Brussels & Berlin | March 2021

After a bumpy four years in transatlantic relations, EU allies have warmly embraced the Biden administration. In addition to working with the White House to reaffirm the importance of the transatlantic alliance in global affairs, the EU is looking inward as it works to rebuild the economy post-pandemic.

The EU Welcomes a Biden Presidency

In early December, the European Commission released “A new transatlantic agenda for global change,” outlining areas for mutual cooperation, such as fighting the pandemic, combating climate change, and developing mutual standards on technology and trade. Brussels heralded the election of Biden and Harris as a “once-in-a-generation opportunity to design a new transatlantic agenda for global cooperation.”

That could be, but neither the United States nor the EU seems particularly keen on compromising its own authority to accommodate the policy desires of the other. For example, the Biden administration still has not revoked Trump-era steel tariffs, and in January, the EU wrapped up the Comprehensive Agreement on Investment with China, surprising partners in Washington with the abrupt timing of the deal. While both the EU and United States must contend with unique pressures from domestic coalitions, they must find common ground if they want to rebuild together on problems like climate change and the Privacy Shield replacement.

Pandemic Status

Following the one-year anniversary of the onset of the pandemic, Europe is entering a third wave of COVID-19 infections, leading to another round of lockdowns and growing frustration with the EU’s vaccine rollout. Roughly 20,000 Europeans are dying each week due to COVID-19, and relatively few Europeans have been vaccinated. In the United States, 23 percent of Americans have received a shot, versus 10 percent of Europeans. The mid-March decision by the German, French, Italian, and Spanish governments to temporarily halt the distribution of the AstraZeneca vaccine, despite evidence supporting its safety, has sent public trust in the vaccine plummeting and has slowed vaccination efforts. While these EU governments have since reinstituted AstraZeneca jabs, the vaccine is again making headlines. This time, the UK is trying to import doses produced in the Netherlands, only for the EU to block vaccine exports, causing a legal headache for AstraZeneca, which has contractual obligations to both parties but which cannot fulfill both simultaneously. The trade conflict over the vaccine foreshadows what will likely be a turbulent period in EU-UK trade relations.

Another issue of contention in Europe is the Digital Green Certificate, hailed as a “vaccine passport,” which would allow those with vaccines or adequate antibody levels to travel throughout the Continent. Countries such as Spain and Greece, which depend heavily on tourism, generally welcome the idea, while opponents say it puts younger people at a disadvantage, since most Europeans vaccinated by summer holidays will be older citizens. There is also concern that the proliferation of vaccine passports would lead to discrimination against people without them — for example, being turned away at bars and restaurants for lack of a vaccine passport. The last week of March, Chancellor Angela Merkel announced that Germany was reentering a hard lockdown for Easter, only to reverse course in the face of a backlash. Whether because of vaccine-passport rules or lockdowns, a big question mark hangs over summer holiday travel.

Brexit Update

The effects of Brexit have so far borne out long-standing concerns among trade experts and economists about the high cost of barriers between the UK and the EU, as the AstraZeneca debacle demonstrates. In January 2021, British exports to the EU fell by 40 percent, leading businesses to seek clarity on trade rules in order to avoid shutting down. Opposition to the new trade rules has been particularly acute in Northern Ireland, where efforts are underway to prevent a “hard” border that would endanger a hard-earned but fragile peace. For more on Northern Ireland, watch the Bertelsmann Foundation’s documentary, The Troubles with Brexit.

Elections

The Netherlands

In the Netherlands, former Prime Minister Mark Rutte, who resigned in January over a child benefits scandal, has been reelected after his People’s Party for Freedom and Democracy won even more seats than in the previous election. Freedom and Democracy now controls 35 of parliament’s 150 seats, a strong showing given that 37 parties ran in the elections and 16 parties won seats. Following his last victory, it took 208 days to form a government, so building a coalition amid the pandemic and post-Brexit uncertainty will be an immediate hurdle for Rutte to clear.

Germany

On September 26, Germany is set to hold national elections. With Chancellor Angela Merkel stepping down after 16 years, the future of her Christian Democratic Union is uncertain. Two months ago, the CDU elected Armin Laschet to succeed Merkel as its leader. However, in regional elections in mid-March, the party took a beating, losing out to the ascendant Green Party, even in what was once the safe territory of Baden-Wuerttemberg, home to Germany’s automobile industry. As the popularity of the conservative party wanes and the popularity of Greens waxes, the Green Party could elect its first chancellor in German history. Given German political and economic strength within the EU, the results of the September election could have lasting effects on the transatlantic relationship. For more on the German elections, including the prospects for the far-right Alternative for Germany, read our recent piece on German politics.

Hungary

In early March, the European People’s Party (EPP), which is the political family of Germany’s CDU, voted overwhelmingly to change its rules to allow leadership to expel national members, namely Hungarian Prime Minister Viktor Orbán’s Fidesz. In response, Orbán, who called the decision “undemocratic,” has opted to withdraw Fidesz from the EPP. Donald Tusk, former Polish prime minister and one-time president of the European Council, who currently serves as president of the EPP, tweeted that Fidesz had long since left behind its democratic cohort.

Struggles Ahead

European Commission President Ursula von der Leyen has a potentially bumpy road ahead. In addition to managing distribution of the COVID-19 vaccine, she also must work to maintain bloc unity, combat climate change, and restore faith in international institutions. As the United States rebuilds its international strategy and diplomatic integrity following four years of the Trump administration, the Americans will likely face a European Union also undergoing a revitalization and transformation. Both seek to unify their citizens, combat climate change, and forge a cohesive digital path forward that enhances economies, while protecting citizens.

In the meantime, the EU eagerly awaits news regarding Section 232 tariffs on steel and aluminum. Rolling back those tariffs would serve as an enormous gesture of goodwill, which the Biden administration will desperately need if it seeks to renegotiate the Joint Comprehensive Plan of Action (JCPOA) with Iran. Furthermore, U.S. Treasury Secretary Janet Yellen’s signal that she is willing to work more closely with European allies to find a solution within the OECD framework on digital taxation issues has been warmly received, particularly in France. For now, with Biden set to join EU leaders at the European Council the last week of March, it seems that the most likely path forward will be one of close transatlantic partnership.

Recommended Reading and Watching

1. THE HUMAN PROGRAM: A Transatlantic AI Agenda for Reclaiming Our Digital Future — a policy guide for navigating AI regulation.
2. Past the End of History — a short animation on the transatlantic security and diplomacy relationship.
3. The Transition — short policy briefs and recommendations for the Biden Administration
4. Sustainable Commerce and Trade as a Force for Good — B|Brief
5. Transatlantic Digital Trade: Is the Data Flows Conundrum Fixable? — policy paper

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