What is the US-EU Trade and Technology Council? Five things you need to know

Chad P. Bown (PIIE) and Cecilia Malmström (PIIE)

September 24, 2021 5:00 AM
Image credit: 
REUTERS/Yves Herman

Semiconductors are in short supply, limiting the production of automobiles in both the United States and European Union. The stunning spread and potential abuse of technologies like artificial intelligence (AI) is potentially impacting everything from digital commerce to surveillance of minorities to voting and thus to democracy itself. The spectacular rise of China's state-driven economic model is posing new challenges for a postwar trading system that had mostly market economies in mind when it established guardrails to help shepherd global economic integration.

These are but three of the many challenges US president Joseph R. Biden, European Commission president Ursula von der Leyen, and the president of the European Council, Charles Michel, decided to take on jointly in June when they launched a new trans-Atlantic forum. On September 29, 2021, in Pittsburgh, PA, the United States and the European Union will meet and start the complex task of defining—and then beginning to tackle—a seemingly endless list of problems.

The new EU-US venue is being dubbed the Trade and Technology Council (TTC). Plenty of issues confront the democracies and market economies of the West, including authoritarian regimes' potential misuse of economic policy tools, as well as technological innovation, to suppress human rights and distort competition and investment. At the same time, the US and EU have a shared history of bilateral disagreements on trade and technology that they can no longer ignore. Pressing global challenges such as climate change are demanding enhanced efforts at trans-Atlantic cooperation as well.

Despite so much on the agenda, the TTC's first meeting in Pittsburgh was cast in doubt at the last minute. Unhappy with the Biden administration's new submarine deal and security pact with Australia and the UK, France demanded the European side boycott the session. It took a call from Biden to President Emmanuel Macron of France on September 22 to calm tensions and ensure the TTC would go ahead as planned.

What the TTC will ultimately become is still a work in progress. Here are five things to know so far.

1. Who's in charge and what's TTC going to cover?

The United States and European Union have appointed some of their most important senior officials to shepherd the TTC. The US side is co-led by Secretary of State Antony Blinken, US Trade Representative Katherine Tai, and Secretary of Commerce Gina Raimondo. EU Commissioner for Competition Margrethe Vestager and Commissioner for Trade Valdis Dombrovskis are coordinating for Brussels. Other government agencies (as well as the White House itself) are also participating. The array of involved ministers is the first indicator that the TTC will likely span trade, competition, technology, and foreign policy.

The TTC starts with ten issue-oriented working groups (see table). The topics range from workers to supply chain resilience (e.g., semiconductors), to technology standards (e.g., AI, Internet of Things), to climate policy (e.g., carbon border adjustment mechanism), to enhanced cooperation over export controls and screening of foreign investment, to what to do about countries that employ forced labor or operate nonmarket economies.

US-EU Trade and Technology Council
TTC Working Group Topics US Departments EU Directorates General
Technology Standards Cooperation Artificial Intelligence, Internet of Things Commerce CONNECT
Biotechnology, Pharmaceutical products, medical devices GROW
Additive manufacturing, robotics, blockchain, other emerging technologies  
Climate and Clean Technologies Climate, energy, and environmental initiatives that involve trade and technology State CONNECT
USTR CLIMA
Energy GROW
Secure Supply Chains Semiconductors Commerce TRADE
Batteries, critical minerals, active pharmaceutical ingredients State GROW
    CONNECT
ICTS Security and Competitiveness Data security standards State CONNECT
Secure, resilient, and diverse telecommunications and ICT infrastructure supply chains, 5G/6G Commerce
Data Governance and Technology Platforms Establish responsibility of technology platforms, content regulation, targeted advertising and use of big data White House CONNECT
JUST
Misuse of Technology Threatening Security & Human Rights Counter cyber threats and technology used to violate human rights State CONNECT
Address those conducting information / disinformation operations EEAS
  JUST
Export Controls Cooperation Align export controls, improve information sharing and assess risks for sensitive and emerging technologies, including surveillance technologies impacting human rights Commerce TRADE
State
Investment Screening Cooperation Improve information-sharing for screening of inbound foreign investment Treasury TRADE
State
Promoting SME Access to and Use of Digital Technologies Empower SMEs to reach more clients, ensure digital technologies benefit underserved communities Commerce GROW
CONNECT
Global Trade Challenges Trade policy toward non-market economies USTR TRADE
Avoid new technical barriers to trade with each other
Trade and labor, including forced labor
Other
ICTS = Information Communication Technology Services; SME = small and medium-sized enterprise; USTR = US Trade Representative; CONNECT = Directorate-General for Communications Networks, Content & Technology; CLIMA = Directorate-General for Climate Action; GROW = Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs; TRADE = Directorate-General for Trade; EEAS =  European External Action Service; JUST = Directorate-General for Justice and Consumers.
Source: Constructed by the authors.

2. Is the TTC a US-EU free trade agreement?

No. The two sides have not signaled intention to discuss reciprocal cuts to their import tariffs, as typically arises through rounds of trade agreement negotiations. While each side has examples of applying high tariffs on trans-Atlantic trade in certain products—e.g., EU tariffs on cars, US tariffs on pickup trucks—on average, each already offers relatively low duties toward the other's exporters through tariff commitments implied by membership in the World Trade Organization (WTO).

Under the Obama administration, the United States and the European Union had attempted to negotiate a comprehensive agreement called the Trans-Atlantic Trade and Investment Partnership (TTIP). Negotiations began in 2013 but failed to conclude before President Barack Obama left office in January 2017. The Trump administration showed no interest in continuing the talks, and the Council of the European Union declared the TTIP negotiations "obsolete" in April 2019, when instead it began engaging with Trump over a more limited set of potential tariff reductions for industrial goods. The result was little beyond a deal involving tariff cuts for lobster and prepared meals in August 2020.

The TTC appears intent on avoiding tough issues that have stymied trans-Atlantic negotiators in the past, such as investor-state dispute settlement (ISDS), which became a lightning rod for civil society protests against the TTIP. ISDS is a special court by which foreign investors can sue governments when unexpected and discriminatory changes in the regulatory environment cause economic harm to their investment. (Critics argued that such courts favor investors over consumers, citizens, and workers and prevent policymakers from implementing needed regulations.) But the TTC does not mention agricultural issues either, including market access for farm imports, old technical barriers to trade (e.g., genetically modified foods, geographical indications), or farm subsidies. There is also no reference to the hot button issue of government procurement.

TTC leaders may have learned one other important lesson from TTIP's failures. A lack of transparency contributed to TTIP's unpopularity, especially in Europe. The European Commission held a public briefing on TTC with civil society groups even before the first meeting. While not specific to the TTC, USTR Tai has prioritized transparency and inclusion (i.e., "giving workers a seat at the table") for the Biden administration's entire "worker centered" trade policy.

3. Where's China?

European officials want to avoid the TTC simply becoming an unproductive exercise at China-bashing. In Europe and many places outside of the United States, Trump's trade war and approach to tariffs, the phase one agreement, as well as continued US tensions with Beijing, all signal Washington has made little progress by confronting China unilaterally. France, Germany, and other EU member states generally are eager to avoid a new cold war with China. On the other hand, the Biden administration likely views the TTC as one of the primary vehicles to be used to fulfill its campaign promise to differentiate from Trump's unilateral approach in order to "work with allies" on China. How the two sides balance their goals remains to be seen.

Shared trans-Atlantic concerns exist over China's approach to trade and technology, even if China is not mentioned by name. Last December, the EU made an overture to the new US administration by issuing a blueprint for new cooperation that endorsed "the strategic challenge presented by China's growing international assertiveness, even if we do not always agree on the best way to address this."

The first TTC exercise may thus be to simply identify which parts of that "strategic challenge" are worth worrying about jointly. Obvious candidates are improved coordination of export controls and foreign investment screening, standards for technologies such as AI, as well as discussions over how to address nonmarket economies and forced labor.

4. When and where will they meet?

The first TTC summit is scheduled for September 29 in Pittsburgh, a city undergoing an economic transformation from heavy industry to becoming a technology hub. What happens after that is not yet announced. Nevertheless, a relatively continuous and ongoing staff-level engagement is likely, with periodic summits to take stock—and potentially announce "deliverables." The TTC may even become a semi-permanent forum, since the issues are certain to remain and even grow, and no cutoff of the discussions is planned.

Indeed, the TTC may be better thought of as an institution where domestic policymakers in Europe and the United States are in continuous dialogue with foreign counterparts, rather than in negotiations trying to arrive at a final document. Both sides recognize they are in this together for the long haul.

5. What will they deliver in Pittsburgh?

No matter what, the TTC has to be seen as a good thing. The Trump administration destroyed institutions and relationships, either deliberately or through neglect. Trans-Atlantic ties were not spared.

Reconnecting a new generation of high-level US and EU policymakers is thus a necessary first step. Without direct channels, repeated interactions, and ways of establishing trust, the Biden administration may continue to stumble through policy miscommunications, as occurred over the security cooperation announcement with Australia and the UK, leading to the row with France that threatened the TTC kickoff meeting. (Earlier communication failures included details over the decision to withdraw from Afghanistan or negotiate over an intellectual property rights protection waiver for COVID-19 vaccines.)

While keeping expectations in check, the two sides should produce a TTC mission statement at Pittsburgh. The topics of some working groups—such as semiconductors, export controls, and investment screening, as well as forced labor—may be further along than others. On the other hand, Pittsburgh attendees may have to put other difficult bilateral irritants aside, including what to do about Trump's steel and aluminum tariffs or how to negotiate change to dispute settlement at the WTO.

Nevertheless, simply meeting in person and getting US and EU policymakers started would be a sorely needed sign of progress. Such is the sorry state of a post-Trump, mid-pandemic world.

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