U.S.-E.U. Relations under the Trump Administration

By Anthony Gardner, U.S. Ambassador to the European Union 2014-2017
The opinions expressed in this op-ed are those of the author and do not reflect the views of the Comparative Jurist, William and Mary Law School, or its affiliates.

The Trump Administration poses challenges to the European Union that are broader than the frequently cited differences over the Paris Agreement on climate change, the Iran nuclear agreement, Russia, Syria or Cuba.

The EU is concerned, like many of our allies, at this administration’s dysfunctional and erratic behavior. This complicates efforts of European diplomats to understand what U.S. policy is, and which officials are the right counterparties. Even if the administration fixes this dysfunction, U.S. and EU views of the world are starkly different and are bound to collide.

First, the EU is concerned about this administration’s disdain for the rules-based international system of multilateral institutions, including the World Trade Organization (WTO), and international law. The EU believes that this system is what enables it to function successfully. The President and leading members of his administration believe that the post-war system has worked against U.S. interests and needs to be fundamentally revised. Steve Bannon has left, but “Bannonism” will live on. This is a radical change from the past when the U.S. saw itself as the main architect and beneficiary of this system. Many leading members of the administration see the world as a zero-sum game in which one side loses if the other side wins; rather than being a “global community,” the world is an arena where nations and businesses compete for advantage.

Second, the EU is concerned about this administration’s disdain for “soft power”.The disdain is evidenced by massive proposed cuts in foreign aid and the State Department budget, as well as dismissal of prior human rights and anti-corruption priorities. Unlike the EU, the President has embraced the autocratic regimes of the Philippines, Egypt, Turkey, Saudi Arabia and Russia. The EU has lost the support of the U.S. in its efforts to persuade Poland and Hungary to subscribe to democratic norms of governance.

The administration pursues burden sharing only in defense, while refusing to consider the relevance of burden sharing on immigration, climate change and foreign aid. During the next three and a half years, U.S.-EU cooperation on stabilizing the European neighborhood – including in the Balkans, North Africa, the Middle East and Ukraine – through aid, trade, training of police and the judiciary, and emphasis on good governance may suffer.

Third, the EU is concerned that this administration is deeply protectionist. Despite some initial indications that the administration wishes to pursue the Transatlantic Trade and Investment Partnership Agreement (TTIP), it is unlikely that an ambitious agreement can be reached. Thorny issues such as government procurement, agriculture (especially geographical indications), services liberalization (especially maritime) and dispute settlement have all become tougher.

The U.S. already has some of the world’s more far-reaching forms of “trade defense,” including anti-dumping and anti-subsidy duties. The White House has clearly signaled that it is prepared to ignore unfavorable WTO rulings and bypass the WTO by imposing trade sanctions unilaterally by using statutory authorities rarely used in the past. This includes Section 232 of the 1962 Trade Expansion Act, enabling the President to limit imports of a specific item because of national security considerations. Although this was originally conceived to apply at a time of war, this administration is prepared to define “national security” far more broadly.

Current investigations into steel and aluminum imports could result in import restrictions. The countries hit by steel restrictions would include allies such as Canada (6% of consumption) and the EU (5% of consumption). In August, the President rejected a Chinese proposal to cut steel overcapacity, preferring to impose tariffs on imports.

U.S. withdrawal from the Paris Accords suggests that the President is principally focused on what appeals to his core base of support, especially in the swing states that won him the Electoral College. Unilateral trade restrictive measures may make sense because they appeal to this base, even if they result in higher input costs for many other industries, higher costs for consumers, and injury to sectors hit by retaliatory trade measures.

This protectionism does have some upside for the EU of course. The decision to withdraw from the Trans-Pacific Partnership (TPP) Agreement has arguably hastened the EU-Japan Free Trade Agreement (FTA). A decision to withdraw from the Korea-U.S. FTA would place EU exporters at an advantage over U.S. ones. The EU is well on the path to concluding FTA with nearly every member of TPP, including Australia and New Zealand. But EU trade leadership can only go so far. Plurilateral agreements like the Trade in Investment Services Agreement and multilateral trade liberalization may well suffer without U.S. engagement.

In light of this turbulence and the administration’s transactional foreign policy that prioritizes “hard power” and bilateral relations, it will be challenging to focus on a positive U.S.-EU agenda. It is possible, though alas unlikely, that such an agenda could focus on several pillars of interest to both sides: (1) deeper cooperation on law enforcement and counter-terrorism; (2) greater cooperation on trade defense mechanisms, especially against unfair Chinese trade practices; (3) continued collaboration on combatting multinationals’ tax evasion; (4) further aligning transatlantic standards on auto safety, pharmaceuticals and chemicals; and (5) deeper cooperation in combating cybercrime and cyberwarfare.

While it remains unlikely that this administration will commit any grave “sins of commission” to undermine the EU – as appeared possible in the first half of this year – it is possible that it will commit “sins of omission” by simply underappreciating the role that the EU plays as a key partner of the U.S. on a range of regional and global issues. The EU will struggle to consolidate the achievements of the past, left alone make significant progress, in such places as the Balkans and in Africa as the U.S. deprioritizes anti-corruption, human rights and foreign aid.

In summary, the European Union will struggle to cope with the fallout of the Trump administration. It needs to focus, as best it can, on limiting the downside while seeking to build on the areas where cooperation is still possible.

*The front picture is from Efficiency of EU Military Budget 50% Lower than in US – Juncker, Sputnick International, https://sputniknews.com/world/201611181047586701-eu-us-military-budget/. (The Editorial Board)

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Ambassador Anthony L. Gardner (retired)
Ambassador Gardner serves as Senior Advisor to Sidley, the international law firm, and Brunswick Global, the public affairs and communications firm. He is a board member of Scottish Power and Brookfield Business Partners. In addition, he serves as Senior Non-Resident Fellow of the German Marshall Fund and is a member of the Strategic Council of the European Policy Centre. He is an adviser to the Bill and Melinda Gates Foundation and is a member of the Council on Foreign Relations.
Ambassador Gardner served as U.S. Ambassador to the European Union from March 3, 2014 to January 20, 2017. He has dedicated more than twenty-five years of his career to U.S.-European affairs, as a government official, lawyer and investor.  He served as Director for European Affairs on the National Security Council in 1994-95. Prior to serving in his diplomatic post, Ambassador Gardner was Managing Director for six years at Palamon Capital Partners, a pan-European private equity firm based in London, and worked as an Executive Director at GE Capital and Bank of America, as well as with international law firms in Brussels, Paris, London and New York. He is a member of the New York Bar.
He has written a book and numerous articles on EU affairs and U.S.-EU relations, and is a frequent commentator on CNN, BBC, CNBC and Bloomberg, as well as in the Financial Times and the Wall Street Journal.