The European Offers America Cannot Refuse – War on the Rocks


The prospect of a Joe Biden administration is exciting for Europeans. Their long transatlantic nightmare is finally over. They can now believe that a more humane, more “European” political party has reclaimed power in the United States. From their perspective, this is the America that believes in the importance of human rights, the value of allies, and the reality of climate change. This is the America that Europeans longed relied upon and with whom cooperation can flourish.

The removal of President Donald Trump from the White House, Europeans are aware, does not represent a wholesale change in America. Unless Democrats win both Senate seats up for grabs in Georgia in special runoff elections in January, Biden will lead a divided government that will limit his freedom of action. The forces that brought Trump to power remain and could easily re-emerge in four or eight years. More immediately, the Biden administration presents its own challenges, which — even if they pose a less fundamental threat to the transatlantic alliance — remain vexing and divisive.

 

 

The lesson that Europeans should take from the long roller coaster ride of transatlantic relations over the last 20 years is that America is neither their redeemer nor their ruin. Europeans can and should continue to have a productive alliance with the United States. But as the United States becomes relatively weaker and more focused on its own problems, Europeans will need to increasingly assert their own interests and forge hard bargains with America on issues that divide them. These new transatlantic bargains need to demonstrate both to European publics and American leaders that the alliance has value.

There are many obstacles, but if Europeans and Americans do come together during a Biden presidency, they will represent a formidable combination, even in the context of a rising China and increased geopolitical competition. Together, the United States, European Union, and the United Kingdom still represent about 45 percent of global GDP, contain more military power than any other alliance on earth, and maintain commanding positions in most international organizations.

New Transatlantic Bargains

Europeans need to come to the new transatlantic table prepared with a proactive set of offers that both express European interests and might appeal to the new U.S. president.

As always, it is not clear that there is a cohesive European interest to express — Europeans remain divided on key issues in the transatlantic alliance, from the role of the European Union in defense to the right approach to dealing with the challenge of China. Europeans are thus unlikely to present a unified approach in the heady first few months of a new U.S. administration. They are more likely to rush to Washington in an unseemly race to ingratiate themselves with the new administration. But nearly all European countries want a more productive and amicable relationship with the United States. And a more unified approach is the only way that can work. If they fail to establish one, they will regret the lost opportunity in the less halcyon days to come.

There is reason to believe Washington will be receptive. Not only is President-elect Biden looking for new cooperation with allies, but most of the offers presented here (with the notable exception of climate change) will appeal to significant elements on both sides on the aisle in the United States. Accordingly, we present here some proactive offers that European leaders could make to Biden’s America, including new bargains on trade, NATO, Russia, China, human rights, and climate change.

Trade

The United States and the European Union are each other’s largest trading partners. Perhaps not coincidentally, trade threatens to be the most divisive issue in E.U.-U.S. relations in the Biden administration, as it was in the Trump administration. The Biden team might take a more diplomatic approach and may pull down some of the punitive aluminum and steel tariffs imposed on the European Union by its predecessor. But transatlantic differences on privacy, agricultural goods, and the role of U.S. tech giants will remain and will continue to sour transatlantic relations.

This is not a soluble problem — trade frictions between two such large and interdependent economic partners are inevitable and, arguably, a sign of the importance of their economic relationship to both sides. A new overarching trade deal, on the model of the Transatlantic Trade and Investment Partnership effort during the Barack Obama administration, makes little sense given the domestic politics on both sides. Instead, Europeans should make a proactive effort to lessen the next dispute over trade that might emerge from the nascent European effort to impose a digital tax aimed principally at U.S. tech giants.

A digital services tax would seek to extract money from tech giants, which as of now pay very little into E.U. member state coffers. Around half of all Organization for Economic Cooperation and Development countries in Europe have implemented or announced plans for a digital services tax. A Biden administration would, like the Trump administration, strongly oppose any tax regime that appears to single out U.S. tech giants. By achieving some early compromise on this issue, they could set a tone in U.S.-E.U. trade relations that would lessen the ferocity of any future disputes.

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The European Union will be keen to push the United States to provide greater privacy protections in the aftermath of the July 2020 European Court of Justice decision to strike the E.U.-U.S. privacy shield as insufficient. Satisfying the court will require an enormous shift in American practices on data treatment. Biden has shown some willingness to move toward an E.U. model, remarking that the United States should be “setting standards not unlike the Europeans are doing relative to privacy.” American consumers share many of the European concerns about the tech giants, and such an effort would attract support within the United States, but it remains a heavy lift in the U.S. Congress. Biden would need a compromise on the digital services tax to create the right atmosphere in Washington.

Offer

Propose to the new Biden administration a compromise on a digital tax in exchange for greater privacy protection both from U.S. tech companies and within the U.S. domestic regulatory apparatus.

NATO

NATO remains roiled by a burden sharing debate that began in the 1950s and has only grown fiercer over the years. The current standard, re-affirmed in 2014, that all NATO members should spend 2 percent of their GDP on defense has only led to more arguments. The fundamental issue is that, despite their earlier commitment, many European NATO member states now feel that the 2 percent commitment is a poor reflection of the modern nature of national security and the contributions that they make to transatlantic security that defense budget contributions do not capture. They are quietly seeking to reframe their contributions to NATO in non-defense-spending terms.

This new measure could certainly include spending on overseas development assistance, contributions countries make to security through their efforts to combat climate change, and the cost that countries bear from economic sanctions. Such costs are as highly asymmetric as defense spending. One study, for example, estimates that Eastern European states incur sanctions costs amounting to about 1 percent of GDP (mostly from sanctions on Russia) while costs to the United States amount to only 0.01 percent of GDP. Germany, at 0.2 percent of GDP, falls somewhere in between. A new metric would establish a benchmark of spending that better captures this wider definition of security.

Such a measure reflects a view of national security that many Europeans and Biden administration would likely share. But no spending metric will fully capture the idea that what matters for defense burdens is the capabilities provided rather than the money spent. Accordingly, any agreement on a new metric probably also needs include a renewed commitment to provide capabilities for European defense in the east, and even more controversially a willingness to ensure continued American access to the European defense procurement market.

Offer

Europeans proactively propose a new metric of commitment to transatlantic security. This would require the United States to accept a new, broader burden-sharing concept, but one that would appeal to its priorities in the provision of capabilities and arms sales.

China

The European Union has recently toughened its stance on China and has described it as “a systemic rival promoting alternative models of governance.” But it is still prepared to seek partnership and cooperation where possible, noting that “[e]ngaging and cooperating with China is both an opportunity and necessity.”

Europeans would prefer to cooperate with the United States on an economic agenda, focusing on tackling non-reciprocal economic behavior from Beijing, taking the lead in setting the standards for new technologies like 5G, and punishing theft of intellectual property. The reinvigoration of E.U.-U.S. cooperation in Asia could take the form of a new Transpacific-Transatlantic Partnership (TTAP), encompassing trade, connectivity, and climate cooperation.

China is the E.U.’s second biggest trading partner (after the United States), and so Brussels may resist choosing definitively between Washington and Beijing. However, E.U. foreign policy chief Josep Borrell reiterated this summer that the European Union would not be equidistant from the two, recognizing the special role the United States played in liberating Europe during World War II and its contribution to building a Europe “whole and free.” Italy remains the only G7 or E.U. member to have endorsed the Belt and Road Initiative, a position now rejected by the Italian Minister for European Affairs, who declared in October 2020 that the Belt and Road Initiative memorandum of understanding “was a mistake. China under Xi is no longer was it used to be.”

France and Germany have now come up with declarations and guidelines for the need to build a European strategy in the Indo-Pacific. In addition to shared security concerns in the South China Sea, there is scope for cooperation on connectivity and environmental and climate issues with the United States.

The European Union could propose moderated cooperation on telecommunications infrastructure with the United States, as there is agreement that mobile operators must have tight privacy and security requirements and that dependence on any one company for 5G infrastructure should be avoided. Sweden decided in October 2020 to ban Huawei and ZTE from the country’s 5G infrastructure: It also happens to be home to the Chinese giant’s biggest rival on 5G, Ericsson.

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All this activity implies there is now room for a broader U.S.-European partnership on the economic and strategic challenges that a rising China presents.

Offer

Europeans propose a comprehensive Transpacific-Transatlantic Partnership (TTAP) aimed at curbing Chinese economic abuses, as well as cooperating on connectivity and maritime security in Asia. This agreement could include formalizing support for Taiwan. Europeans and Americans could also work together to balance Chinese influence in multilateral fora and protect the multilateral trade system.

Russia

The European Union seeks a delicate balance in its Russia policy. It needs to accommodate both those more hawkish states in the east that fear direct Russian threats and those in the west that favor greater dialogue. Since the 2014 Russian invasion of Ukraine, the European Union has largely maintained that balance, symbolized by a fierce web of sanctions to punish Russia for its aggression. A Biden administration that looks more overtly hostile to Russia would threaten that balance, even at it might assuage concerns in the east of Europe of American abandonment. To preserve its unity, the European approach will likely focus on ensuring that United States balances dialogue with deterrence in its approach to Russia, while maintaining and enhancing its security commitment to Eastern Europe.

The principal early irritant in this effort will be the Nord Stream 2 pipeline project, which has created deep divisions both within Europe and across the Atlantic. Germany and some other member states support the project because they hope for cheaper gas and a more secure energy transit route from Russia. Some E.U. members in the east reject it because it denies transit fees to states on the bypassed land route, particularly a very financially hard-pressed Ukraine. The Trump administration has opposed it because it feared that the pipeline would increase European energy dependence on Russia and displace U.S. liquid natural gas exports from Europe. It has threatened secondary sanctions against European companies that are building the pipeline. The creation of both a European and transatlantic consensus on Nord Stream 2 in 2021 stands out as the key step toward maintaining a Western consensus on Russia during the Biden administration.

Working together with the Biden administration on NordStream 2 will require the difficult task of forging some degree of European consensus first. The key would seem to be a German willingness to replace the lost transit fees through investment in the Polish-led Three Seas Initiative, which seeks to develop infrastructure throughout Eastern Europe.

Offer

Germany and its E.U. partners complement Germany’s investment in the Three Seas Initiative with an offer to the Biden administration to create an Eastern Partnership Security compact. That compact would form a European structure for funneling both European and American security assistance to the frontlines of the struggle with Russia. This would offer Eastern Europe increased assistance and the United States an assurance of a stronger Western European commitment to European security, freeing up American attention for other problems while maintaining transatlantic unity and vigilance with regard to Russia.

Climate Change

As part of its European Green Deal, the European Union is proposing to implement a carbon border adjustment mechanism designed to tax imports entering member states based on their carbon content. The intent of measure is both to encourage other countries to adopt similar effort to de-carbonize and to protect the competitiveness of European businesses in face of imports that do not bear similar regulatory burdens. As president of the European Commission, Ursula von der Leyen, has noted, “There is no point in only reducing greenhouse gas emissions at home, if we increase the import of carbon dioxide from abroad. It is not only a climate issue; it is also an issue of fairness towards our businesses and our workers. We will protect them from unfair competition.”

A particularly ambitious proposal by Brussels to a new Biden administration might suggest the European Union and the United States adopt a common carbon border tax regime, forming a sort of carbon free trade zone. Such an arrangement would create a level playing field across the Atlantic, prevent an escalation to retaliatory tariffs, and fulfill a Biden administration’s ambitions to renew ties with Europe and pursue an ambitious environmental policy that meets European standards for de-carbonization. Finally, and perhaps most importantly, it would allow both countries to leverage their enormous economic power to push other countries to adopt similar environmental standards, achieving the dual goal of domestic protection and a greener world economy. Other countries could join the carbon free trade zone and escape the carbon border adjustment mechanism as they meet the necessary standards for de-carbonization.

There is some reason to think such an idea would be met with serious consideration by Washington. Neither side wishes to preserve the tariff war started by Trump, especially in the wake of a COVID-19 recession. Antony Blinken, Biden’s top foreign policy adviser, has also remarked on the importance of leading with Europe on environmental issues. In a recent Chamber of Commerce webinar, he remarked, “We have a very aggressive plan to move on this internationally — not just rejoining Paris, but also working to get our allies, partners and others to raise their ambitions. I’d like to think that’s a place where the U.S. and Europe can lead together.” Big polluters, such as Russia and China, which often engage in economic practices Washington regards as unfair, might also be pushed into concessions — environmental or otherwise — by a united carbon tariff regime.

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If the U.S. Senate remains in Republican hands, this will significantly complicate the reception of this idea in Washington, as Republicans remain very hostile to initiatives designed to combat climate change. At the same time, with creative use of executive orders and existing regulations, as well cooperation with key states such as California, the United States should be able to make progress on this effort even without congressional action.

Offer

The European Commission puts forward proposals for a common E.U.-U.S. carbon border adjustment mechanism beginning in 2021, for a planned implementation in 2023. A Biden administration would reap trade benefits from joining this mechanism, and it would allow the European Union and the United States to then define common positions at the U.N. Conference of the Parties meeting scheduled for November 2021, such as a mutual commitment to carbon neutrality by 2050.

Democracy and Human Rights

The recent divisions between the United States and Europe mask a deeper fear that the West has lost a sense of itself as a community. After the end of the Cold War, the West became convinced that its democratic system would be the gold standard that all others would aspire to. As Ivan Krastev put it in 2018, “Even though the system was rigged, undemocratic governments knew it was important to at least pretend it wasn’t.” Now they barely even feign attachments to such norms, as charismatic strongmen from Russia to Turkey to China seem to have inspired a rising tide of authoritarianism around the world.

Biden’s election represents an opportunity to create a new democratic impetus. The 2021 British presidency of the G7 already intends to formalize the idea of a D10: a group of 10 democracies (the current G7 — Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — plus Australia, India, and South Korea) that would carry out an ambitious cooperative agenda. Large groupings of heterogeneous countries will always struggle to agree on a common vision. A democracy club, unified by both strategic aims and political outlook, would have a better chance at finding one.

Issues that this club could tackle would not be limited to nebulous common commitments, but would ideally rest on identifiable shared interests. These could include cooperation on telecommunications networks, climate change, responses to future pandemics, promotion of developing democracy and human rights, and the efforts against unfair economic practices.

Offer

The European Union and United Kingdom jointly propose a D10 to the United States and hail it as a new framework for cooperation, thus advancing convergence with key democratic partners on priority issues such as digital infrastructure, global health cooperation, and the fight for human rights. In coordination with the United States, Canada, E.U. member states, and key Asian countries, a D10 would send a strong message to rivals and allies of the capacity of democracies to define a shared vision of a revived liberal international order.

If Not Now, When?

The euphoric transatlantic mood of the moment does not feel like the right time to embark on such a hard-nosed approach. But in fact, it is the most propitious moment Europeans are ever likely to have. If European leaders show up in Washington one by one and effectively say to the new president, “How can I help you?” then the Biden administration, like the Obama administration before it, will mostly take European support for granted.

To create a more sustainable basis for transatlantic ties, Europeans need to show both the new administration and their own publics that they can forge tough bargains with a cooperative U.S. president that benefit both sides of the Atlantic. This article has described six potential offers they might make. All would be difficult to realize on both sides. But without such a European effort on these or other issues, transatlantic relations will simply drift back into their default mode of slow decay, waiting for the next Trump-like figure to arrive and administer the final deathblow.

 

 

Tara Varma is the head of the European Council on Foreign Relations’ Paris office. She focuses on European and Asian security.

Jeremy Shapiro is the director of research at the European Council on Foreign Relations and a non-resident senior fellow at the Brookings Institution. Previously, he was an official at the U.S. State Department.

Image: White House (Photo by David Lienemann)





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