tons, the best web re sropean Union om the uinibhowPage ay? site on Ixtermal Rela ringsltesarea sample ‘http aep tern AMtican Develop 1 Union); http://www. COWAS} itp IAD} htindfovne . ASEAN) htp:fwwrs ining South sian, wosceongiindexphy + tp wefan coein)DefaultIN asp tm (Andean Commit gorghome edhtm) Chapter 16 The EU and the United States Michael Smith and Rebecca Steffenson romoancoeasmannnt sassisauanmeebe somnanca Contents Introduction 243 EU-US relations and the EU asa power ininternational relations 237 ‘The changing shape of EU-US relations 44 FU-US relations and the EU's system one 7 of international relations mas Furtherrea 62 EUUS relations and the processes Web links 22 of international relations 3st ‘sever ess eNO Summary ‘The United States has always been the most'‘significant other’ of the European integra- tion project in the world arena. This chapter explores the implications of this factor for the international relations ofthe EU, frst by introducing the key features of the EU-US re- lationship and by considering the ways in which these raise issues of analysis and policy. Second, the chapter explores the ways in which the EU-US relationship reflects and af- fects the workings of the EU as a system of international relations. Third, the chapter focuses on the ways in which the EU-US relationship affects the broader process of inter- national relations. Finally, the chapter evaluates the ways in which the roles of the EU asa ‘power’ in international relations are shaped by ts relationship with the US, and the ways inwhich this moulds the EU's role in exercising international power and pursuing interna tional order. passer eiemccRi ‘otto osnatenonanenE NN SSS SRER Introduction ‘The European Union (and previously the European Community) bas been intimately entangled with the United States since the very beginnings of European integration {n the 19508, In the areas of trade, monetary relations and economic managementa nntesae sratre Ano this gives the US a key role not only in the international policies of the EU, but als in the management of both the European economy and the broader global political economy. In the axea of security, the European project has always been linked to and embeclded in the European and world security order, whilst politically the EU and its preclecessors have been a key part of the USled group of liberal democracies. Amen ‘can influence stimulated the European project in two senses. On the one hand, the ‘American federal system was an inspiration to European leaders, such as Jean Mon. Zet, and to Americans who saw the European project as a means of creating a United States of Europe. On the other band, European integration was inspired to a substan, lial extent, by the desire to match US and Soviet superpower, or at least to create 2 “third force in international relations (DePorte 1987; Winand 1993; Ellwood 1992 Heller and Gillingham 1996). This ambivalence—the US as a key partner and leader but also as a potential rival in world politics — has been central to EU-US relations and to the international relations ofthe EU ever since (Smith 1984; Smith and Wooleoek, 1993: Smith 19980), These two dynamics, producing what can be called ‘competitive cooperation’ (Smith 19989), are visible in all three of the core components of transatlantic life Separate but interconnected economic, political and secutity relationships defing ‘ansatlantic relations and go a long way towards shaping both EU politics and the changing global order. In this context, dealing with the US has been one of the key tests of the extent to which the EU has developed into an effective international actor ‘with a distinct set of policy positions and instruments, Partly as a consequence, the EUUS relationship has, some would say increasingly, been a subject of political and Policy debate, attracting the atention and disagreement of those involved in shaping the key questions of world order (Smith 2004a; Todd 2003: Kagan 2009), This chapter aims to explore the ways in which EU-US relations enter into the ine ternational relations ofthe BU, and to assess the implications for key areas of the EU's ‘rowing international activity. In the first section, the focus is on the changing shape and focus of the transatlantic relationship as it enters into economic, political and se. Cutity questions. The following three sections address the key themes raised by this volume as a whole, by successively dealing with the impact of ELLUS relations on the EU's system of international relations, on the EU's role in the processes of interna tional relations, and on the EU's position as a ‘power’ in international relations, The changing shape of EU-US relations Economic interdependence has always been at the core of the ELLUS relationship European integration itself was closely connected with the economic reconstruction of Europe through the Marshall Plan in the 1940s and 1950s, and the European pro: Ject has been closely inked to both the evolution of the ‘western world economy” during the Cold War and to ‘globalisation’ in the 2ist century. The BU and the US have been historically linked through trade and investment since the early 20th century at least, and this relationship increased in both depth and breadth as theies of the BU, but also roader global political ays been linked to and litically the EU and its al democracies, Amer- On the one hand, the sts, such as Jean Mon- 1s of creating a United inspired toa substan + oF at least to create 44 1993; Ellwood 1992; ey partner and leader EUUS relations and Smith and Woolcock petitive cooperation’ of transatlantic life, relationships define b EU politics and the ‘been one of the key re international actor Sa consequence, the bject of political and > involved in shaping 1 2003) mms enter into the in- key areas of the EU's 1 the changing shape mic, political and se- hemes raised by this HUS relations on the srocesses of interna tional relations, EULUS relationship, mic reconstruction | the Furopean pro: m world economy" The EU and the US nce the early 20th and breadth as the eee By the early 20005, according to European Commission figures (European Commission 2003), this deeply embedded economic relationship accounted for 37% of world mer: chandise trade and for 45% of world trade in services (2002 figures). In 2002, two-way «cross-border trade In goods and services (imports and exports) between the EU and the US amounted to more than € 650 billions (E412 billons in goods and € 238 billions in ser- vices), making the EU and the US each other's single largest trading partner; these figures represented about 21% of each partner’ trade in goods alone; whenit carne to the rapidly growing service trade between the two partners, transatlantic trade in 2002 represented 139% of EU and 35% of US total cross-border trade in service, and this amounted to 36% of. total bilateral trade in goods and services, The EUand the USin 2000 aso accounted for 54% of total worldinflowsof Foreign Direct Investment (FDI) and or 67% of total world outflows. By 2001, the US absorbed 49% ofthe EU's outward investment flows, and the EU 46% of US ‘outward flows; EU investment was 54% of total investment in the US, and US investment in the EU was 6o% of the total. Over a more extended period, nearly three-quarters of al for- eign investmentin the US in the gg0s came from the EU. Asaresul, the totalaccumulated investment by the EUin the US and the USin the EU amounted by 2001t0 1s00billion—by far the largest investment relationship inthe world. ‘Wester Alliance’ grew during the 1950s and beyond, Box 36. summarises a number of features of this relationship as it existed in the early 2000s, ‘The very intimacy of this relationship, and the depth of its historical and insti tutional roots, give rise to 2 number of important trends in EULUS economic re lations. The first of these trends concerns the consistent growth of the economic links between the EC/EU and the US: in other words, there has been a continue ous deepening of economic links over a more than 50-year period, and these links have notably continued to deepen and widen even when transatlantic political or security relations have been troubled (for example, during the later years of the Cold War, or during the period leading up to the war in Iraq during 2002/2003). A second trend concerns the ways in which the ECJBU, through processes of economic growth and enlargement, has increasingly come to be seen as an economic super power. Hoth the FU and the US are of continental size, are advanced industrial and service-based economies, and both are deeply entangled both with each other and with the development of the global economy. In other words, the EUUS relation- ship has become a partnership of equals, at least in economic terms (Peterson 1996; Guay 1999) but this evidence also raises a number of questions about the nature of FU-US eco- nomic relations. Given the continuous widening and deepening of the relationships, is it fair to see the EU and the US as effectively ‘integrated’ within an Atlantic political ‘economy? How far is it possible to see the EU and the US as global economic rivals, given the simultaneous tise of disputes and more extensive conflicts over trade, in- vestment, competition and other areas of regulatory policy, and what are the implic- ations of this? Is the FU, despite its apparent equality with the US in quantitative terms, actually able to mobilise its economic resources to achieve equal influence with the US, within both economic and other contexts? These and other economic is sues will be addressed later in the chapter. Meanwhile, Box 16.1 provides information346 anyCHAEL suerTH wD REBECCA srEEFERSON (on some of the current indicators by which the significance of EU-US economic rele tions might be evaluated, ‘The EULUS relationship also reflects a number of fundamental political forces. The foundations of the European project and the transatlantic relationship were as much political as they were economic. The defeat of almost all of the European states dun ing World War Il, the de-legitimisation of governments and underlying regimes fn all parts of Europe, coupled by the looming threat of Soviet political domination in Eastern Europe, played a key role in shaping the political complexion of the ‘new: Europe’ after 1945. The US commitment to a western market system was thus pan alleled by the desire to promote the strengthening of liberal democracies in Europe, ‘The development and consolidation of anti-Communism in the 1950s, the develop: ment of European socialisms and ‘Buro-Communism’ in the 1970s and 1980s, and the spread of free market and liberal ideas in the 1980s reflect key phases in the devel: ‘opment of the political relationship (Ellwood 1999; Heller and Gillingham 1996). Ibis difficult to establish the extent to which these events affected American engagement in Europe, but it is clear that consistent and deep relationships between European, and American political and diplomatic elites underpinned Cold War Europe. ‘The political changes initiated by the end of the Cold War threatened to trans: form the composition of EU-US relations. Whilst the removal of the Soviet hold over Central and Eastern Europe created new scope for the extension of liberal democracy and market ideas, it also revealed some of the fault lines and key policy questions that had been at least partly masked by the Cold War. To what extent did the EU and the US really share common values? Was it possible for the EU to develop and export a different brand of democracy, underpinned by economic success and by the mechanisms in the Common Foreign and Security Policy? How would this find its expression in both the economic and the security challenges likely to face the ‘winners’ in the contest between western democracy and communism? These were not simply analytical or academic questions: they reflected the uncertainties of polit- ical and policy-making elites on both sides of the Atlantic (Peterson 1996; Smith and Woolcock 1993; Haftendorn and Tuschhoff 1993). As Box 16.2 shows, the sheer range of areas covered by political initiatives in the immediate post-Cold War period raised Box 16.2 Examples of transatlantic political initiatives (post-Cold War) '= Declaration on Combating Terrorism 1 Energy Research Co-operation Agreement 1 Statement on Communicable Diseases in Africa 1 £U-US Biotechnology Consultative Forum ' Declaration onthe Responsibilities of States on Transparency Regarding Arms Exports 1 Declaration on Common Orientation of Non-Proliferation Policy 1 Precursors Chemical Agreement 1 Joint initiative on Trafficking in Women ¥ Caribbean Drugsinitative8 1US economic rela I political forces. The onship were as much European states dur- nerlying regimes in litical domination in, plexion of the ‘new system was thus par mocracies in Europe, 19505, the develop- osand 1980s, and the phases in the devel 3illingham 1996), It is merican engagement os between European ‘War Burope, threatened to trans- f the Soviet hold aver ‘of liberal democracy key policy questions sat extent did the EU xe EU to develop and omic success and by How would this find ses likely to face the munism? These were uncertainties of polit- rson 1996; Smith and tows, the sheer range old War period raised arding Arms TWEEWANDTHEUWITED States 347 important questions of transatlantic coordination, not only among foreign ministries and the EU's external relations apparatus but also in areas previously seen as ‘in- ternal’ or ‘domestic’ in their political impact. Here, as elsewhere, the EU-US relation: ship demonstrated a concentrated form of the questions that had to be addressed by all political leaders and foreign policy officials. Inescapably, the economic and political factors outlined above have been linked to the security question (indeed, many of the initiatives listed in Box x6.2 are secur ity issues in many respects, as well as indicators of political cooperation). The EU and its predecessors can plausibly be analysed as ‘security communities’, as they gather societies together in a pluralistic yet common framework, More directly, of course, there are two standard explanations for the origins of the European project: on the one hand, Franco-German rapprochement and the creation of a new framework for the prevention of armed conflict in western Europe, on the other hand the creation of economic and political conditions that would buttress the West in the conduct of the Cold War, Here, of course, the ECJEU was not and is not the only game in town, ‘American influence over its European allies was well and truly cemented with the creation of NATO in the 3950s, embodying what has been seen as a transatlantic ‘se ‘curity community’ (Sloan 2002) For this purpose, itis possible to see the European integration project as part of the institutional underpinning of the Cold War in general, and the BC as part of the Jigsaw that constituted the western alliance, But the EC was and remained through- ‘out the Cold War a ‘civilian power’, contained as well as supported by the western alliance and subject to US security dominance, especially at the ‘hard security’ end of the spectrum, The security dominance of the US extended also to the economics (of military production and the development of defence industries, ‘The EUUS relationship in security was thus both intimate and uneven during the Cold Wer, and it can plausibly be argued that the trenc-lines of European and US strength within the relationship were far apart—in contrast to the relative and grow- ing equality of the two parties in the economic sphere and the diversity at many levels of political organisation and ideas. But here too the end of the Cold War, com bined with the development of new EU capacities, raised fundamental questions. How far might and should the EU aim to duplicate, complement, or even supple- ment the US in European security issues and in the broader security debate within the global arena? How far was the notion of ‘civilian power" in the European pro ject simply a reflection and rationalisation of subordination and containment by the Us, and how far might that rationalisation be challenged as the Cold War structures themselves were challenged? Did the EU—or could it ever—represent an alternative model of security politics as well as a possible alternative economic or political model for the organisation of the post-Cold War world? It is not surprising that the development of EU-US relations has been accompan- ied by debate, controversy, and the proposal of different, often strongly conflicting, ‘models of the future of the relationship. As the European integration process gained momentum and spread into areas of foreign policy cooperation during the 1970s and 1980s, speculation about the future of the relationship became a focus of policy de- bate among political and economic elites on both sides of the Atlantic (Smith 1984). The end of the Cold War posed new challenges and opportunities for the economic, political and security domains, and in many cases linked them together in new andPotent ways. I affected both the composition and the conduct of the relationship, which for the purposes of this chapter raises important questions about how we in: terpret the transatlantic alliance and the EU’s position within it + Ifwe conceive of the EU as a system of international relations, how exactly does this system relate to the presence of the US, to its dominance of key areas of policy development and to the inevitable collision between the EU and the US systems of policy-making and policy coordination? * If we analyse the BU as part of the process of international relations, how do we factor in the ways in which the EU and the US interact, the changes that have oc. Curred in these interactions, and the balance-sheet of advantage and disadvantage of the economic, political, and security domains? «Finally, if we conceive of the EU as a power in international relations, how ex actly does this power relate to the US and to US power in the 21st centusy, and how can this relationship help us to understand key questions and disputes over the es lishment of international order, both in the global political economy and in the global security arena? EU-US relations and the EU's system of international relations Jn earlier chapters, this book has presented the EU's intemational relations in part a8 expressing a system of international relations within the EU itself, and a sub- system of the broader international system. In other words, the EU's member states and institutions comprise a complex and multi-layered system within which national Policies are adjusted, ‘European’ policy positions are developed and revised, and actions are produced in a number of coexisting and overlapping contexts. This has important consequences for the ways in which the EU enters into and conducts in- ternational relationships, and many of the chapters in this book bear witness to the ‘Ways in which this can be demonstrated. For the puxposes of this chapter, the most important focus is upon the ways in which the EULUS relationship shows the oper ation of the intra-BU system of intemational relations, and by implication also the ‘ways in which the United States can enter into that system both as a contextual factor but also as, in some instances, a pasticipant in the system itself The multi-level governance literature provides a logical analytical starting point for a discussion about the complex relationships between EU member states, European institutions, and the US. According to this literature the EU is character. ised by shared authority and policy-making competencies across multiple levels of government—subnational, national and supranational (see also Marks et al. 1996). ‘This has important effects on EU external policies, and it is not surprising that the ‘US factor" inevitably enters into the many different levels at which EU policies are made (Pollack and Shaffer 2003), In the first instance, there are formal diplomatic relations between tite EU and the US, especially via the Commission in the field ofof the relationship, ss about how we in 's, how exactly does key areas of policy 1 the US systems of elations, how do we anges that have oc and disadvantage of relations, how ex: st century, and how isputes over the es economy and in the inal relations in part BU itself, and a sub : EU's member states sithin which national red and revised, and vg contexts, This has = nto and conducts itt k bear witness to the his chapter, the most ship shows the oper- implication also the asa contextual factor lytical starting point EU member states) so Marks et al. 1996) ot surprising that the which EU policies we formal diplomatie § nission in the field of 4 external economic policies. The member states also retain important economic re- tions with the US, and in a number of areas these national interests and policies are at least as significant as those determined collectively. This is especially true in monetary and investment policy, which differs greatly depending on membership or non-membership of the Eurozone. The coexisting and overlapping policy arenas al: low the US Administration, US state governments and private companies to intervene in many different areas, Many large US companies are so long-established in the EU that they are effectively ‘European’ in terms of their interests and their ability to ex- ext pressure, This means that in terms of international economic relations, the US can be seen almost as a direct participant in the EU’s multilevel system, Interestingly, the US too can be seen less and less as a unitary state, and more as multi-level system of economic policy-making, It is thus important to highlight the shared competencies between separate national as well a state institutions in US for- ‘ign policy making (Smith 1998a; Peterson and O'Toole 2001), which will not neces- sarily always agree among themselves about the positions to be adopted in relation to the EU. ‘Cooperative federalism’, in which powers and competencies are shared and ‘eated as shared between levels, is another way of characterising the US decision- making structure (Nicolaidis and Howse 2002). Shared authority affects the capacity of the US to exercise international relations, because as Peterson and O'Toole (2001, 300) argue, ‘federalism usually gives rise to less formal intricate structures within which a large number of actors, each wielding a small slice of power, interact’. It is not clear how and to what extent this enables the EU collectively or through its ‘many possible agents to intervene in US domestic economic and political processes, bout itis clear that there are important respects in which the changing nature of the ‘global potitical economy has led to a convergence of state forms on the two sides of the Atlantic. Many scholars have begun to focus on multiple actors and multiple levels of in- fluence within international relations theory more generally (see Milner 1997; Risse Kappen 1995; Putnam 1988). The idea that domestic and international politics are fot separable, and that domestic agents—be they political institutions, domestic ‘groups, state or non-state actors—influence international negotiations, is uniting a ing external relations systems of the EU and the US can be seen as a key example of rowing trends in the international arena as a whole. But it is clear that the most anerete examples of this phenomenon can be found in the area of political eco- ‘homy—dealing with the choices mide and the positions adopted by the FU and the Us.in respect of welfare and a widening range of social issues. ‘What happens when we look at the EU's system of international relations in the “more political and security-related domains? Here, we have to consider the notions that statehood and strategic action by major players still shape a large number of Ahternational patterns, including those in which the EU and the US are increasingly Hengaged as part of the global security system. The relationships between the EU and HK member states are very different in political and security concerns, as is the ca- ety of the US to intervene and to exert influence in the system. Most specifically, Uke Us ability to incite defection from common FU positions, to develop ‘special re- {Vikionships' with member states and to undermine the solidarity of the EU is greatly Iireased, This need not be a matter of conscious or explicit US policies: it can simply350 EERCHAEL sMrTH AND REMECER SreerEHSOH be a reflection of the different incentives and natural political leanings of the mem ber states, as well as an indication of the more intergovernmental nature of the EU's institutional setup in the areas of Common Foreign & Security Policy (CPSP) and European Security and Defence Policy (ESDP), There are thus effectively two parallel narratives of the EUS relationship when ‘we examine the EU's system of international relations (McGuire and Smith 2005). On the one hand there is the political economy narrative, which stresses the ways in, which the EU has developed a powerful set of institutions and resources that can be used to undertake collective action in a range of contexts. These contexts are often ‘domestic’ as well as ‘international’: thus EU-US interaction occurs via many agents at a range of levels, froin the global (for example, in the World Trade Organization (WTO) through the European and then the national to the sub-national and the local In the political security domain, however, the narrative is very different. Although in many respects the EU's CPSP and ESDP have been developed because of the US—as ‘a means of filling the gaps in US policies, or responding to the challenges of success- ive US administrations, especially during the 1990s and 2000s—they are also severely constrained by the dominance if not hegemony of the ‘only superpower’ when the questions are those of crisis and conflict, and of the commitment of real resources to the conduct of war or nearwar operations. The incentives for EU member states to act collectively are very different in the two areas, with the balance between solidar- ity and defection or abstention only shifting slowly in the political and secuity area towards the "European level Examples of this contrast have been legion since the end of the Cold War, with the ‘most important of them emerging from the ‘war on terror’ and the invasion of Iraq (see also Chapters 9 and xo in this volume}. Whereas in both of these cases the EU could maintain solidarity in the economic sphere, with the imposition of sanctions or the implementation of reconstruction programmes, the EU's system of interna: tional relations became subject to strains if not to disintegration as soon as the issues became those of hard security’. The collapse of Buropean solidarity in the height of | the Iraq crisis, leading to the stand-off between ‘old’ and ‘new’ Europe and to intense frictions between Britain and France in particular, seemed to indicate that wherever the US placed intense demands on the EU's foreign policy system there would be the likelihood of disintegration rather than a great leap forward in cooperation (Peterson and Pollack 2003). But this is not the whole story: one of the other strands of development during the 1990s and beyond has been the growing scope of areas of ‘soft security’ and se- curity activity engaging the ‘internal’ mechanisms of both the EU and the US (see also Chapter 10 in this volume). This picture highlights very different results from the story of EU-US security cooperation and competition, The EU's system in such areas, as justice and home affairs, or environmental protection, or civil administration in the aftermath of conflict, possesses far greater resources for interaction with the US. Indeed, some have argued that in these areas the EU has a comparative advantage over the US bestowed by the enduring traces of ‘civilian power’. ‘What implications does this system of shared competency, of penetrated decision- making, and of competing ‘languages’ of international relations carry for EU cok lective action? First, it is clear that the overlapping decision-making competency between the internal and external spheres of politics complicates the process of