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The Next US Administration: Prospects for Italy

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The Next US Administration: Prospects for Italy THE NEXT U.S. ADMINISTRATION: PROSPECTS FOR ITALY GIOVANNA DE MAIO AND CAROLINE KLAFF OCTOBER 2020 EXECUTIVE SUMMARY Italy is watching the outcome of the U.S. presidential election closely, as the results could have significant implications for cooperation on security, trade, and global challenges. On the economy, a second term for President Donald Trump could mean more tariffs, whereas an administration led by former Vice President Joe Biden is more likely to pursue conflict-free trade relations with Europe. On climate, there will almost certainly be more commonalities with a Biden administration than a second Trump term, as Biden has repeatedly identified climate change as pillar of his domestic and foreign policy agendas. On security issues, a second Trump administration is expected to continue its alternatingly dismissive and antagonistic approach toward the North Atlantic Treaty Organization (NATO) and contribute to protracted tensions around defense spending. Meanwhile, Biden has said he will prioritize the restoration of American leadership and trust between transatlantic allies; he (like Trump) would likely continue reducing the scope of U.S. involvement in North Africa and the Middle East, which are key areas for Italian and European security interests. Finally, the candidates’ postures toward China and Russia are of great interest to Italy in light of technology competition concerns, as well as minding the trade-offs between economic opportunities and security risks. There are at least four actions that the next U.S. administration should consider in its future engagements with Italy: Recognize that fostering new industrial linkages with transatlantic allies and protecting jobs at home is not a zero-sum game; seek overlap with Italy’s green economy plans and capitalize on existing cooperation in the renewable energy sector; restore trust with allies and leverage Italy as a capable security partner; and coordinate with allies on China and count on Italy as partner to dialogue with Russia. INTRODUCTION the U.S. election closely, as the results could have significant implications for cooperation on security, Over the past four years, relations between the trade, and global challenges. United States and Italy have remained insulated from the overall decline of the transatlantic What would a second term for U.S. President relationship. Trade volumes between the two Donald Trump versus a new administration led by countries — which have been on the rise over the former Vice President Joe Biden mean for U.S.-Italy last 10 years — continued upward, and security relations? Four key intersection points are worth ties remained intact across several theaters. examining. Nevertheless, Italy is watching the outcome of 1 ECONOMY scheme,6 encourages government purchases of domestic goods, and prioritizes bringing critical Discussions on tariffs and trade have dominated supply chains back to the United States — actions transatlantic relations under the Trump presidency. that risk cutting off many European suppliers.7 Following the World Trade Organization’s (WTO) Yet despite these protectionist tendencies, Biden settlement of the Airbus dispute in October 2019 — would almost certainly aim toward conflict-free a long-running disagreement between the U.S. and trade relations and open communication between European Union over state subsidies on the aircraft the United States and Europe. Biden’s willingness industries — the U.S. administration imposed $7.5 to work with European allies could pay immediate 1 billion in tariffs on European goods. However, dividends. In October, the WTO released another thanks to both diplomatic and commercial lobbying ruling on the Airbus dispute, which allowed the efforts, Italy managed to avoid the brunt of these European Union (EU) to impose $4 billion in tariffs tariffs. While a tit-for-tat trade fight hampered U.S. on U.S. goods in retaliation for subsidies accorded economic relations with much of Europe, trade to Boeing. A cool-headed response could help volumes between the U.S. and Italy increased in de-escalate tensions and alleviate the market 2 2019, and as of June 2020, the United States uncertainties that are particularly harmful for is the third-largest market for Italian exports export countries like Italy.8 Moreover, in the digital 3 (after Germany and France). However, as of May sphere, a Biden administration is likely to push for 2020, U.S. import volumes from Italy were down greater technology regulation, including stronger significantly compared to 2019. While this decline action on competition and stricter guidelines for is largely attributable to the COVID-19 pandemic, data privacy (which would correspond more closely the historical upward trajectory of U.S.-Italy trade with ongoing European efforts). 9 relations must not be taken for granted. A second Trump administration will likely feel CLIMATE CHANGE emboldened to impose long-threatened tariffs Italy has long dragged its feet on measurable on European cars and auto parts, which would environmental action, focusing instead on other be acutely detrimental to Italy, the third-largest structural problems perceived as more urgent. European car exporter to the United States and However, mounting public concern about climate key supplier of intermediary parts for the German change in recent years has pushed policymakers car industry.4 President Trump could also impose to take more concrete action, positioning Italy as additional tariffs on European goods in response a key protagonist on environmental issues. In to domestic digital services taxes that several his September 2019 speech to the U.N. General countries, including Italy, have set for U.S. tech Assembly, Prime Minister Giuseppe Conte affirmed giants. that “Italy intends to play a leading role in the global 10 In contrast, Biden foreign policy adviser Anthony fight against climate change,” a goal that has Blinken stated that a Biden administration will “end been reiterated in Italy’s priorities for its upcoming 11 [the] artificial trade war with Europe.”5 That said, it G-20 chairmanship. is highly unlikely that Biden would engage Europe Over the past year, the environmentally conscious in a new trade deal on par with the Transatlantic Democratic Party (PD)-Five Star Movement (M5S) Trade and Investment Partnership (TTIP) that coalition undertook a flurry of legislation: introducing Barack Obama attempted. Biden’s economic mandatory climate and sustainability education in recovery plan has a strong domestic focus, which public schools,12 passing the “Salvamare” decree includes the $400 billion “Made in All of America” 2 promoting cleaner oceans and waterways, and SECURITY approving updated recycling regulation. In addition to aligning with the EU Commission’s European The United States and Italy share crucial and historic Green Deal (a set of policy initiatives with the security ties. Italy is the second-largest host of U.S. 16 primary goal of making the EU carbon-neutral by troops in Europe (after Germany), second-largest 2050), Italy committed to a “Green New Deal” of contributor to NATO out-of-area operations (after 17 its own — allocating a reported €33 billion over the United States), and the largest European 18 15 years toward diversifying Italy’s energy mix and contributor to U.N. peacekeeping missions. building a circular and more equitable economy.13 Italy’s geographic position makes it strategically and geopolitically significant for all operations On climate, there will almost certainly be more concerning the Mediterranean, from North Africa to commonalities with a Biden administration than the Balkans. In Afghanistan, Iraq, Libya, and Niger, a second Trump term, as Biden has repeatedly Italian and U.S. troops operate together. Italy has a identified climate change as pillar of his domestic leading role in international missions in Lebanon, and foreign policy agendas. Both the “Biden Plan Kosovo, and Somalia. for a Clean Energy Revolution and Environmental Justice”14 and the 2020 Democratic party platform Over the past four years, the Trump administration’s mirror Green New Deal objectives already underway foreign policy disregarded coordination with in Europe: achieving net-zero greenhouse gas NATO allies on several occasions, such as the emissions by 2050, imposing carbon tariffs on negotiation of the peace deal with the Taliban, the countries that are not meeting climate targets, killing of Iranian General Qassem Soleimani, and conserving wildlife and habitats, and divesting from most recently, the withdrawal of U.S. troops from fossil fuels, among others. Aside from recommitting Germany and the unwillingness to cooperate on to accords like the Paris Agreement, Biden’s plan the COVID-19 pandemic. Meanwhile, Italian and also indicates that his administration would offer European countries have redoubled their efforts countries that have signed onto China’s Belt to stabilize Libya (crucial to tackling the migration and Road Initiative (BRI) — including Italy, a BRI crisis) and to fight terrorism and human trafficking signatory since March 2019 — “alternative sources in the Sahel region. Italy’s security commitments of development financing for lower carbon energy have not changed. Yet, Rome has had to find new investments.”15 interlocutors given the intermittent absence of the United States, especially on the Libya dossier, which Conversely, the Trump administration has repeatedly is the top priority for Italian national security. promoted fossil fuels, displayed
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