Αγαπητοί Φίλοι,
Πιο κάτω παραθέτουμε ένα επίκαιρο άρθρο, με αφορμή τις πρόσφατες Προεδρικές εκλογές στις ΗΠΑ. Το αποτέλεσμα των εκλογών αναμένεται να επηρεάσει με διάφορους τρόπους την Παγκόσμια Οικονομία. Ιδιαίτερα σε μία τέτοια περίοδο όπως αυτήν που ζούμε τώρα, με την πανδημία να βρίσκεται στο προσκήνιο και τις σχέσεις μεταξύ διάφορων κρατών να βρίσκονται διαρκώς σε τεντωμένα σχοινιά.
Το άρθρο αυτό γράφτηκε στα Αγγλικά, για τον λόγο ότι το υλικό που συλλέγηκε από την αρχή προερχόταν κυρίως από διάφορες παγκόσμιες πηγές, οι οποίες ασχολήθηκαν εκτεταμένα με το ζήτημα.
Ελπίζουμε να προσφέρει σε όλους τους αναγνώστες, είτε διαθέτουν αρκετές γνώσεις ως προς το θέμα αυτό είτε όχι, μερικές σημαντικές πληροφορίες και απόψεις για ενδεχόμενες παγκόσμιες εξελίξεις στο σύντομο μέλλον.
Πάντοτε με σεβασμό προς τον Αναγνώστη,
The Revita Team
Introduction
It is considered a fact that the European Union and the United States hold a long-lasting relationship throughout the years. Especially during the modern world era (post World War II), whereby the USA acted as a major superpower which critically influenced the way in which Europe was reformed, restructured and regenerated following the years of direct conflict. It is therefore not by coincidence, that one who
hears the phrase “western civilisation” ultimately thinks of these two regions of the world in their mind. Deep interconnected roots in terms of language, religion, political, philosophical and social background between the USA and European nations have often provided common ground for communication, policies and agreements during the 20th and early 21st centuries. Nevertheless, it seems that the latter period of extensive globalisation the world is now experiencing is bound to bring the establishment of some interesting changes (minor or major, only time will show). Changes which may be contradictory to how people were used to perceive international relations up until today. The balance of power on the chessboard is constantly shifting.
In this context, the US Election results of November 2020 provide a great excuse for some insight (through research), as to the ways in which the EU and its member states may be affected (socially and economically) by the new President of the USA, Joe Biden. This short study aims to present the facts, as they stand, with regards to the relationship of the USA and the EU during the Obama and Trump years, as well as grasp (as much as possible) the essence of Biden’s international political intentions following his election.
Overview of Recent Relationship
From Obama to Trump, and now to Biden, the last 10 to 15 years have really been a rocky road for the relationship of the two sides, namely the EU and the USA. We approach each US Administration separately, below:
i. The Obama Administration:
When President Barrack Obama was elected in late 2008, his background had convinced the European leaders of anticipating the rebirth of the relations, following the bitter Bush era. Indeed, Obama seemed ideal for the job. A “hard working, intelligent man”, a “defender of law-based international order”, a critic of “unthinking American interventionism”, a politician of “mixed racial heritage” who “grew up abroad” (Politico, 2016). A politician of the modern era.
Nevertheless, things did not turn out as perfect as Europe had imagined them to be.
Obama’s election had created such high expectations, that one could argue they were never satisfied. Incidences such as the lack of healthy US interventions in Libya, in Russia’s involvement in the Ukrainian Crimea, in the civil war in Syria which escalated year by year and the even more unstable environment in the Middle East (conflict, huge masses of refugees, etc.) brought criticism to the President’s foreign affair policies, as well as tension with regards to the transatlantic relationship with Europe.
Nevertheless, what may be argued that Obama actually pursued during his years in office, was broadening USA’s horizons towards the rest of the world. Europe remained an area of focus for the USA (remember the Trans-Atlantic Trade and investment Partnership and America’s strong commitment to the NATO partners in Eastern Europe under Obama). However, it did not form the only critical area anymore. The USA was pursuing its global interests at a time when it was still fighting in an aftermath of its own financial crisis and Europe itself was not actively intervening in Middle Eastern matters. The Eurozone crisis was escalating rapidly. The rise of Asian markets and the Middle East did a great job at catching the eye of the US Administration. Since the 2000’s, China and the Far/Middle East have experienced unparalleled growth, matched by very few regions of the world (if any). A Nuclear Agreement was signed with Iran during the Obama years and the President spoke fondly of the new “Pacific Century” and the USA’s turn to establishing solid relationships with East Asian economies.
ii. The Trump Administration:
President Trump’s profile allowed for no European expectations from the very start. Indeed, it was reported that the G7 leaders were even surprised that he attended their first summit following his election in 2016. In the four years until 2020, Trump politically attacked NATO, called Europe a “foe” and withdrew from the Paris Climate Agreement and from the Iran nuclear deal and Trans-Pacific Partnership. Economically, President Trump imposed trade tariffs on steel and aluminium from Europe (Timsit, 2020), amongst others. Such decisions created an even colder, more hostile and distant environment between the USA and the rest of the world and followed (even intensified) the same course which the EU-American relations had taken during the last years of the Obama Administration. The main difference, in this context, between Obama and Trump was that the first “emphasized on the importance of NATO”, while the latter was “happy to leave it altogether”.
With regards to the Eastern European and Asian regions, Trump’s efforts to counter Russian and Chinese growing influence on the global scene included support for programs such as the Three Seas Initiative (coordination of projects regarding infrastructure, digital and energy matters in the Baltic, Black and Adriatic Seas region), as well as campaigns to encourage Eastern European countries such as Estonia, Poland and Slovenia in strengthening their relations with Washington. Essentially, Trump embarked on a new “Cold War” era with China, while keeping a distant stance against Europe. How did such decisions affect the EU?
These strategic decisions and policies “forced” in a sense the European Union during the last 4 years to become more independent on its own. To look into ways to enforce new economic alliances, as well as become more efficient in tackling its own challenges. New joint investment agreements between the EU and various Chinese companies are currently at various stages of implementation. The EU has also demonstrated great determination in effectively helping member states to tackle the recent COVID-19 pandemic with a “recovery fund” of €750 billion. People at key positions, such as the director of the Atlantic Council’s Future Europe Initiative, Benjamin Haddad, have recently expressed the view that such actions would never have happened if Trump’s Administration had never existed.
iii. Key Statistics in Recent Years:
Key statistics (as they are being recorded) usually depict, in an unmistakeable manner, the true picture in certain foreign affairs.
Figure 1 depicts the overall trading position of the EU with the USA in 2019, during the latest Trump Administration. An EU surplus of €153 billion has been recorded, meaning that at a first glance Europe is in good trading position, despite Trump’s policies. It serves as a fact that the USA is reliant on various European imports, ranging from consumables and food production to car manufacturing. Nevertheless, this means that Europe is also reliant on the USA as a trading partner of the utmost importance. In this context, it is worth keeping in mind what the EU statistical body supports through media; that even if disputes often make up media headlines, they do affect only some small 2% of the whole EU-US trade volume.
Additional to the above is the fact that the EU states that the total investments made by the USA in the EU is still three (3) times as high as the sum which the USA contributes to Asian markets. On the other hand, the EU invests eight (8) times as much of a sum in the USA as it does in the Chinese and Indian markets jointly (European Commission, 2019). Main driver of this relationship being intra-company transfers and labour. It is important to note that the EU and the USA jointly account for about half of the world’s GDP and a third of the world’s trade flows. Therefore, two economies of such calibre should have a lot to gain from one another, even in the future.
Figure 2 below demonstrates a breakdown of the trade figures, in billions of Euros (€) as provided by the European Commission (European Commission, 2019). At a first glance, the EU has kept a constant trade surplus in Goods and slight deficit in Services throughout all 3 years between 2017 and 2019, suggesting the importance of the USA in the tertiary sector. In terms of FDI (Foreign Direct Investment), the EU recorded a surplus of more than €250 billion in 2018. The magnitude of these numbers provides further evidence of why a debate with regards to the EU during each US Administration exists in the first place.
Even with the EU and the USA considering greater levels of “independency” and turning towards Asian markets with the greatest willingness and commitment, the economic ties between the two regions may not practically allow for such an easy and immediate total transition, as such a scenario would demand significant (and possibly economically unnecessary) restructuring. That being said, the focus turns towards the newly elected Biden Administration.
What to Expect After the US Election Results of November 2020?
Prior to his election, Joe Biden laid down plans for the progress of US economic and social policies. Domestically, Biden faces great challenges with regards to the COVID-19 pandemic, the rising levels of household debt and corporate taxation.
- Regarding the first, American experts are almost certain that a fiscal package of at least $2 trillion will be launched following Inauguration Day, so as to offer aid to businesses and households in need (Greene, 2020). Democrats have also been pushing for more individual and specific aid, such as unemployment benefits, so as to encourage a consistently strong consumer spending in the near future (Silver, 2020).
- Regarding household debt, the US Government is called up to effectively deal with the US student loan debt levels, which are currently a blowing $1.54 trillion. This means that university graduates begin their independent lives on debt. Such issues add value and importance to the government’s decisions regarding economic/financial actions. Biden’s proposed tax credit of up to $15,000 to first-time homebuyers will add to the state’s financial burden.
- Corporate taxation is also linked with the US economic/financial performance and should therefore be approached in serious context. Biden is ready to raise taxation for wealthy Americans (income of more than $400,000 per year) and Corporations (from 21% to 28% of annual revenues), as well as implement income tax rates on capital gains, in a direction towards greater social welfare levels.
The methods by which the newly elected President will approach the above matters will be directly linked with the Administration’s international agenda, since it all falls down to a common government budget. President Biden will certainly choose his moves following great consideration. It is clear that policies with regards to opening up on international economic affairs constitute an opposite approach to Trump’s unilateral trade. Towards this direction, there is a general sense that rules will be implemented to discourage companies from leaving the country. Such scenario favours the opinion that the new Administration will engage intensively in international business (unlike Trump), as long as it is worth it. This brings back memories of Obama’s approach, and this could potentially be the case. Experts such as Amaro support that Biden “will take the US back to the table of multilateralism” (Amaro, 2020).
On the other hand, Ellyat supports that Biden’s victory might bring such tax reforms in the USA that these could negatively affect the “export-oriented” EU if US growth is significantly “curtailed” (Ellyatt, 2020).
Nevertheless, if the EU handles such a case cautiously, then it could take the chance to benefit from a future boost in international markets. After all, the UBS Asset Managem
ent’s strategic asset allocation team supports that the US fiscal spending is “more important to the macroeconomic global market outlook than any tax policy changes alone”.
In addition to the above, Karnitschnig states that, to say the least, Biden’s election will change the transatlantic tone from “one of hostility to one of mutual respect” (Karnitschnig, 2020). Yes, long running disputes such as that regarding subsidies for Airbus and Boeing will not be easy to tackle. However, a new free trade agreement may be negotiated with Europe. Even if Biden embraces globalisation, China remains a US competitor economically in many ways at the end of the day. Engaging with Asia may be welcomed, but potentially up to a certain point. Therefore, the way in which the EU handles its relations with China, as well as its response to new US foreign policies and actions may determine how relationships will form under this new Presidency.
Conclusion:
Enrico Letta, former Prime Minister of Italy, has stated that he believes that “the Biden win makes an EU-U.K. deal more likely”. That being said, he remains certain that the new US President will not form an alliance with any country, including the UK, against the EU (Amaro, 2020).
The above reinforces the point that EU-American relations possess chances of improving since the Trump era. Nevertheless, when analysing such matters, it is always critical to keep in mind the globalisation era we are experiencing, as well as the fact that each nation is pursuing its own interests. Even if the Biden Administration seeks to reinforce international alliances, it would be wiser if Europe embraced some of the independency which it was set up to follow under President Trump, while keeping a healthy relationship balance versus the USA and Asia. Of course, this would pose a great challenge to the EU and a whole lot of diplomacy would have to be put into the work.
What remains clear is that, putting aside any social ties, maintaining a healthy EU-US economic relationship could be viewed as a beneficial scenario for both sides. At the same time, the growth of Asian markets cannot, will not and indeed must not remain in the fringe. EU-US relations should not be exclusive to new, third party collaborations during the modern era. Sole commitment towards the same trading partners is not as popular anymore in this new age.
Thus, a popular opinion is that the world is changing, and the stand-alone nation approach does not form a liable option anymore, regardless of size or power. As the saying by John Donne goes:
“No man is an island, entire of itself”.
Bibliography:
- Amaro, S. (2020, November). Europe Welcomes Biden’s Win After Four Fractious Years of Trump. Retrieved from https://www.cnbc.com/2020/11/09/us-election-2020-what-a-biden-victory-means-for-europe.html
- Ellyatt, H. (2020, October). How The U.S. Election Could Affect Europe’s Markets, Economy and Trade. Retrieved from https://www.cnbc.com/2020/10/14/how-the-us-election-could-affect-europes-markets-economy-and-trade.html
- European Commission. (2019). Retrieved from https://ec.europa.eu/trade/policy/countries-and-regions/countries/united-states/
- Greene, D. (2020, November). What Is The Impact Of The Presidential Election On The U.S. Economy? Retrieved from https://text.npr.org/930722317
- Karnitschnig, M. (2020, November). What Biden Means For Europe. Retrieved from https://www.politico.eu/article/what-joe-biden-means-for-europe/
- (2016, April). The Previous Leaders: Barrack Obama. Retrieved from https://www.politico.eu/article/what-will-define-barack-obamas-european-legacy-eu-us/
- Silver , C. (2020, November). The Most Important Economic Issues In The 2020 U.S. Presidential Election. Retrieved from https://www.investopedia.com/democratic-debate-policy-cheat-sheet-4691340
- Timsit, A. (2020, October). Trump’s Presidency Has Changed Europe For The Better. Retrieved from https://qz.com/1909749/how-trumps-presidency-has-helped-the-eu/
[content_block id=45]
