U.S.-EU Trade Summit in Pittsburgh Aims to Deepen Economic Ties
Senior U.S. and European officials meet in Pittsburgh on Wednesday, aiming to show that closer trans-Atlantic ties have value—in dollars and euros.
Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai plan to sit down with European Commission executive vice presidents Margrethe Vestager and Valdis Dombrovskis to launch a forum they agreed to in June, the U.S.-EU Trade and Technology Council.
Underpinning the talks is a fact often lost in debates both sides have about voluminous trade with China: The U.S. and European Union are by far each other’s most important economic partner, by orders of magnitude. Businesses on both sides are eager to expand the partnership.
The meeting comes at a tense time for trans-Atlantic relations, following the chaotic withdrawal from Afghanistan that many Europeans feel the U.S. mishandled, and European anger over the U.S. sale of submarines to Australia. That deal usurped a French contract valued at roughly $65 billion, inspiring fury in Paris and beyond.
In Washington, meanwhile, many people believe Europe doesn’t spend enough on consumption or defense, leading to economic imbalances.
The Pittsburgh meeting aims to look beyond those differences and start tackling new and long-festering obstacles to commerce between the giant economies. It isn’t a deal negotiation, and concrete results won’t emerge quickly. The goal is to align priorities and create a joint agenda.
Ten working groups will tackle items including differences over data governance, technical standards and export controls to third countries. Some items, like investment-screening cooperation and securing supply chains, are more about cooperating against China, Russia and other adversarial economies. But even those priorities entail deeper U.S.-EU commercial linkages, since each considers the other among its most familiar and secure foreign markets.
Agenda item “Climate and Clean Energy” suggests how success could deepen ties. President Biden wants to spend potentially trillions of dollars tackling climate issues, which happens to be an area of EU expertise. But much U.S. government spending will be limited to U.S.-based contractors.
Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, says passage of Democratic infrastructure and environmental programs could trigger a deal wave.
“EU companies will buy U.S. companies to get around Buy America,” Mr. Kirkegaard predicts.
The U.S. economy’s cutting edge, meanwhile, is looking to Europe. Silicon Valley investors and Big Tech conglomerates are devouring EU startups that carry lower valuations than U.S. peers, and are piling into European universities to access their surfeit of Ph.D.s and untapped technologies. Policy alignment could accelerate that.
The trans-Atlantic economic foundation runs deep. Europe and the U.S. are each the top foreign employer on the other’s soil and each accounts for roughly 60% of all foreign direct investment in the other’s economy, according to the Commerce Department. U.S. direct investment into Europe grew faster than into any other major region, despite the pandemic.
U.S. companies’ overseas subsidiaries sell more in Europe than any other foreign market and their profit set a record in 2019, before coronavirus hit, according to analysis by the U.S.-EU Chamber of Commerce. The picture is similar in the U.S.
“European companies are embedded in our markets,” says Joe Quinlan, senior fellow at the Transatlantic Leadership Network, a think tank, pointing to examples ranging from German car manufacturers to Irish dairy producers.
“They’re so well embedded in our economy some people don’t know they’re European,” he says. Indeed, few shoppers at Trader Joe’s or Food Lion know the chains have been European-owned since the 1970s.
While the U.S. unquestionably dominates the relationship, the ties benefit both sides. Europe’s world-leading manufacturers are helping power the U.S. recovery, European savers are big buyers of U.S. stocks, and European engineers are a huge source of brain power for U.S. companies.