Marjorie Chorlins Senior Vice President, European Affairs, U.S. Chamber of Commerce, Executive Director, U.S.-UK Business Council

Published

May 27, 2021

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[This is the first article in a series on policy priorities for transatlantic relations. Read articles two, three, four, and five.]

President Joe Biden, European Commission President Ursula von der Leyen, and European Council President Charles Michel will meet in Brussels next month for the first U.S.-EU leaders’ summit since 2014. The long overdue meeting is an essential opportunity to reaffirm American and European leadership in addressing today’s global challenges—responding to the pandemic, jumpstarting the nascent global economic recovery, addressing climate change, ensuring digital connectivity, and countering China’s anticompetitive practices at home and abroad.

The June 15 U.S.-EU Summit holds great potential in terms of setting the stage for closer collaboration, especially if we can resolve outstanding disputes and secure a new Privacy Shield. This also would be an excellent opportunity to establish a forward-looking strategic dialogue via a Transatlantic Trade and Technology Council. That platform would allow Washington and Brussels to maximize opportunities for convergence and minimize risks of divergence. We recently joined BusinessEurope on a statement making these specific points.

As we consider more broadly the work ahead of us, the question arises: Will Washington and Brussels act in concert to achieve shared objectives, or will divergence become more prevalent?

Where We Seem Headed in the Right Direction

  • U.S. steel and aluminum tariffs and European countermeasures:These ill-targeted tariffs have had a devastating impact and must be lifted quickly. We applaud the European Commission’s decision to refrain from increasing its retaliatory tariffs on June 1. This is an important step, and we’re cautiously optimistic that the two sides can agree on new measures to address overcapacity in China’s steel and aluminum sectors, transshipment, and possible import surges — paving the way to lift the damaging measures.
  • Large civil aircraft subsidy disputes: It’s past time for the U.S. and the EU to strike a deal to discipline subsidies in this sector and lift the damaging retaliatory tariffs each has imposed. Here too we are cautiously optimistic that the two sides can find a way to “get to yes.”

Where the Jury is Still Out

  • COVID-19 Vaccines:As vaccination campaigns in the U.S. and Europe leap ahead, Washington and Brussels should commit to working with industry to execute on ambitious plans now unfolding to manufacture and distribute vaccines worldwide on a much larger scale. The U.S. and EU should pledge anew to open trade in vaccines and vaccine inputs, reject export restrictions, and strategize on how to boost production of the critical inputs — some of which have been in short supply — needed to accelerate production. EU leaders have signaled an understanding that the principal challenge remains the scarcity of many of the hundreds of highly specialized inputs needed to produce vaccines — not intellectual property protections.
  • OECD Tax Negotiations: Both the U.S. and Europe have affirmed their commitment to talks aimed at achieving global agreement on a taxation regime fit for the digitalizing economy. Yet some EU member states have adopted and are implementing unilateral digital taxes aimed squarely at a handful of large mostly American companies. There is even a question whether these discriminatory measures would be lifted in the event there is an OECD agreement. This stance threatens to undermine transatlantic commerce and the millions of middle-class jobs it supports in both the U.S. and the EU.
  • Coordination on China:The U.S. and EU have strong shared interests in ensuring China plays by the same rules as others in a globalized economy. China is and will remain a critical market for both the U.S. and EU member states, but our democracies and future competitiveness as market economies depend on working together to address our common challenges with Beijing. The Chamber welcomes efforts by Washington, Brussels and Member State capitals to collaborate and coordinate in areas ranging from illegal subsidies and forced technology transfer to investment screening, export controls, and sanctions policy. Yet despite these shared interests and the high stakes involved, prospects for achieving meaningful outcomes remain unclear. EU Member States are not of one mind when it comes to responding to the challenges China poses, and Europe’s focus on “open strategic autonomy” risks undermining our ability to collaborate on this and other 3rd country challenges.
  • Promoting Sustainability and Addressing Climate Change: Europe is a leader in efforts to respond to climate change. The U.S. decision to rejoin the effort is critical and presents a new opportunity for transatlantic cooperation. However, businesses will ultimately drive the innovations needed to decarbonize the economy, and a thoughtful dialogue between policymakers and stakeholders on both sides of the Atlantic is essential if we are to achieve ambitious climate objectives that advance our competitiveness. One thing we are watching: Europe’s plans for a carbon border adjustment mechanism. If such a measure specifically targets U.S. exports, it will have a considerable chilling effect on prospects for transatlantic cooperation on climate.

Where We Have Serious Concerns

  • Tech Sovereignty: The EU’s drive to become more competitive in the digital space is understandable. In its quest for technological sovereignty, however, Brussels seems intent on penalizing U.S. companies that have made huge investments and maintain significant operations in the Single Market. European officials also have made clear over the years that they believe their approach to regulation should be emulated everywhere in the world. Now, the EU is aggressively pursuing a raft of new regulatory controls on technologies including AI and cloud computing, as well as a new data strategy, a Digital Services Act, and a particularly troubling Digital Markets Act. The policy conversation underlying each of these efforts is important, and the objectives are not necessarily reflexively bad in every instance. However, the totality of these proposed measures can—and likely will—raise serious concerns. Rather than going it alone, the EU would be better served to coordinate with the United States to tackle legitimate policy issues raised by the digitization of the economy. And the U.S. government would be well served to take a hard look at where Europe is headed and push back on bad ideas.
  • Data Flows and Digital Trade: The ability to move and process personal data across borders is essential for transatlantic commerce in the digital age. Yet transatlantic data flows have been in disarray since the European Court of Justice invalidated the EU-U.S. Privacy Shield last year. The European Data Protection Board (EDPB) has exacerbated the situation by drafting and enforcing measures that go well beyond the Court’s ruling, raising the specter of forced data localization in Europe. Several U.S. digital exporters have already seen their access to the EU market disrupted by regulators more concerned by flows of EU personal information to the U.S. than to China and Russia. Last week’s resolution by the European Parliament endorsing a strategy that would further inhibit data flows only confirmed that forced localization is increasingly en vogue in Brussels. A new EU-U.S. Privacy Shield is essential to head off these trade headwinds and bring certainty to U.S. exporters and affiliates in Europe. We call on the U.S. Government and the European Commission to swiftly conclude an agreement and bring much-needed certainty.

Faced with today’s global challenges, transatlantic collaboration is not a “nice to do,” it’s a “must have.” To be sure, we won’t converge on every issue. But if the divergences grow too numerous and too stark, the U.S. and Europe will squander the opportunity to lead.

About the authors

Marjorie Chorlins

Marjorie Chorlins

Senior Vice President, European Affairs, U.S. Chamber of Commerce, Executive Director, U.S.-UK Business Council

Marjorie A. Chorlins is senior vice president for European Affairs at the U.S. Chamber of Commerce and the Executive Director of the U.S.-UK Business Council.

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