The EU-US Trade & Technology Council: Red Light & Green Light

After years of political tensions, representatives from the United States and the European Union are trying to mend the transatlantic partnership and leverage it to address major global challenges. The inaugural joint meeting between the EU and the US on the Trade and Technology Council (TTC) took place in September 2021 and raised the bar of future expectations.

They say love is in the eye of the beholder, and many in Brussels saw such a high-level policy forum as a testament to a rekindled transatlantic relationship. The EU sees this as an opportunity with potential spillovers in the areas of climate change, upholding democracy, and reducing trade and defence tensions. For Brussels, the TTC is as an open platform for transatlantic cooperation and global engagement.

However, for the time being, Washington’s eyes are mostly on China. All of the ten joint working groups established under the TTC have a direct bearing on the most pressing challenges coming from Beijing. From technology standards and secure supply chains to investment screening and export controls, one can clearly see what whets the appetite of the US administration. For Washington, the TTC is a specific tool mainly for transatlantic cooperation on China containment.

China’s rise, of course, is an acute concern for the European Union, as well. The economic onslaught of state-backed Chinese digital companies internationally and Beijing`s aggressive posturing on trade, investment, and military-related issues is raising red flags in European capitals. The US fixation on China might seem a bit over the top for some more dovish European leaders who want to navigate the situation aptly and avoid confrontation; however, the TTC is a chance that must be seized for overlapping trans-Atlantic interests.

How should the EU position itself in the upcoming TTC meetings? On which fronts should we press ahead and on which should we stand our ground when negotiating with the US?

Green Light

The TTC needs to be part of a comprehensive effort to contain China and also secure vital European interests internationally. When it comes to China, we need to oppose the Chinese Communist Party, whose authoritarian leadership is becoming a threat to NATO Allies and other like-minded partners. Rigorous foreign investment screening needs to saw off corrosive capital channelling from Beijing which aims to buy positive narratives, influence, and economic dependencies. Joint EU-US export controls on our advanced technologies, which end up in the hands of autocrats, is extremely needed, if it isn’t too late already. Moreover, common technological standards should protect European and American citizens from foreign technology riddled with vulnerabilities and personal data scrapers. These tools should act as a deterrent and help us consolidate a joint tech front.

The EU should ensure that the long-term success of the TTC also entails raising the bar of personal data protection within the US. It is embarrassing to remember that in 2020, the European Court of Justice invalidated the EU-US Privacy Shield Framework under which data was shared across the Atlantic. The American personal data regime doesn`t provide sufficient safeguards that European data flows are handled adequately, due to official US government surveillance. If the two economic blocks are to stand united on trade and technology, fixing data flows is the basic pre-condition for a successful Tech Alliance.

The linkage with climate change is more nuanced and uncertain. The only pertinent point from the first TTC meeting is the reference to ‘climate and green tech’. Again, this is covertly aimed at China as the country dominates solar panel and battery cell production. The Asian hegemon is also in a leading position for the extraction and processing of critical raw materials essential to renewable infrastructure. For the time being, investing heavily in renewables, batteries, and clean tech effectively means directly subsidising China. The TTC should alter this trend. If Brussels plays its cards right, the TTC could also become a potential springboard to convince Washington on the future implementation of a transatlantic carbon border adjustment mechanism (CBAM) that negates carbon leakages to global polluters with lower environmental standards such as Russia, China, India, Turkey, and Mexico. This would be a hard sell to the Americans, but the EU should pursue it nonetheless.

Red Light

The EU should make sure that the TTC isn’t exploited as a forum where the US government tries to apply pressure to water down existing European tech regulation. Issues such as competition law in the digital realm, personal data rights or content regulation concern our internal market of 450 million Europeans. Actually, the US Department of Justice and many American lawmakers on both sides of the aisle share some of the serious issues we are trying to address in the digital domain. European member states already folded on the question of a fair digital tax across the EU under severe pressure from the US. The EU has to stand its ground on digital issues within the TTC.

On the trade front, the TTC shouldn’t be an excuse for the EU not to strengthen its own arsenal on responding to external pressure. In a best-case scenario, the joint EU-US forum would be an insurance policy for Brussels that we can react jointly on global trade challenges or threats to our supply chains. However, wounds are still fresh from the steel and aluminium tariff disputes between the EU and the US, which were imposed by Washington on extremely shaky ‘national security’ grounds. China’s ban on Lithuanian exporters and targeted economic sanctions on the Baltic nation are an additional case in point. The EU needs to be able to respond and deter such whims with unilateral instruments at its disposal. The recently unveiled anti-coercion trade tool by Commissioner Dombrovskis is an extremely positive sign that the EU is not dragging its feet while others are sharpening axes.

This is not a trade negotiation but the EU should pay attention that it doesn’t repeat some mistakes from the past, which derailed the TTIP agreement several years ago. There should be maximum transparency of the whole TTC process and active engagement with all related political, business, industry, and civil stakeholders from across the Atlantic.