Let's reset trade

When the United States declared their independence, France and the Netherlands were the first two countries to officially recognize their existence. Our commitment to a strong relationship with the US has grown ever since. To this day, the ties that bind Europe and the United States have not only endured, but also flourished, growing into one of the strongest, deepest and richest relationships on the planet. Together, we account for a third of the world’s trade. Every year, we exchange more than 600 billion euros of goods and services.

Today, it is time for a new dawn for our trade relationship. Now is the time to resolve the trade disputes that have damaged our long-standing mutual confidence and to withdraw measures that have hampered bilateral trade. Now is the time to work together to tackle the formidable challenges that await us.

The first step forward we must take together is to make our planet great again and to have a greener international trade.

In the first hours after he took office, President Biden signed an executive order to rejoin the Paris Agreement. The new administration’s willingness to make environmental and social issues part of the US trade agenda represents an unprecedented opportunity for America and Europe. We must seize it and build upon this renewed momentum to strengthen international coordination on sustainable development. The EU and the US should lead the way in achieving the Paris Agreement’s ultimate goals.

Our efforts would however be meaningless if they lead to a transfer of carbon emissions to less ambitious parts of the world. If our climate policies can only reduce greenhouse gas emissions at home by offshoring our industries to countries that do not share our standards, they will become devoid of purpose. The EU and the US must therefore cooperate on carbon pricing and ways to prevent carbon leakage.

As France and the Netherlands – two countries with different trade traditions – have done in recent months, the EU and the US should also work together to design trade policies meant to be stepping stones for higher environmental standards: we should push back plastic pollution, fight deforestation and foster a circular economy. Globalization must be fair to everyone, let us be as demanding towards our trade partners as we are for ourselves.

The second step we must take is to level an increasingly uneven playing field.

Massive and enduring trade distortions by countries such as China are undermining public trust in the benefits of open economies and harming European and American economic interests.

Close EU and US coordination is of paramount importance to tackle level-playing-field issues. We should give special attention to our technology-intensive industries, in close coordination with the Trade and Tech Council recently proposed to the US by the European Commission. The sooner we take joint action on this, the better.

The third step we must take together is to revive trade multilateralism.

The WTO should be instrumental in making trade fairer. However, there is no denying that the WTO rulebook is critically outdated. It is time to shake and shape up the Organization, in particular to address the lack of a level playing field with stricter constraints on industrial subsidies, tech transfers and the role of state companies.

The US and the EU should also lead the way to fix the dispute settlement mechanism, addressing long-standing American concerns while coming up with forward-looking solutions to restore the settlement of trade disputes. Reassessing carve-outs for the developing bloc is also needed; special treatment should be meaningful but also strictly reserved to genuine developing countries.

Together, the European Union and the United States can pave the way towards a greener, fairer and more sustainable globalization. Let us join forces and usher in a new chapter in a trade relationship that has already given so much to citizens on both sides of the Atlantic, and to the world as a whole.

Franck Riester is Minister Delegate of Foreign Trade and Economic Attractiveness of France

Sigrid Kaag is Minister for Foreign Trade and Development Cooperation of The Netherlands