US-EU Trade and Technology Council: Takeaways and Next Steps – International Law
Last month, the US Trade and Technology Council (TTC) held its first ministerial meeting in Pittsburgh: US Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai met with the European Commissioners Margrethe Vestager and Valdis Dombrovskis. Just three months after the TTC process kicked off at the US-EU summit, the two sides pledged to take important steps to coordinate their policy on issues such as investment screening, export controls, artificial intelligence (AI), semiconductors and global business challenges. The meeting also included stakeholder outreach with industry and working groups, and was followed by further engagement with the private sector and civil society.
Leverage half of global GDP
The basic logic of the TTC is that the US and the EU can jointly shape the global economic rules of the 21st century, as the two sides collectively continue to represent nearly half of global revenues. Certainly, a larger format such as the G-20 represents an even larger proportion of global GDP. But the G-20 also includes authoritarian states like Russia and China, which do not share the same values ââand interests as Europe and America. Arguably, the TTC could benefit from the participation of other prominent democracies, such as the UK or Japan, but there are currently no plans to expand its membership.
The reinvigorated commitment to a strong partnership between the US and the EU also helped to include topical issues in the discussions. The EU took the opportunity to highlight the importance of climate change for trade, which was welcomed by the United States. Both sides agreed that trade policies cannot substitute for climate legislation, but that the two policy areas must be mutually reinforcing.
General agenda, periodic deliverables
Ten working groups cover the vast TTC program: technological standards, climate and clean technologies, secure supply chains, security and competitiveness of information and communication technology services, data governance and technological platforms, use abuse of technologies threatening security and human rights, export controls, investment screening, SME access to digital tools and global trade. While it may be difficult to establish a clear benchmark for the success of these efforts – akin to the jobs and growth resulting from a trade deal – U.S. and EU officials expect to be able to announce periodic deliverables, for example coordinated grants for semiconductors or complementary approaches to AI Regulation. These incremental developments may not make the headlines, but will be of critical interest to the businesses and organizations involved.
For example, the global semiconductor shortage and their fragile supply chains were high on the TTC’s agenda. Both the EU and the US have been hit by semiconductor shortages, especially as both depend mainly on Taiwan, which has a virtual monopoly on production. The two sides have already started to take legislative measures to rebalance their dependence on the European flea law and CHIPS for America Act. The Pittsburgh meeting was, however, an opportunity for both parties to express their commitment to coordinate measures to further improve transparency in this area.
In addition, trade-distorting and non-market practices have provided the transatlantic partners with several points of common interest. There was general agreement to share information on certain sectors, especially new and emerging technologies. China’s growing presence and dominance in these areas has provided additional motivation for both sides to agree to unite to maintain their competitive advantage. It was agreed that a joint effort would be more likely to dampen China’s efforts than two uncoordinated policies.
In addition, the United States has particularly emphasized the importance of developing national measures to address non-market practices. The EU Investment Screening Tool was seen as a step in the right direction, but there is still a significant capacity gap between the two. Closer cooperation and coordination between respective national policies has been agreed to provide the best chance to counter distorting practices.
Cooperation on key technologies of the future is also expected to continue to determine the TTC agenda, given China’s significant advances in areas such as AI. One of the most important issues during the meeting, the US and EU agreed to tie joint cooperation on the development of AI to maintaining and defending their “shared values ââand fundamental freedoms. “.
Separate track from the TTC of the US-EU Technology Competition Policy Dialogue
Along with the TTC, there is another US-EU dialogue on technology competition policy. While the first concerns policy coordination, the second concerns the coordination of enforcement measures, for example between the Federal Trade Commission and DG Competition, or between the Ministry of Justice and their European counterparts. Although at first glance the two dialogues may appear to overlap, they are intentionally separate and involve different groups of individuals from the US and the EU.
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The next TTC ministerial meeting is scheduled for next year, possibly in the spring during the French Presidency of the Council of the EU. Although the diplomatic fallout from the AUKUS agreement continued to cast a shadow over the Pittsburgh meeting and prevented a more vigorous engagement by France, it would undoubtedly be in President Macron’s interest to welcome the TTC in a former factory transformed into a technological hub in the run-up to the French presidential elections. In addition, it may be in the EU’s interest to balance ministerial participation with the inclusion of HRVP Josep Borrell as the counterpart of the US Secretary of State and, more importantly, to build on TTC initiatives. as part of a broader foreign policy agenda.
The Covington team is well placed to advise you on these policy developments and how to engage with relevant decision makers in these areas.
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