The COVID-19 pandemic was unforeseen but not unlikely. In spite of that, prevention and global coordination have been disappointing. Governments’ response has been fragmented, poorly coordinated, and hence inefficient, as often happens in cases of international externalities. Disparate health data-gathering and processing methodologies hindered early identification and consistent monitoring and risk assessment, and therefore testing and preparedness. The World Health Organization, relying on nationally provided data, and constrained by the withdrawal of funding from the United States and by geopolitical maneuvering, was not effective in detecting the epidemic, steering cooperation, and building trust.

European Union Heads of State and Government reached a crucial agreement in the early morning of July 21 to establish a massive fiscal recovery package to help the most affected countries recover from the COVID-19 pandemic and a multi-annual budget framework for 2021-2027. The €1.8 trillion agreement was the subject of intense debate over several days, but in the end European leaders reached a compromise that is a win-win for all sides and will strengthen the EU’s economy and political stability during turbulent times.

The US administration just announced a new $4 billion list of European Union (EU) products which it could apply additional tariffs on in response to the ongoing dispute between both sides of the Atlantic over government subsidies to aerospace companies Boeing and Airbus. While the United States thinks it can create better economic outcomes by forcing concessions out of Europe, this new action will only continue the lose-lose spiral of threats gripping the transatlantic trade relationship. Washington could pursue a different strategy, however, by legitimately working with Europe to reduce government subsidies, while also taking tangible steps to strengthen antitrust enforcement at home. The transatlantic trade environment, growth prospects, and public finances would greatly benefit from such a change in approach.

US consumers and importers are already paying a price for trade tensions between the United States and China. They are bearing almost entirely the tariff revenue collected at the US border. Escalation is also likely to affect business sentiment and investment.

Some in the West argue that the emerging countries have prospered from globalisation at the expense of low- and middle-income classes in advanced countries by abusing open trade. Others in the East counter that the problem is the unfair distribution in Western countries of the benefits derived from global integration. This column argues that Europe’s stance on globalisation – a combination of enforcement of a level playing field at home and abroad and a welfare state that mitigates polarisation and empowers middle classes – is capable of overcoming these zero-sum stories by reconciling higher growth with a fairer distribution of income and opportunities and a multidimensional concept of sustainability and well-being.