A New Agenda for Transatlantic Relations

Times Square, New York City © timdavidcollection/Fotolia

The United States is and remains an important partner for politics and business in Germany. In order to improve the transatlantic partnership, the new administration under Joe Biden and the EU should intensify talks to dismantle transatlantic trade barriers. They should furthermore strengthen cooperation within the World Trade Organisation (WTO) and join forces in dealing with China.

Since 2015, the United States has been the biggest market for German exports in goods. German and U.S. companies are also among the most important foreign investors in their respective market. Thus, relations with the United States are one of the cornerstones of job creation and prosperity in Germany. Likewise, the U.S. economy benefits from strong economic ties with Germany and the European Union.

Transatlantic Trade: Facts and Figures

  • In 2019, the total value of German goods exports to the United States amounted to 118.7 billion Euro, accounting for 8.9 percent of all German exports (Federal Statistics Office of Germany).
  • In 2019, Germany imported goods worth 71.4 billion Euro from the United States. The United States was Germany’s third most important partner regarding goods imports, after China and the Netherlands. For the United States, Germany is the sixth largest market for its exports.
  • German investors have invested a total of 522 billion U.S. dollars in the United States (U.S. data on investment as of 2019, Bureau of Economic Analysis). German companies employ some 861,000 people in the United States (numbers as of 2018, Bureau of Economic Analysis).
  • In 2019, U.S. investors held almost 150 billion U.S. dollars of investment in Germany. Associated with these investments were 1,851 companies with 675,000 employees in 2018 (Bureau of Economic Analysis).
  • In 2019, the EU and the United States combined generated 42 percent of global GDP (World Bank) and accounted for almost 60 percent of global outward stock (outward stock; UNCTAD).

Transatlantic Relations in Choppy Waters  

Since U.S. President Donald Trump took office, the transatlantic partnership has entered choppy waters. The President repeatedly criticised Germany for its export surplus. Since June 2018, producers of steel and aluminium from the EU have had to pay high tariffs on their exports to the United States. In October 2019, the United States also imposed retaliatory tariffs on numerous goods from the EU. A WTO dispute settlement ruling on European subsidies concerning Airbus serves as the basis for these tariffs. Although in line with WTO rules, they put a considerable strain on the transatlantic relationship.

In addition, President Trump ordered the U.S. Department of Commerce (DOC) to assess whether imports of cars, mobile cranes, and electrical components endanger the national security of the United States. Section 232 permits trade restrictions in case trade affects national security. The result of the investigation report on auto imports was positive. In mid-May 2019, the White House released a proclamation by the President announcing that car imports posed a security threat while at the same time postponing the decision on import restrictions for another 180 days. President Trump also commissioned U.S. Trade Representative Robert Lighthizer to negotiate with Japan and the EU in order to avert the threat to national security. The White House let the deadline expire without comment.

Little Progress in Dismantling Trade Barriers

The transatlantic trade conflict is poison for economic growth and jobs on both sides of the Atlantic. The best way to de-escalate the conflict is a free trade agreement between the United States and the EU. Unfortunately, negotiations on a comprehensive transatlantic economic agreement (TTIP) have been suspended since 2016, against the backdrop of massive criticism from civil society groups on the EU side.

After U.S. President Trump and Commission President Juncker agreed in summer 2018 to negotiate an industrial goods agreement and to strengthen cooperation on regulatory issues, the Council of the European Union adopted two negotiating mandates in mid-April 2019. These related on the one hand to the dismantling of industrial goods tariffs and on the other to the mutual recognition of conformity tests. The EU’s negotiating mandates were much narrower than those of the United States. The Americans wanted a more comprehensive agreement that included the agricultural sector, which the EU rejected. The EU has also underlined that it would only sign an agreement if the tariffs on steel and aluminium have been lifted. It is therefore unsurprising that the transatlantic partners made virtually no progress in both negotiation dossiers.

Redesigning Transatlantic Relations

Joe Biden places significantly more emphasis on multilateral solutions than his predecessor. He is a transatlanticist and values the EU as an important partner.

It is time for a fresh start for transatlantic relations on an equal footing. The task now must be to revive the relationship and rebuild damaged trust. The EU and the United States must pull together in the face of the major challenges in international security, climate protection, and digitalization, all of which were exacerbated by the Corona crisis.

Only together can the EU and the United States shape a future based on the shared values of democracy, freedom, and personal responsibility. The economy needs a strong WTO that helps to solve the numerous trade conflicts. The United States should now abandon its blockade in the WTO Appellate Body and participate constructively in the selection process for the post of Director-General.

German industry hopes for a quick negotiated solution in the dispute over Airbus and Boeing subsidies. In addition, the United States must finally refrain from imposing or threatening to impose tariffs under the guise of national security. Imports from the EU and from other allies do not endanger the national security of the United States.

Finally, the United States and the EU should resume talks on dismantling barriers to transatlantic trade. Cooperation in setting standards for new technologies is particularly important, since new non-tariff trade barriers threaten to emerge here.