Recent relations between the EU and the United States are reminiscent of a few celebrities having issues with the red carpet. They smile at the camera and behave like everything is fine, but personally they are not happy.

At the recent G7 summit, there were fun photo ops and even progress on trade disputes such as the ceasefire between Airbus and Boeing. But fundamentally, Europeans are deeply skeptical about whether the Biden administration is just a roadside station on the road to yet another episode of toxic populism. Americans, on the other hand, are not happy with Europeans for hedging their bets between closer transatlantic alliances or closer ties to China.

You don’t have to do this. In fact, it shouldn’t be. If the EU is serious about protecting its liberal values ​​in the era of surveillance capitalism, it needs the United States. And if the United States wants to be economically separated from China in strategic areas such as semiconductors, green batteries, and electric vehicles, it needs more demand than the domestic market alone. There are low hanging fruits picked here. But it requires real empathy and understanding on both sides.

First, Europeans should not confuse America’s new industrial strategy, outlined by President Brian Deese, Chairman of the National Economic Council last week, with protective trade. It simply aligns the United States with what most other developed countries and many developing countries are doing under their normal economic plans. That is, make strategic investments in high growth technologies and harness the power of public procurement to support local workers and businesses.

According to a recent BCG report, the plan is to increase national and global economic resilience by increasing geographic redundancy in areas such as semiconductors, where 75% of the capacity is concentrated in China and Asia. Is. Intended to. Almost all of the world’s most advanced semiconductor manufacturing capacity (around 92%) is in Taiwan.

Considering the geopolitics of the area, does anyone really think this is a good idea? Europeans certainly don’t, hence the “Electronic compassPlans to double its own share of chip production by 2030. The US Senate’s $ 52 billion bill to boost domestic semiconductor production complements that. But the truth is that it will take more than a decade to rebuild the American industrial base with chips, but the United States, Economies of scale It works in industries like semiconductors.

Not only allies like Japan and South Korea, but all countries like the Netherlands can play an important role in the restructured semiconductor supply chain. A weakened concentration, both locally and within a particular company, is good for the global market. In an ideal world, allies of the US, EU and Asia will work together to create a common industry standard that will enable step-by-step innovation and expansion in areas such as chips, green batteries , clean technologies and AI. ..

Another way for the EU and the US to find an agreement now is to “focus on a common response to the challenges existing within democracy”, rather than on China, which the Europeans do not want to choose. Lassus says he is an economic adviser at the French embassy in Washington and The resurrection of democracy in America and the best angel of your nature, Tokbillian wants an optimistic view of the future of the United States.

These challenges can include everything from the regulation of big tech to common climate change goals, perhaps as ambitious as carbon pricing. Despite opposition from several European countries, including Poland, the EU could announce a carbon regulatory mechanism project by July. The United States has the option of responding in kind with its own proposals.

It is a heavy burden on the government. Last week’s bipartisan infrastructure contract contained very little clean energy. However, it responds to the stated objective of placing the climate at the center of its own industrial strategy. It will also begin to address some common trade concerns about China through agents. For example, the dumping of steel in China would not be possible if carbon had a real price.

The Biden administration could use the upcoming “Summit for Democracy” that the White House convenes as a place to begin its work. There is already a vicious cycle between the US and the EU in areas such as digital privacy, and the European General Data Protection Regulation (GDPR) could one day be adopted nationwide for privacy. more aggressive in California. Stimulate the law. Antitrust law is also one such area, and the two sides have signaled their mutual efforts to tackle the platform monopoly.

One can imagine more cooperation on issues such as press freedom, methods and means of creating digital rights encyclopedias, and principles of regulation of artificial intelligence and genomic research.

All of this will help lay the foundations for transatlantic relations. Rather than attacking China, it focuses on correcting national weaknesses and building regional strengths. Both sides are too much to lose by going alone.

rana.foroohar@ft.com

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