Transatlantic Economic Relations
By Jeffries Briginshaw, Executive Director, TransAtlantic Business Dialogue, Belgium


We are finally coming to the end of what has been a long transition period for political and institutional aspects of the US-EU economic relationship, especially as focused between Washington DC and Brussels. The change of administration in the US and now a new Commission in Brussels has taken up a whole year. But as we enter 2010, on one side looking at the US from Europe, EU issues continue to struggle for airtime in Washington.  And on the other side the new Commission will need to assess what the story of the continuing centrality of US-EU economic ties (representing for example 50% plus of global GDP, and 75% of global financial markets activity and global fixed direct investment both) will mean for its conduct of foreign and domestic economic policy, particularly with product and service market regulation.

The attitude and approach of the new administration towards Europe, and in particular towards economic relations with the European Union and the EC, is now clear. Policy making will likely be driven by the following tendencies:

A 'policy savvy' pragmatism which starts from the big picture and sees all contexts from economic to security as essentially linked. That means that Afghanistan and European economic 'asks' are part of the same conversation. It means that there is unlikely to be any 'bottom up' poultry- style advocacy, but it also means that more probing, high- level questions will be asked instead, such as 'does Europe want to have a high-level phtyo-sanitary discussion with the U.S. or not?' And an answer will be a driver of the level of political attention to the economic relationship and/or investment by the Administration in tough issues (for them) like aviation liberalization, and so on.

The US Administration, in short, seems to want to know what the 'red line' issues for Europe are, so as to take a view on what else might be worth talking about, and whether there is enough to warrant attention. Lack of attention to, or lack of visibility for EU perspectives in Washington reflects skepticism that Europe has anything to offer currently, and an 'a la carte' view of the conduct of relations is taking hold, shifting from the bilateral (eg Italy for Somalia) to the EU where a competency exists.

The new Administration is understanding of business without being beholden to it and there has been a general narrowing of lobbying access to policy making. There are a fair number of senior political appointments with commercial /finance backgrounds, from Trans-Atlantic Economic Council Co Chair Michael Froman to Deputy Commerce Secretary Hightower. A more questioning approach to 'what’s good for business' type statements should not be confused with a lack of knowledge.

Particularly in the specialist policy media the traditional search for a new 'Big Idea' for the economic relationship with Europe is underway, but the most likely result will be focus on learning from what worked and what didn’t work in the fifteen years of efforts towards regulatory convergence since the 1995 New Transatlantic Agenda. Calls in Europe and in the US, being led in parts of the media and the policy community, for a resurrection of TAFTA talks are more likely to lead to repackaging of a set of smaller ideas. That probably means renewed focus on trying to agree a more flexible, outcome-oriented approach to hard core areas of regulatory cooperation, like mutual recognition, with a distrust of one size fits all type solutions. In the absence of a better alternative, the Trans-Atlantic Economic Council is likely to continue to be viewed and to remain as the main instrument for transatlantic economic cooperation for the foreseeable future. Its credibility will be ever more pressed by the need to deliver tangible outcomes.

There is interest in new approaches to regulatory policy, particularly as espoused by Cass Sunstein, the new Director of the Office of Management and Budget (attached to the White House), which plays an important role in the US regulatory agency system. An acknowledged academic in his own right he is the author of the influential ‘Nudge’ treatise which expounds a theory of ‘soft’ incentives to form normative behaviour short of regulation. He is also associated with the rise of behavioural economics. For US regulatory policy this will explicitly lead to a factoring into methodology of redistributive and environmental impact in addition to a ‘science base’. In short this adds a social policy dimension more akin to EU thinking, but without use of the precautionary principle. It remains to be seen how new policy directions can be inserted into the existing transatlantic processes seeking alignment of regulatory methodology such as the HLRCF.

The identities of the Commissioners who will serve for the next five years are now known. President Barroso’s College of Commissioners will include the following briefs most closely relevant to the transatlantic economic agenda: Commissioner Ashton – High Representative on Foreign and Security Policy; Commissioner Barnier – Internal Market; Commissioner De Gucht – Trade; Commissioner Oettinger – Energy; Commissioner Almunia – Competition; Commissioner Geoghegan-Quinn – R&D; Commissioner Kroes – Information Society; Commissioner Tajani – Enterprise and Entrepreneurship.

While the overall character of the Commission is expected to represent center right continuity or even a slightly more favorable approach to business, the exact nature of Commissioner ambitions with specific portfolios such as the Trans-Atlantic Economic Council remains to be seen, as well as whether there will be adjustments or new emphases with broader aspects of EU foreign economic policy towards the US.

With the design of the new EU foreign service likely to take up a considerable amount of time and focus, Commissioner Ashton will need to balance external advocacy and engagement with what, of necessity, will be inward looking institution building.

 

Go to Menu