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“There will be light at the end of the tunnel” – Expectations for the Biden Administration


Analysis by Sven Oehme, Senior Advisor at AmCham Germany and President & CEO, European-American Business Organization, Inc.

Number One Issue: Handling the Pandemic

On January 20th, Joe Biden and Kamala Harris were inaugurated as the new President and Vice President of the United States. When it was clear that the Biden/Harris ticket had the majority of the public vote and enough votes in the Electoral College based on the individual votes, there was certainly euphoria among the Democrats in the US and also many responses from Europe were extremely positive, not to say outright happy. Was the response in Europe justified? What are the major issues for the Biden Administration and what are the major challenges?

The number one issue is handling the pandemic. Within the last three months there was not much happening at the federal level dealing with the pandemic. Of course, it is good to know that more and more vaccines are coming to the market. At the same time, infections in the US are going up. Many of the steps that are taken to contain the virus are undertaken at the state level and thus they vary. President Biden asked Dr. Anthony Fauci to serve as his chief medical adviser, in addition to his role as the director of the National Institute of Allergy and Infectious Diseases (NIAID).

Economic Recovery at the Center of Attention

Due to the structure and legal environment of the US economy it usually rebounds faster than the economies in other parts of the world. But it will still be a major task to get the economy in shape and to put people to work again and also create new jobs. With the vaccines coming to the market in large numbers next year, there will be light at the end of the tunnel. An ambitious environmental agenda may be crucial for generating new, better paid jobs. They may require higher qualifications and a major effort retraining laid-off workers.

The third important challenge for the new administration is uniting the country. President Biden has said he will not be president of the Democrats, but the president of all Americans. In case the economy picks up quickly, this will be easier to achieve. Part of uniting the country is also overcoming racism. There has been an intense discussion this year about racism and it will not go away and thus needs to be addressed by the new administration. In this context it will help that Vice President Harris is of Indian and Jamaican heritage.

The fourth major challenge is climate change. President Biden said that he will re-join the Paris Agreement on his first day in office. Beyond that he has also said that he will have a policy that will help protecting the climate, reducing the ill effects of climate change. Biden has stated many times he will start programs that will develop new technologies to counter climate change.

International Partnerships will be Revitalized

What about his foreign policy, what about Europe, one might ask? It is not at the forefront. However, the relationship will be more stable, the tone of any discussions will be different, much more congenial. Biden knows many of the European leaders, is very familiar with the European situation. He was a member of the Senate Committee on Foreign Relations and chaired the committee twice. Obviously, one goal of his administration will be to reestablish the United States as the leading international partner of many countries, and especially so in Europe. This partnership will be revitalized. There will be no discussion about reducing any presence of troops in Europe. NATO will be seeing a more secure future. That will calm many of the fears of European countries.

That said, make no mistake, the foreign policy of the Biden Administration will have to focus on Asia and specifically on China. Asia had already become more important under President Obama and that has not changed. Europe remains an ally, of course, but it is not a priority of the foreign policy of the new Administration. Europe can gain stature again, if it aligns itself on China with the United States position on human rights and on trade with China. A cooperation of the EU and the US on issues with regards to China will carry much more weight than any single action by one of the blocks.

Free Trade Agreement is Unlikely, Industry Specific Agreements Possible

We frequently hear from Europe the question whether there will be a free trade agreement between the EU and the United States, whether there will be a revival of the transatlantic trade and investment partnership agreement (TTIP) that was a goal under the Obama Administration. From my perspective that is rather unlikely. President Biden has downplayed trade talks with Europe. As stated above, overcoming the pandemic and building up the US economy are the priorities.

On the one hand, it must also be seen whether Congress in the United States would be in favor of an agreement with Europe, as Congress will have to vote on such an agreement in order to adopt it. The Head of the Ways and Means Committee in the House of Representatives, Richard E. Neal, has called on the Biden Administration to start trade negotiations with close allies soon. It is noteworthy that the nominee of the Biden Administration for United States Trade Representative (USTR) is Katherine Tai, the Ways and Means Committee’s chief trade lawyer. A comprehensive agreement with the EU would most likely follow the structure of the US Mexico and Canada agreement (USMCA) that replaced NAFTA and went into force earlier this year.

On the other hand, it seems to be important to know whether Europe will be ready for it. One can be doubtful. Just a few examples to support this: It has been the position of the United States under recent presidents that agricultural exports should be increased. That is very much opposed in France. Also opposed, especially by the public, the import from the US of chlorinated chicken, and genetically modified foods. It is thus the expectation that the European public in some of the major countries would be out in the streets protesting any such agreement, replaying what happened four years ago on European streets, massive allies against a trade and investment agreement. Therefore, there does not seem to be a realistic chance for a comprehensive trade and investment deal. Some industry specific agreements may be possible, though.

New Opportunities for European Companies

That should not be viewed negatively. Trade and investments between the US and the European Union after World War II have increased tremendously without a comprehensive trade and investment agreement. The Biden Administrations will be more open to companies from Europe, especially when they plan to increase the number of jobs in the United States. Again, this will be a major issue for the American president to make sure that enough jobs are provided for Americans, thus a benefit for Americans. While this is not going to run under the banner ‘Make America Great Again’, the idea as such will not disappear. If Americans can find jobs again, some of the restrictions on non-immigrant visas may be relaxed eventually. Thus, it may become easier for companies abroad to transfer employees to the US whether this will happen is more of a medium- or long-term issue.

One can certainly see opportunities for companies from Europe in the alternative energy sector, in any product that will be able to assist in reducing the ill effects of climate change. There will also be opportunities in the sector of artificial intelligence (AI), more embraced in the US than in Europe. In contrast to the Trump Administration, the US will have a more favorable view of businesses coming from abroad. But anyone wanting to come must play by the rules in America. Any company that will create jobs will be more than welcome. So, it really depends on entrepreneurial spirit in the European countries, on whether they see opportunities across the Atlantic.

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