There is newfound urgency on both sides of the Atlantic. The rekindling of a transatlantic sense of purpose following Russia’s invasion of Ukraine is seen keenly in the
Joint Statement released after the second Ministerial Meeting of the Trade and Technology Council (TTC) in Saclay on 15 and 16 May. Areas for cooperation across the TTC’s 10 constituent working groups, identified in the first meeting in Pittsburgh, have been looked at anew.
China remains the implicit adversary, but Russia’s emergence as the immediate threat-in-chief is evident. Supply chain pressure relief, export controls, investment screening, and the coordination of trade responses to non-market policies and practices are adjusting to a
paradigm shift in Western economic thinking.
Transatlantic collaboration on AI management tools, SMEs’ digital transformation and climate issues are no less relevant, although their scope has not been as directly affected by the war.
The key message of the second TTC meeting can be found in the words of US Trade Representative Katherine Tai after the ministerial meeting: “
Good work and results: the reward for that is more work, and more results.” The use of the TTC as a cooperation framework is only in its initial stages but, EU and US politics allowing, it promises to be a structuring endeavour for years to come, directly connecting policy communities on both sides of the Atlantic. With trust in the process increasing all-around, concrete outcomes and more contentious areas of transatlantic relations should now be honed in on. After Pittsburgh, Saclay must be the budding of the flower, not the falling of the petals.
The EPC Round-up assesses pivotal EU policies from different angles. It collects contributions from EPC analysts and experts in the field, bringing together various points of view for a more comprehensive and nuanced picture.
At the outset, for the US, the TTC was about containing China. The EU’s ambition was to pull the US closer to European values in platform regulation and the green transition and overcome trade irritants. Now, faced with the Russian war on Ukraine, the EU and the US have found a common direction in the TTC and, perhaps, more fundamentally, a sense of shared identity.
To face down the authoritarian alternative, extending from China and Russia across the globe, the West must revive economic security cooperation across the board. Technology and trade are at the crux of liberal democracy’s future through their compounding role in prosperity, security and sovereignty. And in the superpower marathon with China – a race likely to span generations –, all efforts will count. The EU and US have worked together successfully on export controls over the past months, which is a promising start. But it is not enough. The TTC’s work now needs to go deeper and be more concrete across all ten working groups.
Trade barriers, such as the tariff-rate quotas that still prevail in steel and aluminium, prevent long-term investment decisions in Europe and the US and contribute indirectly to our import dependence on China. Our supply chains will be more resilient if they are effectively greened with Western technology. Setting standards for trustworthy AI is about not only protecting our own societies but also defining the technologies we will not put into the hands of our enemies. Reining in Big Tech platforms is fundamentally about preventing the breakdown of our economic, societal and democratic fabric.
In short, what is needed in the next months and years is an effective synthesis of the EU’s and US’ original TTC ambitions. After Saclay, can they do it?
The EU and US are attempting to bring transatlantic coherence to their domestically driven initiatives to increase supply chain resilience, particularly for semiconductors and raw materials. This makes sense: supply chains are deeply globalised, in most cases spanning across not only EU–US jurisdictions but also multiple countries outside their borders.
The TTC conclusions acknowledge that international cooperation on supply chains is necessary if the drive towards more resilience is not to be rendered ineffective or counterproductive. But the joint tools to actively manage supply chain risks are clearly still underdeveloped. While there is language on coordinating approaches, including on research and development and investment, and a commitment to consult and dialogue, there is little concrete substance.
Still, even merely designing domestic measures in such a way as to reduce their undesirable international spill-overs would be a step forward. There are a number of areas, like clean tech or semiconductors, where attempts to onshore production would cause considerable tension between the EU and US if it triggered protectionist policies or a subsidy arms race. Some of statement’s most concrete language is in the latter area. Furthermore, the TTC promises the development of joint tools to coordinate monitoring and information flows to avoid bottlenecks building up, such as an early warning pilot for semiconductors. Such coordinating action could well help address poor transparency and information flows in the international private sector. However, it is far from clear whether this will lay the groundwork for more coordinated policy interventions, or whether policy initiatives will remain predominantly domestic.
The TTC’s ambition on supply chains, standards, AI, 5G and 6G and other digital policies is yet to spill over to the ‘classic’ trade files. The Joint Statement is essentially an ambitious declaration of intent on strengthening information exchange and coordination in investment screening, areas like ‘trade and labour’ and ‘trade and climate’, and ‘non-market policies and practices’ (i.e. China). Binding commitments enshrined in international agreements are not yet envisaged. The focus of the TTC is on non-tariff barriers, supply chains, and digital and regulatory issues, which for legal and political reasons are hard to cover in binding treaties.
Sensitive trade files are largely left outside the scope of the TTC, including how to deal with the remaining US Section 232 tariffs on EU exports of steel and aluminium and the finalisation of a new data transfer agreement. The notable exception is cooperation on export control, as stressed by officials on both sides. The working group in question has proven extremely effective in coordinating export controls which deprive Russia of critical technologies and weaken its military capacity.
Although the TTC’s soft approach will not result (in the short term) in binding and enforceable trade commitments, it can anticipate and prevent trade irritants, such as on the EU’s numerous new and envisaged autonomous trade measures covering public procurement, foreign subsidies, the Carbon Border Adjustment Mechanism or anti-coercion. Moreover, the frequent meetings of the TTC Working Groups build trust and can lay the groundwork for sectoral agreements at the bilateral or multilateral (WTO) level. Concrete deliverables are already expected by the next TTC meeting in the US in December 2022.
Eight months on from the Pittsburgh summit, the Saclay statement shows that the EU and the US, spurred by the war in Ukraine, are now aligning more closely in digital affairs.
The document’s commitment to the principles of the Declaration for the Future of the Internet recognises the urgency to protect a free and open cyberspace against expanding authoritarian rule. Since the last TTC meeting, Russia has accelerated its transition to
RuNet, preventing its citizens from accessing information outside of the Russian infosphere and increasing state control – a model that can be tempting for weak democratic states.
The EU and the US will also cooperate on the governance of new technologies and emerging tech like AI. By preventing trade disputes and reducing the risks of technology misuse, such cooperation will benefit both sides. If done right, it can boost research and innovation and help cover the innovation gaps on both sides of the Atlantic.
Showing that the TTC can also deliver on digital and tech is essential for the project’s sustainability. If it can translate political goodwill into real-life action, it will be an important step towards improved democratic and global digital governance. But first, EU and US efforts must also convince and bring in third countries, notably those in a weaker position vis-à-vis China and Russia, such as Europe’s close neighbours.
The Joint Statement rightly recognises the importance of the green transition and the roles of trade and international cooperation in supporting climate action; addressing challenges related to biodiversity, environmental degradation and pollution; and enabling the global transition to a circular economy.
However, more ambition is needed on three accounts:
1. The recognition of solar power as a central component to a net-zero Western economy, which would reduce energy costs and bolster energy security across the Atlantic, is welcome. But addressing the challenges in the solar supply chain is only one area for collaboration. There are many more opportunities to cooperate to advance the
clean energy transition and the circular economy and address supply chain challenges.
2. While it is promising to see references to the
twin green and digital transitions, there is scope to do much more to align these agendas for the benefit of our society, economy and the planet. There is great potential for collaboration when it comes to
using data and digital solutions to address sustainability challenges and greening ICT. One concrete area is
digital product passports.
3. The envisaged EU–US collaboration on
food security must be aligned with long-term sustainability considerations. This means reducing greenhouse gas emissions from the agricultural sector, halting biodiversity loss, promoting healthy diets, ensuring animal welfare, and building on nature’s potential to support climate action.
Throughout the Joint Statement, the invasion of Ukraine looms large. Russia’s decision to unleash war on European soil is helping consolidate EU and US resolve on China. This is apparent throughout the document, from its emphasis on shared democratic values to repeated calls for the regulation of emerging tech and AI to be aligned with human rights.
That the TTC’s original nexus was China rather than Russia is evident in certain parts of the Saclay statement, particularly on solar supply chains. But across the working groups, having had to shift their focus after 24 February, the Chinese targeting has become less clear. The geopolitical upheaval wrought by Russia’s invasion has rightfully affected the TTC. The war is the emerged iceberg around which Western coordination and cooperation have rallied and found purpose. Below the surface and looking to the future, the TTC’s entire body of work will be fundamental in setting up the necessary transatlantic dialogues to tackle the threat of China’s non-market policies and Beijing’s disregard for a human rights-centred approach to emerging technology.
The TTC must pursue the work it has set out and be ambitious when moving forward. The areas it has promised to tackle should be addressed, and the possibility of opening up new areas for collaboration must not be shirked away from. The framework has started to prove its ability to connect policy communities across the Atlantic, and such coordination will prove essential long after the immediate geopolitical crisis has waned, and the looming challenge of China’s construction of an illiberal world order comes to the fore.
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