Comment

Key takeaways from the inaugural EU-U.S. Trade and Technology Council meeting

Carisa Nietsche / Oct 2021

Photo: European Union, 2021

 

On September 29, the European Union and United States hosted the inaugural Trade and Technology Council (TTC) meeting in Pittsburgh, Pennsylvania. As an official stated in advance of the meeting, analysts should not expect fireworks from the inaugural meeting. While there were no fireworks and few tactical policy recommendations, the resulting joint statement outlined the United States and European Union’s priorities moving forward in trade and technology. Several issues topped the agenda in the inaugural meeting. How these issues are addressed in the upcoming working group meetings will outline the path forward for transatlantic cooperation across a variety of areas.

The TTC joint statement identifies semiconductors as a top priority for the transatlantic allies. Shortages across the global economy and geopolitical concerns about manufacturing concentration in Taiwan, who holds 92% of leading-edge capacity, have necessitated improving semiconductor supply chain resiliency in the United States and Europe. To this end, the U.S. Congress passed the CHIPS Act in January to elevate the priority of semiconductors, and recently the U.S. Senate passed a bill appropriating $52 billion to improve semiconductor supply chain resiliency. Similarly, the EU Commission President Ursula von der Leyen outlined the EU’s goals for semiconductor supply chain resiliency in her State of the Union address.

Although von der Leyen’s speech outlined the importance of semiconductor production, Europe’s semiconductor strategy remains unclear. The absence of a clear strategy and prioritization from Europe threatens to hobble transatlantic cooperation in this domain. Without a clear vision of Europe’s priorities or goals, the partners are unable to determine complementarity in their strategies or how to chart a course forward for cooperation. Moving forward, Europe must define their overarching goals in this space. Only then can the TTC’s supply chain resiliency working group coordinate the transatlantic partner’s efforts and subsidies to create the most impact, while avoiding a subsidy race between the United States and Europe.

Developing and implementing trustworthy artificial intelligence was another focus area in the joint statement. The United States and European Union acknowledged the importance of human-centered AI and recognized each other’s regulatory regimes. As the United States builds AI regulations, the United States should strive to align its AI Risk Management Framework with the European Union’s Artificial Intelligence Act. Recognizing their respective regulatory frameworks in the joint statement is a good first step toward more aligned regulations on artificial intelligence, which are critical to counter authoritarian uses of artificial intelligence.

However, a stumbling block in transatlantic cooperation on artificial intelligence will be an absence of alignment in data privacy regulations. The TTC did not address data privacy in their inaugural meeting, which was a disagreement between the United States and Europe going into the first meeting. The European Union advocated keeping privacy negotiation separate from the TTC and operating in parallel in the negotiations to determine a Privacy Shield successor, given that data privacy deals with citizens’ rights. Eventually, data privacy needs to be discussed in the TTC, given that data underpins most critical technologies on which the transatlantic allies must lead. Without close enough alignment on data privacy, the United States and Europe will struggle to collaborate on critical technologies moving forward. When the Technology Standards and the Misuse of Technology Threatening Security and Human Rights working groups convene, they must discuss opportunities for collaboration on critical technologies, such as artificial intelligence, in spite of misalignment on data privacy.

The protect agenda, or how to protect critical technologies and build transatlantic resiliency, was another priority area of the joint statement. The statement focused on the next steps for transatlantic investment screening mechanisms. In the past year, investment screening cooperation focused on sharing best practices for establishing investment screening regimes in the European Union. With most EU member states establishing investment screening mechanisms, the statement rightfully takes the next step and focuses on how the United States and Europe can share best practices and information on focus critical technologies. Additionally, the statement highlighted the importance of multilateral export controls. After four years of the Trump administration’s overuse of unilateral export control actions, the United States’ commitment to multilateral export controls was a welcomed development for the European Union. In order to cooperate in this area, the export controls working group should focus on sharing best practices to strengthen EU member state export control regimes and identifying technologies to restrict.

The next few months will set the tone for the transatlantic technology relationship for the next decades. For democratic actors to prevail in the global technology competition, the United States and Europe must align their regulatory and privacy regimes as closely as possible. Only by establishing a strong foundation based on shared values will the transatlantic partners be able to secure transatlantic technology leadership and outcompete authoritarian actors seeking to use technology for their own ends.

           

Carisa Nietsche

Carisa Nietsche

October 2021

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