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Tech & Digitalisation

What is the US-EU Trade and Technology Council?

Commentary16th June 2021

Chapter 1

  • Following years of transatlantic tensions on tech policy, the US and EU have announced a new Trade and Technology Council (TTC) to cooperate on standards, semiconductor supply chains, regulatory frameworks and China policy.

  • The Council’s working groups will focus on immediate issues where incentives are aligned, such as technical standards and semiconductor supply chains, as well as longer-term coordination on technology investments and regulatory alignment.

  • Success is not guaranteed, however: the geopolitical incentives and regulatory philosophies of the EU and US are still far apart in many areas.

  • Even if the EU and US can work together, they cannot go it alone. With 3.7bn people still lacking internet access, and China in place to provide the necessary financing and support to fix that, a more internationalist strategy will be necessary to safeguard and expand the global, open internet.

Chapter 2

What Will The Council Do?

The White House statement announcing the TTC sets out several aims, including growing bilateral trade between the US and EU; strengthening cooperation on global technology policy, semiconductor supply chains and international technical standards; promoting US and EU innovation; and exploring regulatory alignment. Many of these objectives are in response to growing competition with China.

This agenda will be delivered via working groups focused on:

  • Critical supply chains, inc. a new US-EU partnership on the rebalancing of semiconductor supply chains to ensure:i) security of supply, andii) capacity to design and produce the highest-performance chips

  • Technology standards (including AI, Internet of Things and other emerging technologies)

  • Climate and green tech

  • ICT security and competitiveness

  • Data governance and technology platforms

  • Misuse of technology threatening security and human rights

  • Export controls

  • Investment screening

  • Promoting SME access to, and use of, digital technologies

  • Global trade challenges

There will also be an adjacent US-EU joint dialogue on competition policy and a new joint initiative on biotechnology and genomics standards will be explored. Finally, the US and EU will continue trying to find an agreement on cross-border data flows, after the EU-US Privacy Shield data transfer framework was struck down by the EU’s Court last year, though negotiations on this issue have been stalling for some time.

Chapter 3

Why Is This Happening Now?

President Biden’s refreshing approach to working with international allies provides the foundation for improved cooperation, while US and EU leaders also have a shared political incentive to tackle the biggest issues in technology policy.

However, while broad alignment on global tech regulations remains challenging, there is also a ‘hidden frontier’ in internet policy that is becoming more fractious: technical standards, submarine cables and semiconductors are all being co-opted by geopolitics, putting at risk the future of the open internet, the free flow of data, and supply chain security. These immediate issues are shared by both the US and EU, with Commission EVP Margrethe Vestager recently highlighting the need to protect “the open, un-fragmented and free nature of the internet”. These near-term concerns may have motivated this new initiative.

Chapter 4

Are There Any Obstacles?

The liberal democracies of the US and EU have long seemed like they should be natural partners on technology policy. But until recently, transatlantic debates about global standards on tax, data privacy, competition and content moderation saw few signs of progress. This is because, across many long-term issues, they have fundamentally different geopolitical incentives and regulatory philosophies.

The US is home to several major tech champions that are systemically important to the global internet economy. In contrast, while there are some large tech companies based in the EU, they do not provide the same sort of geopolitical leverage from which the US benefits. As such, the EU has turned to regulation as a tool to reclaim its ‘digital sovereignty’, in the process promoting proposals on data localisation, privacy, competition and AI transparency that challenge the US tech sector.

Meanwhile, binary, ‘Cold War’ analogies that frame China as a common enemy to motivate cooperation are also limited. China is not a monolith: it is a partner, competitor & adversary all at once and the EU is wary of joining public condemnations or getting into a full trade war.

However, while these obstacles mean longer-term cooperation is not assured, creating the TTC is nevertheless a welcome step: recent negotiations on a global tax deal demonstrated the importance of strong, multilateral institutions (e.g. G7) already being in place once incentives change and negotiations start to progress. To that end, creating this new institutional infrastructure is at least a promising enabler for future global cooperation.

Chapter 5

What's Missing?

While a new Council formed by a ‘coalition of the willing’ may be useful to deal with many issues today, the US and EU must also look ahead to where the internet is headed. 3.7 billion people still have no internet access. On present trends, low- and middle-income countries seeking to build this connectivity are likely to receive the necessary financing and institutional support from China, threatening the hegemony of the open, free internet. Notably, despite rumours that the plans would include a coordinated pushback on authoritarian internet restrictions and shutdowns, this did not make the final statement.

If the US, EU and G7 offer little to emerging economies by way of internet infrastructure financing and capability support, China will be free to use its support to export its domestic, authoritarian internet model further. So while cooperation among the world’s largest democracies is necessary, it’s not sufficient. Without a more internationalist strategy, in closing one digital divide we risk simply creating another – this time over who has meaningful access to the free, open internet.

Next month we will be setting out what this more internationalist strategy may look like. Get in touch if you’d like to discuss! @andrewjb_

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