Are we entering a new and dramatically different era of transatlantic commerce? Since the economic relationship between the European Union and United States is the most influential commercial partnership in the world, and, for the first time in decades, one government has inhibited commerce by imposing higher tariffs, this question suddenly seems to require an urgent answer. To determine the answer, we should ignore the headlines, and study two fundamental realities.
The first reality is that the world has changed since the basic framework of the transatlantic relationship was constructed. The EU was established in reaction to two wars on the European continent which left the economies of every major European power devastated. The United States, on the other hand, not only escaped the devastation, but through the demands of the war on its economy, built a industrial capacity which produced around 40% of the world's GDP. Europe has recovered its economic vitality- as have the powers of Asia- and the economic dominance of US has become less stark. The relationship, therefore, has become one of economic equals. Which raises the question of whether that reality is reflected in the economic policies and trade agreements between the two. The US Chamber argues that both sides may have reason to complain, and the best solution is a trade agreement that eliminates all tariffs in every industry, and unifies certification processes. If we are equal, let's eliminate any barrier to doing business with each other.
The second reality is that the commercial relations between the EU and US have created a network so thick and varied that its stability is virtually assured. The density and complexity of the EU-US commercial network will overwhelm any political attempt to suppress or sever relationships. The transatlantic relationship is not build on visits of political VIPs. It is built on the investment of companies like IBM and Microsoft, of Coca-Cola and Mondelez, and of Thermo Fisher Scientific and GE Aviation into the Czech Republic, and of Linet and YSoft into America. Each of these investments create a web of supplier relationships, and a deeper web of personal relationships between the two continents. The fact that these relationships started without the pageantry of a political summit and paper signing between governments make them less susceptible to damage, One of the best signs of the tensile strength of these human connections was Zbynek Frolik's decision last week to provide his hospital beds to help those Americans endangered by the floods in North Carolina. A decision by a truly decent human being to help others who could use his help. That shows a relationship not defined by nationality, but by humanity. That is what the economic relationship between Europe and the United States has created: a union of people who can see each other as humans, and who can do business with each other more easily because they can ignore the trap of thinking in purely nationalistic terms.
The EU and the US do have to overcome the fundamental shift in power that has occurred on the political level. The EU cannot expect the US to pay an outsized portion of the bill for defending Europe, or the trade lanes between the two countries. Both entities should do everything possible to make free trade possible between the countries. Both entities should recognize that the WTO is being misused by some countries, and work together to make changes that make that body a more legitimate enforcement tool for making the playing field level for all businesses. I am confident all this will happen, even through periods of political conflict and posturing, because the most important relationship between Europe and America is strong and strengthening. Just look at the numbers. Americans trusts no other part of the world more when it comes to investing and spending its money. The same applies to Europeans. As long as that holds true, governments will face insurmountable resistance to any attempts to diminish the dense economic network running across the Atlantic. The answer to the question of whether we are entering a new era of the transatlantic relationship is that our politics is evolving to a new economic reality, but that the chances of that evolution bringing greater benefit to both continents are high.
Author: Weston Stacey, Executive Director of the American Chamber of Commerce in the Czech Republic
22nd October 2020
22nd October 2020