At first glance, transatlantic relations look rosier since Donald Trump left the White House. In public, there’s no longer a U.S. president who attacks German cars and accuses Angela Merkel of not paying her NATO bills.
But look closer, and it turns out that on everything from trade and taxes to coronavirus vaccines, U.S. President Joe Biden is transpiring to be every inch as much of a pain in Brussels’ bureaucratic backside as his predecessor — hitting the EU exactly where it hurts, while robbing it of the moral high ground it loves to occupy.
Biden’s bombshell proposal to waive intellectual property rights on coronavirus vaccines is a perfect case in point, as the EU is now floundering in the PR war, all too conscious that it has suddenly been turned into a cartoon villain, advocating the rights of Big Pharma against poor nations.
“The real change is that the Biden administration, to our biggest astonishment also including mine, is really changing the overall narrative on these issues, which we didn’t think he would,” said Kathleen Van Brempt, a Belgian member of the European Parliament and the Socialist group’s point person on trade.
America’s vaccine gambit is not a one-off. In only a few months, Biden has exposed both the folly in the EU’s trade policy toward China and Europe’s lack of ambition in plans to tax digital multinationals.
Infuriatingly for the Europeans, while the superficial political optics have improved, Biden’s turning out to be just as hard as Trump on issues the EU really cares about, like Germany’s plans to buy gas from Russia through the Nord Stream 2 pipeline.
While Biden has moved to defuse a long-standing tariff clash over subsidies for Airbus and Boeing, the new president has also left much of Trump’s trade policy untouched, including tariffs on steel and a blockade of the World Trade Organization’s court system. On some fronts, he’s actually pushing Europe harder than Trump did. Biden’s drive for a “Buy American” policy, favoring U.S. companies in major public tenders, is even drawing countermeasures from the EU camp.
A hundred days into the new administration, the Europeans are starting to sense that they are being offered pretty tough love from their ally.
Vaccine villains
Biden’s surprise move to publicly back India and South Africa’s call for a waiver on the intellectual property of coronavirus vaccines was just the latest example in a set of maverick moves that not only run counter to the EU’s economic interests, but that — unlike Trump — also called the bluff of Brussels’ supposedly progressive leadership.
In a sign that even France, which officially backed the IP waiver, was not amused by the Biden administration’s volte-face, Junior Europe Minister Clément Beaune told POLITICO that it was a “very political move, because so far they have exported nothing” in terms of vaccines.
Commission President Ursula von der Leyen on Thursday similarly attempted to shift the focus onto vaccine exports, where Europe has been a more responsible global player. While the EU was “ready to assess how the U.S. proposal could help achieve” the objective of boosting vaccine output, “in the short run, however, we call upon all vaccine producing countries to allow export immediately and to avoid measures that disrupt the supply chains,” she tweeted. The accusation against the U.S.’s conduct was clear.
But Van Brempt from the European Parliament pointed out that Biden had exposed Brussels’ failure to act. “I remember that in one of her first speeches after the COVID-19 crisis broke out, Ursula von der Leyen said no one is safe unless everybody is safe. She set the scene: we Europeans, we will stand together with the rest of the world. And then we didn’t.”
China has been another highly strategic area where the U.S. has made the EU look hypocritical for pontificating about “European values.” Led by Germany and its all-important car industry, the EU rushed into a trade deal with Beijing at the end of last year, brushing off concerns about human rights and requests from the incoming Biden administration to consult on the agreement.
While it was Trump’s Secretary of State Mike Pompeo who first labeled China’s persecutions of Uyghurs in Xinjiang a “genocide,” the Biden administration doubled down by formalizing the designation in a report — piling moral pressure on EU countries to also take a stand, and turning the eyes of the world to German carmaker Volkswagen’s factory in the region.
Now that the Brussels-Beijing deal is unraveling — with key members of the European Parliament vowing never to ratify it after Beijing put sanctions on them — U.S. Trade Representative Katherine Tai has wryly suggested again that it might be time to talk. She was too polite to say: “We told you so” over the implosion of the deal. Instead, she simply noted that the EU’s accord was “a topic of great interest here within the administration … the terms of that agreement are under review in Europe, and that is something I am interested in as well and expect that we will have a chance to explore more in our conversations with our European counterparts.”
To the levies
Most unexpectedly, the Americans have also just outboxed Europe on tax fairness, a long-running bone of contention between Brussels and Washington, where the EU has been adamant that it is fighting the good fight.
As with the steel tariffs and WTO blockage, Biden has kept the stick and largely continued Trump’s policies. He has maintained the threat to slap tariffs on billions worth of French luxury goods over Emmanuel Macron’s digital tax. USTR Tai is also actively pursuing new investigations. Only last Monday, Washington began a procedure to retaliate with tariffs against Austria, Italy and Spain over their digital taxes.
But, unlike Trump, Biden is simultaneously winning the moral high ground. In another curveball move last month, Biden blindsided EU leaders. In international talks on global taxation, he proposed a worldwide minimum corporate tax of 21 percent — much more ambitious than the EU’s proposal of 12.5 percent. And it’s one that creates all sorts of problems for EU countries such as Ireland — but, to its embarrassment, also France — that see their low effective corporate tax rate as a unique selling point.
Biden’s plan to tax the 100 largest companies in the world would include the likes of Google and Facebook, but also non-digital giants such as Volkswagen and French oil and gas giant Total.
In a remarkable spin of the wheel, Berlin and Paris are now under pressure to explain why they would not back a higher minimum tax on multinationals, after clamoring for years about tax fairness.
Asked whether he backed the tax, German Economy Minister Peter Altmaier last week said Berlin still needed to “explore the efficiency and scope” of the U.S. proposal. “My impression is that also our French friends in Paris are very much impressed [by Biden’s tax initiative] and will give him a chance,” Altmaier said diplomatically.
Van Brempt from the Socialists said all these moves from Biden ramped up pressure on the EU to become more coherent.
“We thought he would roll back all the bad things of Trump, start negotiating on multilateral issues, try to resolve the situation at the WTO, be more diplomatic, and team up with Europe,” she said. “And he’s not doing that — he is absolutely fully-fledged going for what he believes in. That is wonderful, because it’s what I believe in … But it’s of course very confronting, that all of a sudden, we Europeans are lagging behind on all these progressive issues that we normally lead on.”
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