Since the end of the Second World War, the United States and Europe have built and sustained a relationship that provided them with a significant degree of stability and predictability in areas ranging from security relations to political engagements to economic ties. The partnership is built on a long history of cooperation on issues of common interest which laid the firm foundations of the transatlantic collaboration. As stated in the US National Security Strategy (2022), strengthening the transatlantic relationship continues to be important, with President Biden prioritising the broadening and deepening of the transatlantic bond to pursue a common global agenda. Towards this end the Biden Administration has committed to deepening the United States partnership at the bilateral level and with the European Union (EU) including strengthening the North Atlantic Treaty Organisation (NATO).
While the transatlantic partnership has always been viewed as one of cooperation, the relationship has oscillated between strong support on some issues while on other they have differences in their approach. For example, one can witness support from Europe for the United States post the 9/11 attacks and in the current Ukraine crisis. Differences on the other hand can be seen on issues such as, the United States’ decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) with Iran and in how the transatlantic partners view their relations with China. This paper will attempt to highlight divergences of views between the partners on issues which are of common concern. The aim of the paper is to underscore that diversity of views has not weakened this partnership but adds value to it.
Common Challenges but Differing Approaches in the Partnership
Strategic partners, security allies and political and economic partners are among some terms that have often been used to describe the transatlantic partnership. As two partners that share socio-economic and political values, they generally have had similar responses to issues of common concern. While a convergence in response remains the foundation of the partnership, one finds that at times they do have divergent views on how to address common challenges. This section highlights four such concerns in which the partners have differing views.
i) Differences on China
A primary challenge before the partnership has been the growing influence of China and its possible destabilising effects on global politics, economy and security. The US National Security Strategy (2022) states, that China “…is the only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to advance that objective.”[i] The Biden Administration has responded to China by refocusing on its own research, development and innovation industries through such measures such as the CHIPS Act, encouraging American industries to shift units from China to the United States, working with partners and allies to counter China’s financial diplomacy and economic outreach through various infrastructure initiatives such as Build Back Better, Indo-Pacific Economic Framework etc and increase its diplomatic outreach across Europe, Asia, Africa and Latin America and the Caribbean.
Europe also identifies China as a global rival in areas such as trade, geopolitics, defence, economic power and technology. Nonetheless, Europe has adopted a different approach from the United States in its engagements with China. Europe’s response has been based on the three objectives as outlined in the EU’s Strategic Outlook towards China 2019[ii] which call for it to deepen its engagements with China to promote common global interests, seek a more balanced economic partnership and for the EU to strengthen its own domestic policies and industrial base to maintain its prosperity and values. While the European Commission is seeking to decrease its dependency on China, it also agrees that China could play a role global politics such as in ending the ongoing Russia-Ukraine crisis. Members States of the EU continue to pursue their respective bilateral relations with China which is different from the United States’ approach to the country. In 2022, German Chancellor, Olaf Scholz, undertook a State visit to China. Since then, various European leaders have visited Beijing which includes Spanish Prime Minister, Pedro Sanchez and French President Emmanuel Macron. The visits focused on increased economic bilateral engagements, with President Macron calling for Europe to follow an independent policy towards China.
ii) Economic Relations: Working towards Climate Resilient Economies
Interlinked to the first issue, one can see certain divergences of views in the economic arena. The United States and the EU are important trading partners for each other and their economies are increasingly intertwined. The two have the largest bilateral trade and investment relationship. Although overtaken by China in 2020 as the largest trading partner specifically for goods, when services and investment are taken into account, the United States remains the EU’s largest trading partner by far. Nonetheless, given deep economic ties with China, European leaders have adopted a more business oriented approach towards China, even as China-US relations remain tense.
Within the transatlantic partnership the recent US Inflation Reduction Act (IRA) 2022, has caused some disagreements. The IRA aims help fight domestic inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030.[iii] It aims to invest in research and development and commercialisation of technologies to address climate change by carbon capturing, storage and clean hydrogen. While the EU has welcomed the focus of the IRA for climate change mitigation, it has been critical of provisions within it which will provide tax subsidies to manufacturing of clean technologies in the United States, by both American and global companies. The EU feels that such tax incentives would not only prove to be disadvantage for European industries to export to America, but may also push European firms to relocate to the United States. The IRA will also reorganise supply chains as the United States pushes to manufacture locally which the EU feels will further dent the competitiveness of European companies.
The IRA has led to political differences between the United States and Europe. European leaders such as President Macron have called IRA disadvantageous to European industries and pointed that it would pose a challenge for the United States and the EU to coordinate and re-synchronise their policies to address concerns. France has also proposed that the EU explore similar subsidies for its industries. However, some States like Germany and Netherlands have called for a relook of current European plans to find responses to the IRA. The EU has taken steps by strengthening its previous Industrial Policy into the 2023 Green Deal Industrial Plan to make the economy fit for the green and digital transitions and reduce strategic dependencies. The plan acknowledges that EU funding sources have largely benefitted research and innovation and deployment of renewable energy and related infrastructures, rather than targeting manufacturing capacity in the sector. It calls for building stronger industrial value chains across the Union and deployment of cutting edge technologies across industries. It also lays emphasis on encouraging more private entities to invest in the EU.
iii) Competition and Cooperation in Technology Sector
Apart from the above two areas there are other sectors in which the transatlantic partners are balancing cooperation and competition. For example, in the technology sector, the partnership is committed to driving digital transformation and cooperating on new technologies and deepening cooperation on technology issues, including on artificial intelligence (AI), 6G, online platforms and quantum. In the recent US-Nordic Summit, the leaders recognized the crucial significance of critical and emerging technologies—with appropriate guardrails and risk mitigation measures—for global prosperity and security. Nonetheless, the United States has expressed its reservations on digital regulatory policies proposed by the EU. The EU’s 2020 Digital Markets Act (DMA)[iv] aims to prevent large online platforms that connect consumers with content, goods, and services from abusing their market power. With most major digital platforms based in the United States, they have been lobbying for less stringency in the Act. The EU has also proposed rules to regulate the use of AI in a range of activities from self driving cars to their use in law enforcement and court systems. The rules would have far reaching consequences for companies that are investing in AI development such as Alphabet, Microsoft. The United States has not yet proposed any such regulatory measure for AI usage.
iv) The Security Partnership
In the security arena, both partners understand that stable relations remain in the interest of both. The NATO remains the primary security mechanism for the partnership with the recent NATO Summit and the US-Nordic Summit (2023) reaffirming “…the importance of the Alliance for regional and transatlantic security and stability.”[v] Within the United States, there is growing bipartisan support for collaboration with various sub-regions within Europe. The United States strategy for engagement with the Black Sea region is under consideration in the US Congress. The region is at the crossroad of Asia, Europe and the Caucasus which allows for enhanced economic engagements. The United States has also increased its engagements with Central Europe with a view to bolstering the NATO’s presence and readiness to address threats. Cooperation with the Nordic and Baltic States is an important pillar for the security of the Arctic region. With the NATO expanding into the Nordic region with Finland officially joining the alliance, the United States hopes for a stronger northern European security.
While the above highlights the close security relations, nonetheless, remarks by President Trump along with the US focus on other regions such as the Indo-Pacific in recent years, led to questions on the long term reliability of the US security commitment. Apart from this, the changing security landscape of Europe with the crisis in Ukraine and an antagonistic Russia has once again brought focus on the need for European security architecture. A common European defence outlook has been a work in progress and while the United States welcomes greater European contributions to common defence efforts, it would prefer them within the NATO. It remains to be seen if there would be any differences between the partners on an independent European security outlook and if such developments in the future cause friction in the transatlantic partnership or provide space for greater NATO-European security cooperation.
Conclusion
Transatlantic relations are bound to evolve in the coming years as nations address emerging challenges and find additional areas of cooperation. Discord and even crisis have long been part of the transatlantic relationship, which, on some occasions, have given rise to predictions of a break in the partnership. One reason for the robustness of the partnership is that it is based not only on ties of trade and investment, defence and security linkages, but on shared values, people to people contacts, and organisational linkages, with NATO and the EU as the two pillars of this relationship. Together, they help explain the capacity of the transatlantic partnership to withstand disagreements and adapt to geopolitical change. As has been pointed, the relations are not static and evolve with emerging situations. While the United States and its European allies may share similar views on many global issues, they may not necessarily share common views on paths to address these challenges. This fluctuation pushes both partners to continue to engage with each other and seek cooperation.
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*Dr. Stuti Banerjee, Senior Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: The views expressed are personal.
Endnotes
[i] The White House, “ National Security Strategy 2022, October 2022” , https://www.whitehouse.gov/wp-content/uploads/2022/10/Biden-Harris-Administrations-National-Security-Strategy-10.2022.pdf, Accessed on 31 July 2023
[ii] The European Commission, “EU-China Strategic Outlook 2019, March 2019,” https://commission.europa.eu/system/files/2019-03/communication-eu-china-a-strategic-outlook.pdf, Accessed on 31 July 2023
[iii] Senate Democrats, “Summary: The Inflation Reduction Act Of 2022,” https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf , Accessed on 31 July 2023.
[iv] The DMA was proposed by the European Commission in December 2020 and was approved by the European Parliament and the Council in March 2022. A few articles of the legislation become applicable at the end of 2022, with the rest coming into force throughout the course of 2023.
[v] The White House, “Readout of the Third United States – Nordic Leaders’ Summit, 13 July 2023”, https://www.whitehouse.gov/briefing-room/statements-releases/2023/07/13/readout-of-the-third-united-states-nordic-leaders-summit/#:~:text=On%20security%2C%20the%20Nordic%20countries,within%20its%20internationally%20recognized%20borders, Accessed on 26 July 2023.