The relationship between the EU and America these days reminds me of troubled celebrity couples on the red carpet – they smile at the camera, and act as if everything is going well, but in private, we know all, they are nothing but content.
At the recent G7 summit, there were happy photo-ops as well as some progress around trade conflicts, such as the Airbus-Boeing truce. But deep down, Europeans remain skeptical about whether the Biden administration is just a roadblock to another attack of toxic populism. Meanwhile, Americans are frustrated by Europeans for covering their bets between a closer transatlantic alliance or a closer relationship with China.
It doesn’t have to be that way. In fact, it doesn’t have to be. If the EU really wants to protect liberal values in the era of surveillance capitalism, it needs America. And if the United States really wants to separate itself from China economically in strategic sectors such as semiconductors, green batteries and electric vehicles, it needs demand from more than just the domestic market. There is a little fruit hanging to be picked here. But it requires some empathy and understanding on both sides.
First, Europeans should not mistake America’s new industrial strategy, explained last week by President Brian Deese’s director of the National Economic Council, for protectionism. It only puts the United States in line with what most other developed countries and many developing countries are part of normal economic planning – making strategic investments in high-growth technologies and harnessing the power of supply. of government to support local workers and businesses.
In addition to this, the plan aims to create more national and global economic resilience, in part by creating more geographical redundancy in areas such as semiconductors, where 75 percent of capacity is concentrated in China and the United States. East Asia, according to a recent BCG report. Almost all of the most advanced semiconductor manufacturing capacity in the world – about 92 percent – is located in Taiwan.
Does anyone really think that is a good idea given the geopolitics of the region? Europeans certainly don’t, so does the EU. “Digital compass“They plan to double their own share of chip production by 2030. The U.S. Senate’s $ 52 billion bill to boost domestic semiconductor production is a good complement to that. But the truth is that it will take a decade or more to rebuild America’s industrial base into chips, and even then, the United States will need partners to create enough demand to make the economies of scale for an industry like semiconductor work.
Allies such as Japan and South Korea, but also countries such as the Netherlands, could all play a crucial role in reconfigured semiconductor supply chains. Creating less concentration – both regionally and in specific companies – would be a good thing for global markets. In an ideal world, the US, the EU and Asian allies are working together to create common industry standards so that incremental innovation and demand can spread across regions in sectors such as chips, batteries. greens, clean technology and AI.
Another way for the EU and the US to find agreement now will be to “focus on common responses to the challenges that exist in their democracies”, rather than in China, where Europeans do not want to. does not take part, says Renaud Lassus, Minister Counselor for Economic Affairs at the French Embassy in Washington, and author of The Renaissance of Democracy in America and the Best Angels of Your Nature, a touch of optimism about the future of the United States.
These challenges can cover everything from Big Tech regulation to common goals on climate change, perhaps even something as ambitious as putting a price on carbon. Despite opposition from some European countries, including Poland, it is possible that by July, the EU could issue a draft proposal for a carbon adjustment mechanism. The US has the opportunity to respond in kind with its own proposal.
It is a heavy lift for the administration; Last week’s bipartisan infrastructure agreement included little on clean energy. But it is one that would fit the stated goal of putting the climate at the center of its own industrial strategy. It could also, by mandate, begin to address some common trade concerns over China. Dumping of Chinese steel, for example, would become impossible if there was a real price of carbon.
The Biden administration could use any “Summit for Democracy” that the White House convenes as a venue to begin this work. Already, there is a virtuous circle of ideas shared between the United States and the EU in areas such as digital privacy, with Europe’s General Data Protection Regulation (GDPR) inspiring California laws in place. matters of confidentiality even more aggressive than might one day be adopted nationally. Antitrust is another area of such a nature, where both parties are informed of each other’s efforts to curb the monopoly power of the platforms.
One could imagine more cooperation on topics such as freedom of the press, ways and means to create a digital rights bill, principles for how to regulate artificial intelligence and genomic research, and so on.
All of this will go some way to creating a new basis for the transatlantic relationship, one focused more on resolving national weaknesses and strengthening regional strengths than on kissing China. Both parties have too much to lose by going alone.