EU’s free-traders defeat French push to punish US
Trade and Tech Council will now go ahead on September 29 despite French rage about a lost submarine deal.
A high-level meeting between EU and U.S. officials in Pittsburgh next week represents a cool-headed victory for Europe’s liberal, pro-market Atlanticist camp after days when it looked like French fury would kill it off.
Ever since Paris exploded last week over America swooping in to snatch away a massive submarine deal it had with Australia, France has vented its anger by putting big diplomatic set-pieces on ice. EU-Australia trade talks instantly fell victim to French wrath, and France’s EU commissioner, Thierry Breton, called for a “pause and reset” in transatlantic relations.
Over the past days, the highest profile hostage to the sub snub has been a meeting of the Trade and Tech Council scheduled for September 29, where top EU and U.S. policymakers were due to launch a fresh diplomatic forum for aligning their policies in areas such as microchips, robotics and artificial intelligence. For the Americans, this new format is a key way to try to forge an alliance against China to preserve technological supremacy in democracies.
French opposition finally buckled on Thursday night, when the European Commission announced the Pittsburgh talks were back on. It was no coincidence that the first gleeful tweets came from the EU’s digital supremo Margrethe Vestager, a Nordic evangelist for open markets, and EU trade chief Valdis Dombrovskis, from the Baltic nation of Latvia, which sees the U.S. alliance and NATO as a vital counterweight to Russia. Much of Europe felt that transatlantic ties were too important to sacrifice to French pique.
“Strategic alliances are about shaping common approaches and also overcoming difficulties,” Dombrovskis said in his tweet. In Pittsburgh, Vestager and Dombrovskis will meet U.S. counterparts such as Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai.
Still, the victory only came after a direct intervention from U.S. President Joe Biden, who acknowledged in a phone call with his French counterpart Emmanuel Macron on Wednesday that he should have told Paris about the multibillion dollar submarine accord.
The internal tensions over whether to hold the Pittsburgh meeting exposed some of the deepest faultlines in the EU. Free-trading northern nations and some Eastern European nations that prioritize security ties with Washington resented the French attempt to impose its indignation on the rest of the bloc. France is keen to push for greater “strategic autonomy” — relying less on imports from the U.S. and China — while more liberal nations see this as protectionism intended to protect French manufacturers and farmers.
France is rarely shy about imposing its will over the rest of the bloc and Paris was the leading force in freezing trade talks with the U.S. and South America, which would have harmed French farmers, although many other countries were in favor. The timing of this French power-play could also hardly have been more delicate, as a German election on Sunday spells the end of the reign of Chancellor Angela Merkel and has turned Macron into Europe’s No. 1 heavy-hitter.
The diplomats in Brussels said they were willing to rally behind France for a few days before Biden apologized, but now wanted Paris to act for the greater good.
“Solidarity works both ways: the EU was behind France. Now France has to get behind the EU,” one European diplomat said just hours before the Commissions’ announcement.
Onto a tight-rope
For European Commission President Ursula von der Leyen, the Franco-American fracas has been a delicate balancing act.
When France first raised the submarine flare-up with EU ambassadors last Friday, only a handful of countries — including Germany, the Netherlands and the Czech Republic — supported Paris’s call for a discussion at ambassadorial and leaders’ level, one of the participants said, although diplomats downplayed the importance of that meeting, arguing that it was just a first discussion.
But there were intense discussions behind the scenes in the following days before a compromise was reached: If France would tone down its rhetoric against the U.S., the EU would show solidarity, said one of the diplomats.
And so a range of EU leaders, including von der Leyen, came out strongly in support of the French, accusing Biden of disloyalty to allies.
EU unity was important in conveying that message, several EU diplomats stressed. When Germany’s Europe Minister Michael Roth spoke up in France’s defense, he said that “the EU needs to stand united and speak with one voice.”
In private conversations however, diplomats from all over the continent expressed deep concerns. Was the breach of a bilateral military contract really a European problem? And what would happen next time?
One EU trade diplomat said the TTC format should always have been regarded as “too big to fail. … Let’s hope that it’ll be a success, there shouldn’t be any questions on it.”
German power-vacuum, Danes go rogue
Macron stands to be the big winner from Sunday’s German election, giving him an unambiguous opportunity to cast himself as the man to call in Europe.
Foreseeing this power shift from Berlin, a range of EU countries, such as the Netherlands, have invested in renewing relationships with Paris, making them eager to find a compromise.
Even von der Leyen, a close Merkel ally, is seen as seeking more support from Paris in anticipation of the new dynamics. And if Germany’s Social Democrats prevail in Sunday’s election — as the polls predict — von der Leyen, from the conservative Europe’s People Party, could be pushed even more toward France.
“A vacuum in politics doesn’t exist. Paris is filling it,” explained a senior diplomat.
But on Wednesday, before the Macron-Biden call, the Danes broke ranks. Danish Prime Minister Mette Frederiksen came out strongly in favor of the transatlantic alliance.
“I think that it’s important to say in relation to the discussions regarding Europe, that I see Biden as very loyal to the transatlantic alliance,” Frederiksen told the Danish newspaper Politiken.
“I think that in general, one should refrain from raising any specific challenges, which will always exist between allies, to a level where they do not belong,” she added. “I really, really want to warn against that.”
A wide range of EU diplomats privately cheered on Frederiksen.
“Today she’s my hero,” a Western European diplomat texted.
“Everyone but Paris sees it like Mette Frederiksen,” said a second EU diplomat. “We need to be able to further our own interests notwithstanding a different calculation in D.C.”
TLC for the TTC
Many drew a distinction between the French threats to axe the EU’s trade talks with Australia — those weren’t going great anyway — and its attempts to undermine the entire transatlantic partnership.
“Many of us are puzzled by the idea of undermining a relationship with a friendly [U.S.] administration, which can be complicated at times, but is still friendly,” argued the first diplomat.
And the tech and trade council, or TTC, is seen as a central pillar of that relationship.
“Cancelling TTC would lead to a deeper transatlantic drift and deeper crisis,” said another EU diplomat. “In the meantime, we need quite the contrary: to increase our transatlantic engagement. This is in the interest of European businesses and in the interest of the EU’s global posture.”
It’s a stance all EU trade diplomats backed during a technical meeting on Tuesday. According to a meeting read-out seen by POLITICO, every country’s trade representative, including the French official, said they fully support the TTC and accompanying preparations.
“The French have suffered considerable economic damage and have been snubbed unnecessarily. It is understandable that the anger is very great,” Norbert Röttgen, a German MP who leads the Bundestag’s foreign affairs committee said in an interview with Wirtschaftswoche. “But escalation against the U.S. makes no sense, it increases the damage and France also remains dependent on U.S. support in its foreign missions.”
There is another important element for the Europeans: They hope that goodwill established through TTC could help broker a broader deal on steel and aluminum tariffs that Biden has rolled over from his predecessor Donald Trump.
“The EU isn’t just about French interests,” one EU diplomat said. “We’ve been working on the TTC for so long, we don’t want to throw it away.”
Sarah Anne Aarup, Laurens Cerulus, Stuart Lau and Mark Scott contributed reporting.