U.S.-EU Trade Relations

Bilateral trade and investment ties between the United States and the European Union (EU) are long-standing and extensive, but some tariff and nontariff barriers remain. Successive U.S. Administrations have sought to address barriers that restrict U.S. firms’ access to EU markets and to further liberalize bilateral trade and investment ties, enhance regulatory cooperation, and cooperate on global trade and economic issues of joint interest. Over the past decades, the United States and the EU have engaged on these issues through various bilateral dialogues, summits, and trade agreement negotiations. These include negotiations on a proposed Transatlantic Trade and Investment Partnership (T-TIP), which, along with other U.S.-EU efforts, have not yielded a comprehensive, final trade agreement, to date. The partners also have engaged on these issues multilaterally, such as in the World Trade Organization (WTO) and other multi-party negotiating fora. Congress has a broad, enduring interest in understanding U.S.-EU trade relations and the issues underpinning them, given the magnitude of U.S.-EU trade and investment ties, their significance to the U.S. economy overall and specific constituent interests, and their significance to the global marketplace, such as for setting and shaping international rules and standards. While U.S. and EU trade policies are aligned in many areas, frictions can emerge between the partners due to the high level of bilateral commercial activity and different policy approaches on some specific issues. U.S.-EU trade ties were fraught during the Trump Administration. President Biden has “underscored his support for the [EU] and his commitment to repair and revitalize the U.S.-EU partnership.” In 2021, the partners addressed specific frictions (such as on the WTO Boeing-Airbus subsidies dispute, digital service taxes, and U.S. “Section 232” steel and aluminum tariffs) and launched new modes of cooperation—notably the U.S.-EU Trade and Technology Council (TTC). Currently, the TTC is prominent in U.S.-EU engagement on bilateral trade and economic issues, and is playing a significant role in joint responses to global challenges. Other issues of U.S.-EU contention remain, such as EU regulatory barriers to U.S. agricultural trade, and new differences have emerged on certain approaches to the digital economy. The Biden Administration has not indicated any plans to revive broader trade agreement negotiations with the EU. Under the Trump Administration, such talks stalled, but the two sides reached limited market-opening and regulatory cooperation commitments. Many Members of Congress supported U.S.-EU efforts to negotiate a T-TIP free trade agreement (FTA) during the Obama Administration. In the wake of Russia’s invasion of Ukraine and interest among policymakers to deepen U.S.-EU ties, some observers have called for the United States and the EU to renew efforts to negotiate a bilateral trade deal. The withdrawal of the United Kingdom (UK) from the EU (“Brexit”) on January 31, 2020, could shape dynamics in any future U.S.-EU FTA negotiations or in other aspects of the U.S.-EU trade relationship. The UK historically has been a leading voice, alongside the United States, for trade liberalization, and previously accounted for a significant share of U.S.-EU trade and investment ties. Multilaterally, the United States and the EU aim to continue cooperating on WTO reform and other global trade issues, including on the challenges posed by China and other nonmarket economies (NMEs) and on a WTO response to the Coronavirus Disease 2019 (COVID-19) pandemic. More recently, a pressing concern has been cooperation on imposing trade consequences and other measures in response to Russia’s war on Ukraine. U.S.-EU trade relations present a number of oversight and legislative issues. Congress may conduct hearings on U.S.-EU trade and economic issues. If U.S.-EU trade negotiations take place, Congress could actively monitor and shape them, and consider implementing the necessary legislation for a potential comprehensive trade agreement to enter into force. Congress also may consider setting objectives for such negotiations through a potential renewal of Trade Promotion Authority (TPA), which expired in July 2021. Other issues for Congress regarding U.S.-EU relations include prospects for further resolution of trade frictions, cooperation on global trade challenges of shared interest, and standards-setting cooperation and competition.