Transatlantic Relations: Difficult Decisions Ahead

As the son of European immigrants to the United States, I’m proud to call myself an Atlanticist; my heritage has given me an enduring affinity for Europe and its people, as is true for many Americans.  I believe the transatlantic relationship has been a powerful driver of positive change that benefits all of our citizens.  With focus, diligence, and honest commitment, it will continue to be.

Still, let’s not ignore the irritants in this relationship.  The United States has legitimate concerns that must be addressed.  The EU often espouses the rhetoric of supporting free trade, while simultaneously employing numerous non-tariff barriers to its markets.  While these NTBs take many forms, prominent among them are the EU’s unjustified and trade restrictive policies with respect to agricultural and food products, notably unwarranted bans not based on science or actual risk.  It is not a coincidence that the United States has an agricultural trade surplus with the world of $22 billion and a deficit with the EU of $15 billion.  The EU’s tariffs are also higher than the United States.

Without exception, every successful partnership accommodates the needs of both parties involved.  Removing the serious but surmountable obstacles between us, beginning with our imbalanced trade ledger, will allow us to focus on important common external threats and opportunities.  Indeed, a strong transatlantic partnership, rooted in a fair and reciprocal trading relationship, will be essential to confronting the challenges of unfair trade practices and overly aggressive economic rivals in the years ahead. 

Historically, the United States has been there for Europe for more than seven decades.  Our commitment to a free, prosperous and secure Europe has come in many forms, from American dollars to American lives.  The United States decided to make a strategic, long-term investment in this transatlantic relationship.  Hundreds of billions of dollars have flowed into Europe, along with the incalculable investment into Europe’s security via non-obligatory defense spending.  At the same time, we have opened our lucrative markets and welcomed European trade and investment throughout our economy.

Against this backdrop, I arrived in Brussels last July highly optimistic.  I came to government work from the business world, and I was pleased that, after years of deadlock, Presidents Trump and Juncker met in Washington on July 25, 2018.  On that day, both men pledged to make the imbalanced U.S.-EU trade relationship freer, fairer, and more reciprocal.  President Trump is a man of action, and it seemed as though things were happening.  I was ready to engage the EU leadership in friendly, open-minded discussions.

Fast-forward six months.  I am deeply disappointed we have not seen faster, deeper progress on the wide number of areas where European rules prevent U.S. firms from fair access to European markets.  This lack of demonstrable progress on real and tangible U.S. concerns presents a serious challenge to the transatlantic relationship at a time when it is more important than ever that we be working together.  Rest assured, President Trump is committed to fixing the imbalance in our trade relationship so it will not burden yet another American administration.

In my view, it is clearly time for the United States to adopt a different approach.  I believe that unless the EU recognizes and corrects our one-sided trade arrangement, the United States should consider a range of actions to address this problem. In my opinion, these steps should happen sooner rather than later.

It would be extremely unfortunate for the transatlantic relationship to devolve to this, but the status quo in our trade relationship is unacceptable.  Europe needs to recognize the United States has tremendous leverage in this relationship and this president will not shy away from applying that leverage when it is required to address our trade imbalance.   So, let me be clear when I say the United States—from the working level to the President— is ready now, today, to work with the EU to correct the imbalances in our trade relationship.  But, our patience is not endless.  We need the EU leaders to step up, take control of the EU bureaucracy, recognize the unfairness in many of the EU’s current rules, and change the rules to make them fair.

The United States and Europe are partners in a transatlantic market that accounts for about one third of global GDP.  Forty trillion dollars.  We approach regulation differently, but essentially wind up in the same place.  In fairness, the United States should also review any of its own protectionist rules to allow for freer and more open trade between us.  In the future, working together, we should be able to achieve virtually limitless opportunities.  But, to get to that future, we need address the imbalances of today.

We should not be squabbling over EU rules and regulations that too often serve as protectionist non-tariff barriers.  Instead, the EU should get its proverbial house in order and open all of the trade doors, as should the United States.  The resulting growth in GDP, transatlantic innovation, and additional U.S.-EU joint ventures will more than compensate for any short-term rebalancing.

If we can put this trade disagreement behind us, think about what the United States and the European Union have to offer when we work together.  Together we should be setting global standards that ensure safety and health and providing an example for fledgling democracies.  We should be expanding our collaboration on countering the threat of terrorists, isolating rogue regimes, and delivering developmental assistance and disaster response to those countries most at risk.  As guarantors of the liberal world order, the United States and the EU shouldn’t be distracted by challenges that are readily solvable.  We should be unified in our confrontation of China, Russia, and other world actors who fail to share our vision or values and who are actively working against all of us.  Instead, we are wasting our time locked in endless discussions that produce no results, despite the fact we seek the same goal.  This is no time to turn on one another in the name of “process”.

We are better than this, and the reality is that a U.S.- and EU-led world is far better than any other alternative.  I encourage the leadership of the EU to pause and reflect on what is truly important – that which makes this transatlantic partnership such a potent force for good, for so many – then decide how it wishes to make its own long-term, strategic investment in the future of this relationship.  Our enemies want nothing more than to see us divided.  Let’s not play into their hands.

Gordon D. Sondland is the United States Ambassador to the European Union. He is also the founder and chairman of Provenance Hotels and co-founder of the merchant bank Aspen Capital.