Trade harmony is music for 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 flow of bilateral meetings – one of the least commented on may be the most consistent. At the EU-US summit Last Tuesday marked a tidal change in the transatlantic relationship, and in the influence of the West in the world at large.

The headlines focused on the most specific success – an agreement to end the long trade war over subsidies from aircraft manufacturers. Welcome though it was, it lacked what really mattered at the summit and even in the aviation agreement itself. Suspending trade sanctions for five years may or may not resolve the Boeing-Airbus conflict. Much more important is that the conflict is settled, good faith is restored and both parties are engaged in the development of policies guided by their common values ​​and interests rather than the problems that divide them.

The implications go far beyond conventional trade liberalization or ending the tariff war from Donald Trump’s presidency. Both Europe and the United States have increasingly instrumentalized trade policy in the service of non-trade values ​​and geostrategic problems. This trend will now be much more coordinated.

The summit statement makes it clear that trade is becoming a common geopolitical tool, “to help fight climate change, protect the environment, promote workers’ rights, resilient expansion … supply chains ”among others. other things.Even when China is not mentioned, perhaps in a nod to the European joke, there is no doubt that it is meant by “non-market economies that undermine the world trading system”.

The most significant result is the creation of a US-EU Trade and Technology Council. It counts as a point for the EU, that proposed precisely this to the incoming U.S. administration in December. Brussels may also be slightly surprised by how Washington has embraced the idea and run with it. The council will involve three members of Biden’s cabinet – the secretary of state, the secretary of commerce and the trade representative – and various working groups on everything from technology standards and data governance. to investment screening and to security and human rights issues.

We can reasonably hope for two positive results. One is a more aligned approach to governing the digital economy. This should make it easier to deepen digital commerce and data transfers between the two economies. It helps the United States move quickly toward a more European approach to disciplining private technical firms. The last sign of this change is from Biden appointment of Lina Khan, a critic of the power of the Big Tech market, as a regulator of competition.

The second is more collaboration in standard-setting. This includes the internet – the summit’s statement states “the goal of promoting a democratic model of digital governance” – but should be extended to physical technological norms. At a time where China is actively seeking dominates the world standard, A tighter transatlantic approach is a game changer.

I had resigned to the emergence of a “splinternet,” with growing digital barriers between the United States, the EU, and China while establishing various rules for the digital economy. Now I am more optimistic that regulatory disruption can be minimized across the Atlantic. This will drastically change the balance of influence over governance and the rules adopted elsewhere, increasing the pressure on China to adapt to the Western model rather than the other way around.

Of course, there is still work to be done. Both sides are jealous of their regulatory sovereignty and aware of their competitive rivalry. Moreover, previous incarnations of cooperation councils have been disappointed. But today it’s different: the perception of common vulnerability is greater, the Trump era is fresh in people’s memory, and the sense that global economic rules have been rewritten quickly is overwhelming. It is more promising to collaborate in writing new rules than to try to resolve US-EU differences over old ones.

None of this will make a conventional EU-US trade agreement more likely. But that’s not the point. In the 21st century, trade policy is increasingly about finding common approaches to national regulation – to ruin trade flows, yes, but just as important to establish global rules of the game.

The summit puts the wind in the vein of Biden’s plan to show that the world’s democracies can work together to achieve better results for the citizens of the alternatives promoted by strong men around the globe. With the strengthened EU-US relationship, the old liberal world order lives on to fight another day, and then some.

martin.sandbu@ft.com



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