Mon. Dec 5th, 2022

The U.S.-EU Trade and Technology Council (TTC) had its
first birthday
this September, but its ultimate role and importance still remain uncertain. The Biden administration has touted this initiative alongside the Indo-Pacific Economic Framework (IPEF) as examples of a new trade vision that goes beyond market liberalization and formal trade commitments. Yet neither the TTC nor the IPEF is
concrete evidence
of a novel, coherent regional trade regime. And both the IPEF and the TTC are haunted by the
negotiating failures
of the Obama era, fully enforceable
Transatlantic Trade and Investment Partnership
and the original
Trans-Pacific Partnership
.

To review briefly, the TTC
is
a multiheaded council, with the U.S. trade representative, Department of State, and Department of Commerce representing the U.S. and the commissioners of trade and competition representing the EU—with other agencies participating as needed. The council’s
broad mandate
is intended to encompass the major challenges to democracies stemming from nondemocratic, state-directed economies (read China).

More specifically, at the first meeting last year in Pittsburgh, some 10 technologically oriented working groups
were established
in key strategic areas, such as semiconductors, artificial intelligence (AI), export controls, cybersecurity and human rights, and climate change and the environment. Though these working groups have been at work for some months, the TTC is slated to only meet formally twice a year: This year’s first meeting was held last May, and the next meeting is scheduled for December.

In terms of
results
over the past year, the TTC has been credited with facilitating a joint response to Russia following its invasion of Ukraine. Measures the council took included aiding in imposing export controls and sanctions on Vladimir Putin’s regime. Further, the working group on standards has
moved forward
with substantive plans to coordinate U.S.-EU development in emerging technologies—notably, AI.

Industries on both sides of the Atlantic have been strongly supportive of the initiative, but they are already
warning
that momentum is waning and future tangible results may be disappointing. One problem may well be the very structure and modus operandi of the council itself. A multiheaded program that meets only twice a year and is underpinned by multiple working groups staffed by diverse bureaucrats from numerous agencies is not an ideal arrangement for decisive action. For instance, months after the TTC was established, the US passed the
Inflation Reduction Act
, which includes
clearly discriminatory provisions
against EU member states (and other countries) on subsidies in the development of electric vehicles.

Moreover, despite the common front in the face of Russian aggression, on central technology and trade issues, there remain long-standing differences between the two allies. For example, though the effort on AI standards is sincere, the EU is moving toward a much more restrictive regulatory approach than the U.S. And while the two have reached a compromise on a privacy shield for cross-border data flow, there is still
disagreement
over the details of cloud governance, including an EU cybersecurity certification proposal. Similarly, though the two sides have pledged close cooperation on semiconductors, including subsidies and tangibles from the
US CHIPS and Science Act
, each side seems to be moving ahead with internally generated plans, and thus far, there is little evidence of results on a joint semiconductor supply-chain policy.

Understandably, there is a great deal of pressure to produce meaningful deliverables at the December meeting, and possible areas include a joint declaration on human rights, pledge for greater transparency on supply-chain management, aid for small- and medium-size businesses, and increased cooperation on clean technology development. The administration
announced
this week that, at the upcoming meeting, the TTC will launch a joint effort to curb the influence of Chinese technology in African and Central American nations, particularly with regard to digital connectivity and governance.

Still, at this point, even with the strongest of wills, there
remain
formidable obstacles to joint technology and trade policies—not least the EU adherence to the ex ante precautionary principle on emerging technologies and the U.S. preference to deal with problems only after they explode into actual issues. Only time will tell if the TTC will produce meaningful results.

This article originally appeared in the AEIdeas blog and is reprinted with kind permission from the American Enterprise Institute.





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