On Friday, June 15, 2021, the President of the United States, Joe Biden, and the President of the European Commission, Ursula von der Leyen, held a joint press conference following their meeting in Brussels, Belgium. One of the main topics of discussion was their agreement to work towards a trade deal between the United States and the European Union (EU).
The announcement of potential trade negotiations comes as President Biden continues his first overseas trip as President, with stops in the United Kingdom and Belgium to participate in the G7 summit and NATO meeting. The trade talks with the EU could signal a significant shift in US international trade policy, with the Biden administration potentially moving away from the “America First” approach taken by his predecessor.
So what does this mean for US-EU trade relations? The announcement of plans to negotiate a trade deal is a significant step forward, but it is important to note that it is just the beginning of what could be a long process. Negotiating a comprehensive trade agreement is a complex task, involving a wide range of issues such as tariffs, regulations, and intellectual property rights.
One of the key points of discussion during the Biden-von der Leyen meeting was the possibility of granting the euro (EUR) a free-trade agreement-like status. This would enable the currency to be used in the same way as the US dollar (USD) in trade between the US and the EU, potentially making transactions easier and reducing costs for businesses.
The granting of free-trade agreement-like status would also be significant because the euro is currently not officially recognized as a reserve currency by the US government. This means that foreign exchange reserves held by the US are predominantly in dollars, which gives the US considerable economic and geopolitical influence. If the euro were to be granted this status, it could potentially challenge the dominance of the dollar, leading to a shift in global economic power.
Another key issue in US-EU trade relations is the ongoing dispute over aircraft subsidies between the US and the EU. The long-running dispute centers around accusations of unfair subsidies being paid to aircraft manufacturers Boeing (US) and Airbus (EU). In March 2021, the US and the EU agreed to suspend tariffs on billions of dollars of exports for four months, with the hope of eventually reaching a permanent agreement.
The Biden administration has signaled its intention to prioritize US-EU relations, with President Biden calling the EU “an incredibly strong and vibrant entity.” The potential trade deal could have significant implications for both the US and EU economies, with the US being the EU’s second-largest trading partner after China.
The EU has also signaled its willingness to engage in talks with the US, with von der Leyen stating that “we are convinced that trade can be an engine for growth and job creation.” The EU has recently signed a trade deal with the UK and is in the process of negotiating a trade agreement with Australia, showing its commitment to pursuing free trade even amid challenging global circumstances.
It is important to note that negotiations for a US-EU trade deal will not be without their challenges. The Trump administration’s imposition of tariffs on steel and aluminum from the EU caused considerable strain in the relationship between the two economic powers. There are also concerns about the potential impact on various industries and sectors, with some European farmers expressing their fears about increased competition from American rivals.
In conclusion, the announcement of plans to negotiate a trade deal between the US and the EU is a positive development for both economic powers. The granting of free-trade agreement-like status to the euro and the potential resolution of the aircraft subsidies dispute are significant steps forward. Negotiating a comprehensive trade agreement will be a complex task, but if successful, it could have wide-ranging economic and geopolitical implications. It will be interesting to see how the negotiations progress and what the final agreement will look like.
