EU and U.S. flags on Feb. 7, 2020, in Washington.
(Photo by Samuel Corum/Getty Images)

EU and U.S. flags on Feb. 7, 2020, in Washington.

The European Union and the United States will seek to defuse their trade disputes and increase cooperation on issues including climate change and the development of new technology, but the European Union will remain internally divided over how aggressive to be on China. This will force the Biden administration to use a more piecemeal strategy to counter Beijing. U.S. President Joe Biden will be in Brussels on June 14-15 as a part of his ongoing visit to Europe, which started June 9 with a visit to the United Kingdom. European Commission trade chief Valdis Dombrovskis said June 9 that Brussels wants to end its trade disputes with the United States and is willing to lift its trade restrictions on U.S. products, but said the White House should first lift its tariffs on EU products. According to a draft document with the conclusions of the EU-U.S. summit published by European media, the White House and the European Commission will agree to continue negotiating to end their trade disputes. 

  • In 2018, the U.S. imposed tariff hikes on EU exports of steel and aluminum on national security grounds. The European Union retaliated with $3.4 billion in tariffs on U.S. products. In May, Brussels and the White House decided to temporarily suspend these measures. According to the draft conclusions of the June 15 summit, Brussels and the White House have agreed to set Dec. 1 as the deadline for a deal on this issue.
  • In 2019, the World Trade Organization authorized the United States to impose $7.5 billion in annual tariffs against EU products over state support for the European aircraft maker Airbus. The WTO also authorized the European Union to hit back with tariff hikes on $4 billion of U.S. products. In March 2021, the European Union and the United States agreed to suspend these tariffs until July 11, a date that could be extended.
  • The United States has temporarily suspended retaliatory measures on several EU member states for their implementation of taxes on digital companies, hoping to achieve a global agreement on the issue. 

The European Union and the United States will announce their intent to increase cooperation in the development and regulation of emerging technologies and in the fight against climate change, but significant obstacles remain in the way of each goal. According to the draft conclusions, the European Union and the United States will agree to create an EU-U.S. Trade and Technology Council and joint groups to develop trans-Atlantic standards on artificial intelligence, cybersecurity, data governance and technology platforms. Legal and political discrepancies between them on issues like data privacy, competition in the technology sector and state support for companies, however, could complicate cooperation. They will also announce financial incentives to European and U.S. companies to increase the manufacturing of semiconductors, which is part of a strategy to reduce Western reliance on Asian manufacturers at a time of a global chip shortage and to better counter China's technological rise. The European Union and the United States will also express joint support for reducing carbon emissions, though issues such as an EU plan to introduce a carbon border adjustment mechanism (which could target U.S. products) could still generate friction, even as the Biden administration considers backing its own similar initiative.

  • According to the draft conclusions, the European Union and the United States will commit to creating "an EU-U.S. partnership on the rebalancing of global supply chains in semiconductors with a view to enhancing EU and U.S. respective security of supply."

While the European Union supports the United States on issues such as human rights violations in China and Beijing's military activity in the South and East China seas, internal divisions will prevent it from significantly escalating economic pressure on China, leaving the United States to rely on a more case-by-case strategy that relies on bilateral partnerships. In recent months Brussels has become more vocal in its criticism of human rights violations in China, and in early 2021 it put on hold the ratification of an investment deal with China because of diplomatic disputes over the treatment of Uyghurs. Brussels has also passed legislation to increase scrutiny on Chinese-backed enterprises purchasing companies in strategic sectors of the EU economy. In addition, countries such as France and Germany have sent ships to the South China Sea to support the U.S. position on freedom of navigation in the area. Still, China is the European Union's biggest source of imports and its second-biggest export market, while many countries in Central and Eastern Europe are interested in attracting Chinese investment. These economic ties explain why the European Union is more cautious than the United States when it comes to pressuring China economically.

  • In December, Germany was the main political driver behind an EU-China investment deal because of its close export ties with the country. 
  • In March, the European Union imposed sanctions against Chinese officials over human rights violations in the Xinjiang region and China retaliated with sanctions on EU politicians. Then in May, the European Parliament halted the ratification of an EU-China investment deal because of Chinese sanctions. 
  • In May, the European Commission unveiled rules to give antitrust regulators more powers to prevent non-EU companies from making acquisitions in the bloc if they are considered to have benefited from state subsidies. While the measures do not target China specifically, it could be the main country affected by them.
  • In April, Hungary vetoed an EU statement criticizing China's National Security Law in Hong Kong.
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