After a tumultuous summer, the EU and US have agreed on a political agreement to stabilise trade relations. The deal is highly skewed in the US’s favour, which we have thoroughly criticised elsewhere. It’s also unclear how long it will remain viable, as Trump immediately made new tariff threats against the EU in the wake of the deal. So much for certainty in uncertain times.

In the joint statement on the deal, the parties expand on their agreement to “strengthen economic security alignment.” In general, the EU’s tool set and strategy on economic security feel inadequate and quaint after the events of the summer. However, taking stock of what such an alignment could look like is worthwhile.

Cooperation on economic security has previously been discussed and posed as one of the few obvious areas for the EU and US to cooperate. Both have been pushing back against Chinese policies in recent years, diplomatically termed “non-market policies of third parties” in the statement. Although interests and policies on China do not overlap completely across the Atlantic, it is an area where there is some common ground.

In recent years, both EU and US politicians have been decrying Chinese manufacturing overcapacities, undermining the competitiveness of their home markets. Both have put in place trade defence measures targeting specific goods such as electric vehicles.

So far, the EU has gotten nowhere by trying to convince China to rebalance its economy on its own. Neither is decoupling from China on its own a satisfying US policy. As Oren Cass, founder of the American Compass think tank, recently said: “If the U.S. and China are going to decouple, you really have to have a decoupling of spheres”. In Cass’s telling, those who want to keep trading with the US will have to join the US trade sphere, i.e. decouple from China.

The language of the joint statement is woolly and non-committal, and an agreement for the EU to join in decoupling from China can’t be drawn from it. Despite some similarities in approach, it is still doubtful to what degree the two conform in their views on how to tackle the Chinese challenge. However, it marks an intention to hew closer to the US direction of travel. What this results in is firmly in the category of ‘we’ll have to wait and see’.

Indeed, the lack of concrete action on the areas most plagued by Chinese policies can be seen in the statement’s non-committal language on the steel industry. The industry is plagued by huge overcapacities, of which China is one of the main culprits, undermining steel producers in both Europe and the US. The US maintains high tariffs on the metal, also affecting the EU. This would have been an obvious area of alignment, but the statement does not offer more than the less-than-inspiring promise that the parties “intend to consider the possibility to cooperate.”

Any meaningful action on Chinese trade practices will have to find a basis in a broad coalition. It is hard to see the potential of such a coalition missing either the EU or US. As such, the two coming together is nominally good in moving us closer towards such a constructive coalition. In the short term, it is more likely to simply sharpen geoeconomic fronts between the Atlantic partners and the Asian giant.

The wording in the joint statement extends to closer cooperation on specific economic security tools, notably inbound and outbound investment reviews and export controls. This may be tough for the EU to deliver on, as foreign direct investment screening (FDI) in the Union is deferred to the member states, compared to the centralised federal control of the tool in the US.

With the review of EU FDI screening rules now subject to interinstitutional negotiations, it is hard to say what they will eventually look like. Most likely, core competences will remain with the member states, with a continued limited role for the European Commission.

Bureaucratic cooperation across the Atlantic is common, with DG Comp and the Federal Trade Commission working closely on enforcement of competition and merger rules. This could be a template for cooperation on FDI screening as well, but here it will be harder to align the work of DG Trade and the Committee on Foreign Investment in the United States, as well as the work of the member states. FDI screening can also quickly turn political in the US, as proven with the Nippon Steel-US Steel saga, making close alignment tough.

Outbound investment screening is still in the works in both the US and EU, so any alignment would have to be on the eventual frameworks for such reviews. For export controls, there should be room for cooperation. As has been acknowledged by US policymakers, unilateral controls quickly run out of steam.

However, EU politicians and executives may not be interested in following the US in its aggressive use of the tool against China, fearing potential reprisals. There also seems to be limited trust in the area, with the Biden administration imposing some restrictions on the diffusion of AI chips that hit close allies such as Poland. The rules were subsequently revoked by Trump. Additionally, US policy in the area under Trump is chaotic to say the least, making close alignment hard.

Closing the gap in the transatlantic work on economic security is a fruitful avenue for the EU to continue diplomatic and economic engagement with the US. While there is partial policy agreement in the area, too much should not be expected, as disagreements and differences in institutional frameworks persist.