Last month, the US-EU Trade and Technology Council (TTC) held its inaugural ministerial in Pittsburgh: US Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, and Trade Representative Katherine Tai met with European Commissioners Margrethe Vestager and Valdis Dombrovskis. Only three months after the TTC process was launched at the US-EU summit, the two sides committed to significant steps in coordinating policy on issues such as investment screening, export controls, artificial intelligence (AI), semiconductors, and global trade challenges. The meeting also included stakeholder outreach with industry and labor groups, and was followed with further engagements with the private sector and civil society.

Leveraging Half of Global GDP

The TTC’s core logic is that the US and EU can jointly shape the global economic rules for the 21st century, given that the two sides continue to collectively represent nearly half of the world’s income. To be sure, a broader format such as the G-20 represents an even larger proportion of global GDP. But the G-20 also includes authoritarian states such as Russia and China, which do not share the same values and interests as Europe and America. Arguably, the TTC could benefit from the participation of other leading democracies, such as the United Kingdom or Japan, but there are no current plans to expand its membership.

The reinvigorated commitment towards a strong US-EU partnership also saw room for more topical issues to be included into the discussions. The EU seized the opportunity to highlight the importance of climate change for trade, which was welcomed by the US. Both sides agreed that trade policies could not substitute climate legislation, but that the two policy areas should reinforce each other.

Broad Agenda, Periodic Deliverables

Ten working groups span the TTC’s broad agenda: tech standards, climate and clean tech, secure supply chains, information and communication technology services security and competitiveness, data governance and tech platforms, tech misuse threatening security and human rights, export controls, investment screening, SME access to digital tools, and global trade. Although it may be difficult to develop a clear benchmark for success for these efforts—akin to jobs and growth yielded from a trade agreement—US and EU officials expect to be able to announce periodic deliverables, e.g., coordinated subsidies for semiconductors or complementary approaches to AI regulation. These gradual developments might not capture public headlines, but will be of crucial interest to affected firms and organizations.

For instance, the global shortage of semiconductors and their fragile supply chains was high on the TTC’s agenda. Both the EU and US have been adversely affected by semiconductor shortages, especially given that both rely primarily on Taiwan, which holds a near monopoly on production. The two sides have already begun to take legislative steps towards rebalancing their dependence with the European Chips Act and CHIPS for America Act. The Pittsburgh meeting, however, provided the opportunity for both to express their commitment toward coordinating measures to further enhance transparency in this area.

Furthermore, trade distorting and non-market practices provided the transatlantic partners with several common points of interest. There was general agreement to share information on certain sectors, especially new and emerging technologies. China’s presence and increasing dominance in these areas provided additional motivation for both sides to agree to come together to maintain their competitive advantage. It was agreed that a joint effort would be more likely to mitigate China’s efforts than two uncoordinated policies.

Moreover, the US particularly emphasized the importance of developing domestic measures to combat non-market practices. The EU’s investment screening tool was considered a step in the right direction, but there still exists a significant gap in capabilities between the two. Closer cooperation and coordination between the respective domestic policies was agreed to provide the best chances of countering distortive practices.

Cooperation on key future technologies is also set to continue to determine the TTC’s agenda, given China’s significant strides in fields such as AI. As one of the most significant issues during the meeting, the US and EU agreed to tie the joint cooperation on the development of AI to the maintenance and defense of their “shared values and fundamental freedoms.”

TTC’s Separate Track from US-EU Technology Competition Policy Dialogue

Alongside the TTC is another US-EU dialogue on technology competition policy. Whereas the former is about coordinating policies, the latter is about coordinating enforcement actions, e.g., between the Federal Trade Commission and DG Competition, or between the Justice Department and European counterparts. Although at the surface the two dialogues might appear to overlap, they are intentionally kept separate and involve different groups of individuals from the US and EU.

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The TTC’s next ministerial is planned for sometime next year, perhaps in the spring during the French presidency of the Council of the EU. Although the diplomatic fallout from the AUKUS deal continued to cast a shadow over the Pittsburgh meeting and precluded a more vigorous commitment from France, it would be arguably in President Macron’s interest to host the TTC in an old factory turned tech hub in the run-up to the French presidential elections. Furthermore, it may be in the EU’s interest to balance the ministerial participation with the inclusion of HRVP Josep Borrell as counterpart to the US Secretary of State and, more importantly, to leverage the TTC initiatives as part of a broader foreign policy agenda.

The team at Covington is well placed to advise you on these policy developments, and how to engage with the relevant decision-makers in these areas.