With less than 50 days before the inauguration of President-elect Joe Biden, the European Union has — in hopes of, in part, curing bilateral trade tensions and “unilateral tendencies” that have recently tested the United States-EU trade relationship — set forth a policy roadmap (and, perhaps, an olive branch) for renewing the trans-Atlantic partnership. How receptive the incoming Biden administration will be to this overture remains to be seen, especially given President-elect Biden’s recent statements that he intends to stay the course on U.S. tariffs in the short term and “not enter any new trade agreement with anybody until we have made major investments here at home.” Also, a wild card in the mix is the impending expiration of Trade Promotion Authority (TPA) legislation in July — which will further constrain the new president’s ability to enter into trade deals unless renewed by the U.S. Congress. Nevertheless, the EU proposal is important to watch as it provides a potential roadmap to future U.S.-EU cooperation on a host of trade and related issues.
On December 2, 2020, the EU unveiled a policy document entitled “A new EU-U.S. agenda for global change” addressing four major areas of focus: global pandemic preparedness, climate change, global security and bilateral and multilateral trade. The EU’s agenda includes several notable trade-related proposals including:
- Eliminating Transatlantic Tariffs: Referring to the Trump administration’s Section 232 tariffs on steel and aluminum imports — which have been in place since 2018 — as “unjustified,” the EU calls for a resolution to this and other “bilateral trade irritants” through negotiated outcomes. According to the EU, such “irritants” include the decades-long dispute over government subsidies to Boeing and Airbus SE. As explained in our November 10, 2020 client alert, the ongoing dispute recently led to the EU’s imposition of nearly $4 billion in retaliatory tariffs on imported goods from the United States, including but not limited to: food items, beverages, polymers, exercise equipment, suitcases, handbags and shovel loaders and tractors.
- Setting Global Trading Standards: The EU is also seeking “deepen[ed]” U.S.-EU cooperation in setting regulatory and global trading standards. Citing increased competition from “third-party actors” — presumably including China — the EU is proposing the establishment of a new EU-U.S. Trade and Technology Council (TTC). The TTC’s role, according to EU officials, will be to “reduc[e] trade barriers, developing compatible standards and regulatory approaches for new technologies, ensuring critical supply chain security, deepening research collaboration and promoting innovation and fair competition.”
- World Trade Organization (WTO) Reform: Tacitly acknowledging dysfunction at the WTO, the EU calls for U.S.-EU leadership in exploring reforms to the WTO’s Appellate Body, the highest tribunal in the WTO’s dispute settlement system. The Trump administration, which previously threatened to withdraw the United States from the WTO, has been highly critical of the WTO’s Appellate Body, and, most notably, played a leading role in blocking appointments due to its concerns regarding judicial overreach.
- Digital Governance and Taxation: Lastly, a considerable component of the EU’s trade agenda centers on digital governance, including the regulation of online platforms and “fair taxation in the digital economy.” The EU specifically calls on the U.S. to join the EU in “press[ing] for secure 5G infrastructure across the globe” and to promote, among other things, enhanced security for digital supply chains. Taxation on digital services has been a contentious issue of late, as the U.S. proposed additional Section 301 retaliatory duties on anticipated digital services taxes from France and threatened similar actions against other EU member states including Austria and Italy. These tariffs are set to take effect on January 6, 2021, increasing the pressure on the EU to find a path forward on digital taxation.
While the EU’s agenda is, at this point, nothing more than a policy blueprint, the document is the latest European expression of optimism surrounding the incoming Biden administration. President-elect Biden made it known that one of his administration’s top foreign policy objectives will be shoring up the U.S. relationship with traditional European allies. In unveiling its agenda the EU not only demonstrates a desire to revive what many in the EU view as a damaged relationship with the United States, but also its belief that there is little time to waste.
As the U.S.-EU policy agenda continues to take shape in the coming weeks and months, Faegre Drinker will continue to closely monitor these developments and provide timely updates as developments warrant. As always, please do not hesitate to contact us with any questions.