Commercial harmony is music to the ears of the liberal world order


In the whirlwind of summits held during President Joe Biden’s week in Europe – G7, NATO, US-Russia and a flood of bilateral meetings – one of the least commented on is perhaps the most important. The EU-US summit Last Tuesday marks a sea change in the transatlantic relationship, and in the West’s previously declining influence in the world.

Headlines focused on the more specific achievement – a deal to end the long trade war over aircraft manufacturer subsidies. While welcome, it lacks what really mattered about the summit and even the aviation agreement itself. Suspending trade sanctions for five years may or may not resolve the Boeing-Airbus dispute. What is much more important is that the conflict is parked, that good faith is restored, and that both parties commit to developing policies guided by their common values ​​and interests rather than the issues that divide them.

The implications go far beyond conventional trade liberalization or the end of the tariff war under President Donald Trump. Europe, like the United States, has increasingly instrumentalised trade policy in the service of non-trade values ​​and geostrategic concerns. This trend will now be much more coordinated.

The summit declaration makes it clear that trade is becoming a shared geopolitical tool, “to help fight climate change, protect the environment, promote workers’ rights, build resilience.” . . supply chains ”, among others. Even when China is not mentioned, perhaps in assent to European reluctance, there is no doubt who is meant by “non-market economies that undermine the world trading system”.

The most important result is the creation of a US-EU Trade and Technology Council. Count this as a score for the EU, which proposed precisely this to the new US administration in December. Brussels may even be slightly baffled by how Washington embraced the idea and followed it. The board will involve three of Biden’s cabinet members – the Secretary of State, Secretary of Commerce and Trade Representative – and various task forces on everything from technology standards and data governance to investment screening and questions. security and human rights.

One can reasonably expect two positive results. One is a more aligned approach to the governance of the digital economy. This should facilitate the deepening of digital commerce and data transfers between the two economies. This helps the United States move quickly towards a more European approach to the discipline of private technology companies. The last sign of this change is Biden’s appointment of Lina Khan, criticism of the market power of Big Tech, as a regulator of competition.

The second is greater collaboration in setting standards. This includes the internet – the summit declaration sets out “the goal of promoting a democratic model of digital governance” – but should extend to physical technological standards. As China actively seeks to dominate global standard setting, a more cohesive transatlantic approach is a game-changer.

I was resigned to the emergence of a “splinternet”, with growing digital barriers between the US, EU and China as they set different rules for the digital economy. I am now more optimistic about the possibility of minimizing the explosion of regulations across the Atlantic. This would radically shift the balance of influence over governance and norms adopted elsewhere, increasing the pressure on China to adapt to the Western model rather than the other way around.

Of course, hard work remains to be done. Both parties are jealous of their regulatory sovereignty and aware of their competitive rivalry. In addition, previous incarnations of cooperation councils have disappointed. But today it’s different: The perception of a common vulnerability is greater, the Trump era is fresh in people’s memory, and the feeling that global economic rules are being quickly rewritten is overwhelming. Collaborating on new rules is more promising than trying to resolve differences between the US and the EU over old ones.

None of this will make a conventional EU-US trade deal more likely. But that’s not the point. In the 21st century, trade policy is increasingly about finding common approaches to domestic regulation – to smooth trade flows, yes, but just as important to setting the global playing field.

The summit puts the wind in the sails of Biden’s plan to show that the world’s democracies can work together to deliver better results for citizens than the alternatives promoted by strongmen around the world. With the relaunch of EU-US relations, the old liberal world order lives to fight another day, and more.

martin.sandbu@ft.com



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