Transatlantic relations: No breakthrough at the EU-US summit in October

At the EU-US summit in Washington on 20 October 2023, EU Commission President Ursula von der Leyen and EU Council President Charles Michel met with US President Joe Biden. EU Executive Vice President Valdis Dombrovskis and US Trade Representative Katherine Tai also met on the sidelines of the summit for negotiations on the Global Arrangement on Steel and Aluminium (GSA) and the Critical Minerals Agreement (CMA).

Important negotiations have stalled

In the run-up to the summit, the EU had hoped to conclude most of the negotiations on the GSA and finally end the dispute over US tariffs on steel and aluminium. However, the day before the summit, negotiations stalled after the US wanted to keep the option in the agreement to reintroduce tariffs on steel and aluminium imports at any time - an unacceptable deal for the EU. The results of the summit are therefore unfortunately disappointing: it became clear that it would not be possible to reach an agreement on a GSA by the self-imposed deadline by the end of October 2023. As it stands, US tariffs and EU retaliatory tariffs will come back into force at the beginning of 2024. Officials on both sides have stated that they want to avoid this, however. One possible interim solution that is currently being negotiated is the continuation of the US tariff rate quotas for a certain period, providing more time for the finalisation of the GSA.

Neither side was able to achieve any major breakthroughs in the negotiations on a Critical Minerals Agreement (CMA), which is intended to counteract discrimination against European suppliers in access to tax credits for new electric cars under the Inflation Reduction Act (IRA). The progress in the negotiations was merely referred to in the joint statement.

Promises instead of results

Other results of the summit are hardly surprising: there were commitments rather than results. Both sides emphasised that they are striving for cooperation with China on global challenges and that decoupling is not the goal. Instead, the EU and United States seek to expand economic resilience through de-risking and diversification. At the same time, both sides underlined the need to strengthen their own economic security, establish a global level playing field and ensure the protection of critical technologies. The United States and the EU pledge to continue their support for Ukraine and Israel. In addition, both sides advocate a reform of the World Trade Organisation (WTO).

The summit further failed to produce any concrete results concerning the Trade and Technology Council (TTC), currently being the most important transatlantic forum for economic cooperation. During the upcoming meeting, both sides want to continue working towards joint progress. However, no concrete date was specified. It is now considered likely that the fifth TTC meeting will not take place until early 2024.

Mixed results for the TTC

After the initial euphoria surrounding the establishment of the TTC, disappointment has started to set in: The forum has been negotiating for two years, but has so far only been able to achieve minor successes. This applies particularly to the technology sector, being prioritized more strongly by the US. In the area of trade, on the other hand, where especially the EU wishes to see more tangible results, progress has been much slower and much more limited. A progressive trade policy, including negotiations on market access, is currently not a priority for the Biden administration - not even with important partners.

As a proactive climate policy and the green transition are political goals on both sides of the Atlantic, the EU is now hoping to make progress in the area of trade through the Transatlantic Initiative on Sustainable Trade (TIST) under the TTC. The EU and the United States want to promote the green transformation in four areas through trade facilitation and investment in necessary products:

1. a sustainable business environment for an integrated transatlantic market
2. resilient and sustainable supply chains for the clean economy
3. benefits for workers and consumers in the green economy
4. a global path for the green transition.

Whether the TIST can deliver concrete results remains to be seen.

Before the 2024 super election year: Future proofing transatlantic economic relations

In 2024, elections are due in both the EU and the United States. This could lead to political changes on both sides of the Atlantic. It is therefore essential that the transatlantic partners future proof the results achieved so far. To this end, it is important that both sides use the next few months until the elections to achieve concrete results and finalise current negotiations as much as possible. This is the only way to ensure that there are no setbacks in transatlantic economic relations after the elections. It will also create the opportunity to build on these results in the years to come.