Don’t you forget about me: US is still Europe’s most important trade partner

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Trade policy should be, at its core, about a country’s citizens and how to make their lives better through internationalized economic opportunities. [Shutterstock]

The United States is still Europe’s most important trade partner. Europe should regulate trade with the transatlantic relationship in mind, despite US disengagement, writes Heidi Obermeyer.

Heidi Obermeyer is a German Chancellor Fellow at the German Council on Foreign Relations (DGAP e.V.)

The Trump administration prides itself on a number of protectionist policies, but some of the most counterproductive and classically isolationist among them are in the area of trade. While much attention has been given to US withdrawal from the TPP (the Trans-Pacific Partnership) equally concerning is the death of the TTIP (the Transatlantic Trade and Investment Partnership) which would have created a free trade agreement between the United States and the European Union. Trump’s recently announced increases in steel and aluminum tariffs have exacerbated trade tensions in the transatlantic space.

The hot policy idea in European circles these days is to move on without America, generally in a more European direction that calls for deeper and stronger ties among member states. Fear of a Trump presidency has given way to frustration, and instead of waiting to see what the President does next the Europeans are turning their attention elsewhere. On the trade front, strong economies like Germany are tiptoeing between their largest trading partners, the United States and China, trying to decide who at this point is a more reliable bedfellow.

It would be a huge mistake to put the United States on the back burner as the EU presses forward with its trade agenda. While European governments are hemming and hawing about how, and if, they should work with the United States, businesses are full steam ahead creating jobs and economic growth across the Atlantic as they have been for years, creating output from foreign affiliates from each side in the other totaling 1.3 trillion dollars – more than the GDP of the Netherlands.

Politicians in Europe, and particularly in the United States, have done a poor job in selling the strategic value of international cooperation to citizens. When European anti-Americanism rears its head in the trade arena, it is generally not over high and mighty ideological differences but over the finer details of an agreement or in specific sectors, like agriculture.

Even if large-scale agreements like TTIP or TPP are off the table for a period of time, every step regulators can take towards reducing barriers to trade or agreeing upon a set of high standards can create market pressures that reverberate across the globe. When looking at China, for example, the combined power of the US and Europe to set standards of conduct in trade and on the internet could have a huge impact and be one of the only counterweights possibly strong enough to balance against allowing the Chinese economy (and its behind the scenes orchestrators) to force changes in global conduct.

Trade policy should be, at its core, about a country’s citizens and how to make their lives better through internationalised economic opportunities. The political elite in Europe and the US are both trying to figure out how to react to the electoral turn against globalism and win back votes from the Brexit/Trump anti-establishment folks, and the answer may actually lie in the lightning rod for anti-globalisation sentiments, trade.

In many cases, the actual cause of job loss was not companies moving their operations abroad (although that does, as it has for decades, play a role) but was instead the automation of tasks that once were the basis for well-paid, steady employment. If governments can move forward with trade deals that improve market opportunities for citizens, bring in foreign direct investment that creates jobs, and lowers the cost of products people buy from abroad, it is possible that the economic pressure that has exacerbated the political divide could be lessened.

Alongside the challenge of automation is an even more intensive regulatory challenge where the United States and Europe are playing a high-stakes game to shape the future of the internet.

In May, sweeping changes in EU privacy and data law come into effect that will have an enormous impact on the many US companies operating in Europe. Facebook recently changed its privacy settings and released a new list of privacy principles in preparation for the regulations’ implementation in May, while many member states own governments – as many as 26 – remain unprepared to comply with the sweeping changes.

Much like the strategic value that would be created by European and American cooperation to set standards in traditional trade arenas, setting technology and privacy standards through cooperation could encourage technological innovation on both sides of the Atlantic.

While the intentions may be good, forcing EU-led regulation onto globalised companies may in the end result in a convoluted mess of rules that actually make it harder for consumers to discern how their data will be used and even more difficult for governments to collaborate on issues involving the internet where international cooperation can be extremely beneficial, such as in law enforcement.

In the end, it is important to keep in mind that the Trump presidency is not forever. Closer regulatory cooperation within the EU and establishment of high-quality European norms both in the trade and internet regulatory arenas are not necessarily a bad thing, but EU leaders (and Americans with a stake in the European economy) would be foolish to discount the importance of future collaboration with the United States.

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