Any period of crisis, however short or unexpected, exposes long-term problems and gives rise to new ones. The COVID-19 pandemic has exposed the lack of preparedness of governments in Europe and the United States, the fragility of just-in-time business planning, and the vulnerability of far too many industries. As many businesses currently struggle with closures, their long-term viability is also increasingly at risk as the pandemic compounds the effects of several other disruptive trends. If we are to get through the current crisis and anticipate and better prepare for the next one, we need to tackle these challenges together now on both sides of the Atlantic by increasing our collective economic resilience.
Securing Essential Public Health Supply Chains
The most relevant lesson from the COVID-19 pandemic is the need to prepare for future public health emergencies. For example, our populations require greater investments in health care technologies and pharmaceutical industry research for new drugs and vaccines. The excuse that this pandemic was too hard to anticipate will not work again, even if a future crisis is different in its genesis and outcomes. As both sides take steps to reduce their dependence on China for essential medical supplies and equipment, they should simultaneously seek to liberalize current transatlantic restrictions on medical supplies and pharmaceuticals and reinforce integrated supply chains across the Atlantic.
Spurring Sustainable Economic Growth
We also have to start by imagining how the world will look in the wake of COVID-19. The focus for governments on both sides of the Atlantic has to be the drive to stimulate economies and provide jobs in a more sustainable way. At the heart of the EU’s approach is the Green Deal, designed to get to a climate-neutral Europe by 2050. From its Farm to Fork strategy and sustainable food systems to an energy strategy that has renewables and energy efficiency at its core, the Green Deal will drive economic growth and investment in the coming decades and shape the EU’s approach to international cooperation on trade and investment. Already some businesses are making the decision to leapfrog over their next investment plans and move directly to innovation in green technologies. Boosting transatlantic trade in environmental goods and encouraging more joint innovation on sustainable solutions should be a top priority for both the EU and the United States in the coming decade.
Ensuring Trade Works for Ordinary People
More broadly, advancing deeper trade and investment ties between the United States and the EU, and separately with the UK, could eventually form the core of a strong post-pandemic economic recovery. But negotiating a new comprehensive trade agreement takes time. The Transatlantic Trade and Investment Partnership (TTIP), for instance, failed to reach the finish line even after nearly four years of negotiations. While the EU has worked on new mandates with U.S. President Donald Trump’s administration, some of the underlying problems on market access and regulatory cooperation and rules remain. The departure of the UK—a strong advocate of a transatlantic trade agreement—from the EU does not help. France shows little sign of budging on its concerns that its “agriculture and culture” were under threat from any new deal.
This suggests we may see more skinny transatlantic trade agreements, linked to specific sectors. Set against a backdrop of wanting a deeper and more comprehensive deal, it is not impossible to see targeted support for some parts of the economy, as negotiators grind through the harder underlying issues while trying to find common ground. This approach has merits. In particular, the EU and the United States should seek to sign a bilateral trade in services agreement, build a transatlantic digital economy, reduce nontariff trade barriers, and promote regulatory cooperation especially on emerging technologies that can provide the basis for new global standards. On top of this, the EU and the United States should also boost their dialogue and cooperation on investment screening and export controls, transatlantic digital flows, and connectivity and infrastructure development to provide credible alternatives to China’s Belt and Road Initiative.
TTIP will not return—either in name or negotiating mandate—but a strong desire to find an enduring set of trade and investment arrangements remains. The UK, meanwhile, is already negotiating a trade agreement of its own with the United States. The United States, for many in the UK, is the answer to the problem created by leaving the EU. While there is no comparison in terms of economic opportunity, a good deal would be a much-needed boost to an economy already struggling from Brexit. However, an early harvest is unlikely, as the two sides have a lot to cover on, for example, regulatory issues, where animal welfare has been just one highlighted concern.
More generally, any new trade and investment agreement will need to tackle a variety of perceived as well as real challenges. The intertwined nature of economic life, combined with a sense that the blame for ailing economies lies at the door of bad trade deals or unfair trade practices, will not help push new proposals up the agenda. Ensuring, therefore, that any new transatlantic trade deals protect our middle class must be a top priority.
Reinvigorating Multilateralism Together
Finally, the EU and the United States should also join hands in reforming the multilateral trading order. The World Trade Organization (WTO) under new leadership will need to show it has a grip on working out a universal response to the issues thrown up by COVID-19. At its heart, the WTO has an important mandate—to ensure trade flows as smoothly, freely, and predictably as possible. U.S. collaboration with the EU and the UK as well as other key partners such as Japan would constitute a strong and effective lobby for reform. Working out a joint plan of action that encompasses internal reforms, addresses the role of China’s excessive state subsidies and forced technology transfers, bolsters support for the appellate court, offers new ideas for the role of the WTO in the digital sector, and highlights requirements of membership would help take the organization into the next phase. Abolishing it and finding something new that everyone agrees on would be a thankless task and should be avoided.
Any trade agreement needs architecture around it to make it work well, both within its framework and outside. There are questions about how multilateral organizations function when they rely too much on any one funder or the disproportionate effect a single dissenter can have against the grain of other members’ opinions. But for countries to feel comfortable in pooling choices, interests, and sovereignty to others, including on judicial oversight, new rules will need to be agreed on and new ways of tackling disputes will need to be found. What is clear is that the WTO has a big job to do if we are to have the level of trade and investment that will support both fragile and robust economies in the future.
COVID-19 has brought sorrow and uncertainty, destruction and loss of opportunity. As the United States and Europe begin taking tentative steps to restoring the lives we have known, it is time to imagine what legacy we want to create in the name of all those who have given so much. A new, more modern kind of trade agreement—or even more likely, trade agreements—between the EU and the United States should be part of that legacy.
Catherine Ashton is a former EU High Representative of the Union for Foreign Affairs and Security Policy and a former European Commissioner for Trade.