alienating other major trading partners while the Biden administration will want to prove to its domestic audience that it is an effective advocate for key industries.

Election Year
In Europe, the upcoming parliamentary elections may lead to shifts in political dynamics within European institutions. The protracted sequence of events will start on 6 June 2024 with the elections themselves running for three days. Following the vote, the selection of the Commission’s presidency and commissioners will run throughout the summer and fall. Finally, a newly minted European Commission will assume office in early November 2024 and lay out its political agenda for the next five years.

Each of these steps will carry some degree of uncertainty. As regards the European Parliament, there is a possibility that the June elections slightly shift the institution to the right. However, at this stage the most likely option remains the continuation of the current centrist coalition between centre-right, centre-left and centrist/liberal parliamentary groups.

Across the Atlantic, all eyes will be on the race for the White House, the House of Representatives, and a portion of the Senate. Europeans worry that a return of Donald Trump or the arrival of another conservative Republican candidate in the Oval Office will globally hinder the transatlantic relationship, for instance by throwing support for Ukraine in its war against Russia into jeopardy, by solidifying a more isolationist foreign and economic policy, or by stoking new trade wars, including with Europe.

Conclusion
For now, Brussels and Washington are doubling down on negotiations while they still have a reasonable prospect for success. A gathering of the EU-U.S. Trade and Technology Council, meant to touch on issues ranging from export controls towards Russia to artificial intelligence, is anticipated by the end of 2023. As globalization and multilateral institutions are being called into question, as new regional conflicts flare up and old ones reignite, this October’s summit between EU and U.S. leaders could contribute to inject some much-needed momentum in the relation in the months leading up to potentially game-changing elections. If the stakes could not be higher, economic and social players still play a major role to nurture this bilateral dynamic through day-to-day concrete projects.