A New Transatlantic Agenda: A Defensive Turn
Of the four summits President Biden held in Europe in June — with the G7, NATO, the European Union, and Russia — the one with the EU received the least attention. Yet, given the common theme of rallying allies to “counter” China, the summit with the EU was arguably the most important. Why? Because although the EU does not wield military power, it wields regulatory power — the so-called Brussels Effect — through the risk of withholding access to its market. The EU and the US may indeed comprise a shrinking share of the global market, as advocates of the more inclusive G20 argue, but the transatlantic partners can still exert influence when they present a common position to the world.
The summit’s launching of a “Joint Transatlantic Agenda” felt nostalgic, recalling the Clinton administration’s “New Transatlantic Agenda” a quarter a century ago. That was in 1995, the year the World Trade Organization was created, and Western-led globalization was in high gear.
Much of the new Agenda smacks of technocratic, pragmatic problem-solving, just as the old. There will be an EU-US Covid Manufacturing and Supply Chain Task Force, a High-Level Climate Action Group, a Transatlantic Green Technology Alliance, a high-level Trade and Technology Council, and a Joint Technology Competition Policy Dialogue. As in the 1990s, there will be an effort to manage bilateral tensions and to advance common positions in global fora. That all sounds like the old resurrected. But now, a defensive tone has seeped in.
The New Transatlantic Agenda of the 90s spoke of democratic values, but that was a time of Western triumphalism when the two sides saw no challenger and pundits still spoke of the end of history and the victory of free markets and liberal democracy. The Soviet Union had imploded, China was hoping to join the new WTO, and a new “wave” of democracy had swept the world.
Today, in contrast, the US and EU worry about the attractiveness of China’s “authoritarian model” abroad, as democracy and rule-of-law indexes decline in developed and developing countries alike. The Joint Transatlantic Agenda presents a transatlantic endorsement of President Biden’s project to demonstrate that liberal democracies can “meet the challenges and deter the threats of this new age.” But will they?
China is everywhere on the Agenda, even when not mentioned, just as in Biden’s meeting last week with German President Angela Merkel. There are calls to study “the origins of Covid-19,” to address “the risk of carbon leakage” (through trade), for “technological cooperation,” and resistance to “autocrats’ efforts to create an environment that protects their rule and serves their interests.”
For countries outside of the US and EU, there is a disconnect. The age of Western empire is over. China’s economic model has been more successful. And its political model can seem more competent.
For example, the joint statement calls for protecting “our businesses and workers from unfair trade practices, in particular, those posed by non-market economies that are undermining the world trading system.” Yet, for many, it is not China but the US that undermined the world trading system by launching a trade war, raising tariffs on almost everyone, and neutering the WTO’s dispute settlement system.
The Agenda calls for updating “the WTO rulebook with more effective disciplines on industrial subsidies, unfair behavior of state-owned enterprises, and other trade and market-distorting practices.” Yet, now that other countries are accruing wealth, they too wish to support their industries to move up the value chain of production and not be stuck as suppliers of raw materials and low-cost labor for producing consumer goods. No wonder the new EU-US Understanding on a Cooperative Framework for Large Civil Aircraft aims not only to monitor the settlement of the longstanding Boeing-Airbus subsidy dispute but also to “effectively address the challenge posed by non-market economies” — aka Chinese production of jet aircraft.
At the time of the New Transatlantic Agenda of the 1990s, state-owned enterprises (SOEs) were passé, viewed as inefficient sappers of state coffers of little competitive concern. Recall the privatizations of Groupe Bull SA in France (it made computers) and British Steel in the United Kingdom (now owned by the Tata group in India). Under prevailing Western ideology, private enterprises should outperform SOEs. But today, 124 of the Fortune Global 500 largest companies are Chinese, 91 of which are SOEs. The world’s four largest construction companies are Chinese SOEs, and they are building infrastructure across the globe.
No longer is it a question of US and EU competition to set “international standards” for new technologies, such as for “AI, Internet of Things,” “biotechnology and genomics.” China, too is setting international standards, particularly for the next generation of information and communication technology. “International standards” do not make for scintillating headlines, but both China and the EU-US communique recognize their critical importance.
An Atlanticist is in the White House, presenting a stark contrast from a year ago when the President called the EU a “foe.” Even so, serious differences persist across the Atlantic after Trump. On trade, the new administration has yet to remove the Trump-era “national security” tariffs on EU steel and aluminum or to agree to the reviving of the WTO dispute settlement system, both long-time EU priorities. Tensions continue over the Biden administration’s proposed relaxation of patent protections for Covid-19 vaccines as well. Most importantly, despite the common positions expressed in Brussels, it remains unclear whether Europeans regard China as the existential threat seen in Washington.
Finally, hovering over the entire enterprise, Europeans know that President Trump — or a “Trumpist” — could return to power. Then too, the Joint Transatlantic Agenda would have much in common with its progenitor. Two decades ago, following a tightly contested election, a new US administration effectively killed a multilateral treaty to address climate change, and the elaborate architecture of the 1995 NTA crumbled. It is domestic politics that will determine how “joint” this “Transatlantic Agenda” will be.
Mark Pollack is Professor of Political Science and Law and Jean Monnet Chair at Temple University in Philadelphia. Gregory Shaffer is Chancellor’s Professor at the University of California, Irvine, and author of the forthcoming book, Emerging Powers in the World Trading System: The Past and Future of International Economic Law.