‘Europe needs trade deals with US’

Europe should make trade deals with the US á la TTIP. So says Rem Corteweg, senior researcher and head of the ‘Europe’ department at Clingendael. In short, not only is the World Trade Organization calling the WTO ‘paralysed’, but US government aid under the Deflation Act threatens to leak European technology to the US. It is high time for a transatlantic trade agreement.

The US deflationary act leads to an imbalance in the balance between the US and Europe. According to Korteweg, Europeans are disappointed in Joe Biden, but Americans are also disappointed in us. America, because Europe doesn’t want hard cuts with China, Europe thinks Biden is more European than it seems now. “We accused Trump of doing what Biden is doing for a long time. While we in Europe believe we can maintain the multilateral trading system, the United States is not very interested in the WTO.

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Disappointment on both sides

According to Kortevec, while Europe did not expect much from Biden, Europe was also surprised by the IRA. Europe always wore the Biden administration with a pan-European spirit. This explains the anger. The President of the United States is only for Americans, and when we thought he was one of us.’ Conversely, Americans are also disillusioned with Europe; In the past two years, Americans have looked to European actions that make the continent less dependent on China. ‘Americans expect Europe to emulate America on economic and security issues.’

Exit the WTO and enter TTIP 2.0

Korteweg advocates renewed transatlantic trade agreements similar to the TTIP agreement in 2015. This prevents Europe from being crushed on the one hand by the disastrous effects of deflationary legislation, and on the other hand by the bankruptcy of the World Trade Organization (WTO). At least from the American and Chinese point of view.

Korteweg therefore wonders why the EU and the US do not agree on frameworks for many sectors, such as semiconductors, green technology or, more broadly, subsidies for their own industries. ‘The WTO is deadlocked and those structures do not work internationally. Let’s make it bilateral. This brings us back to the Transatlantic Trade Agreement. The WTO is broken, and we have problems with this crazy US government aid, risking our own technology leaking into the US. Shouldn’t we have a trade agreement with the Americans then?’

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Have your cake and eat it too

Europe’s own ambition to occupy a middle position on the bipolar global playing field is playing tricks on Europeans. ‘We invest a lot in America, but also in China. We don’t want to choose. As the U.S. wants, ties with China must be severed. We love the Chinese market, and that Chinese market is incredibly innovative. Europe has one thing in common: We don’t want to go along with the disconnection rage that is so prevalent in America.

According to Kortevec, Europe can continue to trade with China without ‘removing the geopolitical margins of strategic dependence’. By investing heavily in countries like Europe, Japan, South Korea, Singapore and Taiwan, we can reduce this unattractive dependence on raw materials. thereby replacing the critical Chinese link in the supply chain.

Beijing divides and rules

Naturally, this will not go unnoticed and China will respond. But it is already doing that in its approach to Europe. That China is well aware that things are not going well in Europe is evident from the fact that Beijing invites individual European leaders, but not the European Commission. “China is a master at divide and conquer. China has been very good at emphasizing that Europe is a collection of 27 member states rather than a bloc. It wants to point out that China is the biggest party.’ According to Kortevec, this is not only an important political signal for EU member states, but it also causes confusion in the EU.

According to Korteweg, German Chancellor Scholes’ approach exemplifies the radical middle position that Europe wants to occupy. ‘Scholz firmly distances himself from the image that we are heading towards a Cold War. According to Scholes, we must create a multilateral world in which Europe has an independent voice in its relations with both China and the United States.

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Spare cabbage and goat

Scholz is looking for a way for Germany and Europe to work with autocrats, while also acting as a bridge between the United States and China, working equally with all those parties. But China and the US have a say in this. America wants Europe to show its colors, and America’s patience is running out. ‘If we don’t make far-reaching trade deals with Americans about government aid or subsidies, for example, the law of a strong and fat wallet will apply. We are going to lose in that.’

Listen to the full conversation with Rem Corteweg here