Can the U.S.-EU Trade and Technology Council Succeed?

On September 29, the inaugural meeting of the United States-European Union Trade and Technology Council (TTC) was held in Pittsburgh, Pennsylvania. The stated objective of the TTC is to coordinate U.S. and European approaches to key issues like artificial intelligence and global supply chains, deepen transatlantic ties and encourage the spread of democratic and market-oriented values.

Ten working groups, targeting key areas of concern, have been established:

• Technology Standards Cooperation
• Climate and Clean Technology
• Secure Supply Chains
• Information and Communication Technology and Services Security and Competitiveness,
• Data Governance and Technology Platforms
• Misuse of Technology Threatening Security and Human Rights
• Export Controls
• Investment Screening
• Promoting Small- and Medium-Sized Enterprises (SME) Access to and Use of Digital Tools
• Global Trade Challenges

The formation of the TTC comes at a pivotal time in U.S.-EU relations. Recent years saw persistently low levels of cooperation and rising geopolitical tension. The TTC is an attempt to rebuild the transatlantic relationship and leverage that relationship to address global challenges, most notably the rise of China.

The TTC, however, is not the first attempt to align the United States and European Union more closely. Its success may depend on learning from past mistakes.

Before the TTC, there was the 1995 New Transatlantic Agenda (NTA), which was followed by the 1998 Transatlantic Economic Partnership (TEP), the 2007 Transatlantic Economic Council (TEC), and most recently, the Transatlantic Trade and Investment Partnership (TTIP). The NTA, TEP and TEC – all efforts to coordinate policy across the Atlantic and deepen ties – fell victim to enduring regulatory differences between the EU and the United States and domestic sensitivities. The TEC, for instance, was derailed by the longstanding dispute over the acceptability of chlorinated chicken, while disputes over biotechnology and U.S. sanctions helped ensure the accomplishments of the NTA and TEP were relatively limited. Talks to create the TTIP, a large-scale trade and investment deal, were formally launched in 2013, but ultimately became bogged down due to disagreements over regulatory standards and investor-state dispute settlement (ISDS) provisions. The deal was officially declared “obsolete” in 2019.

The design of the TTC should help it sidestep much that befell previous efforts. The highly problematic issues of agricultural subsidies and regulatory barriers to trade have been left off the agenda and the discussions appear to have been targeted to specific areas of engagement where both sides have a strong interest in a tangible outcome. If the TTC can keep focused on tractable issues such as semiconductor supply chains and export controls while avoiding the temptation to hold the TTC hostage to resolve other disagreements, it will have a greater chance for success. Growing concerns about China on both sides of the Atlantic should also help the TTC stay on track.

The TTC did not have an auspicious start, however. A week before the meeting was slotted to begin, the EU members were blindsided by the news of the US, UK, and Australia defense pact (AUKUS). As part of the deal, the US and UK committed to providing Australia with nuclear submarines and Australia abandoned a pre-existing submarine contact with France. The move, described as a “stab in the back” by French officials, nearly derailed the meeting. Tensions were only calmed by a last-minute phone call between President Biden and French President Emmanuel Macron.

During the meeting itself, France refused to commit to moves intended to address the long-term supply of semiconductors. The talks also failed to address the tariffs the Trump administration placed on European steel and aluminum. In September, Valdis Dombrovskis, the EU’s trade chief, said that “time is running out“ for a compromise. Earlier this year, the two parties set out to resolve the issue, one of the largest irritants in the bilateral relationship, by November. There are suggestions that the United States is exploring a quota system as a potential compromise, but there is no official word of when or how the longstanding dispute will be resolved.

Once the meetings got underway though, some bright spots were clearly visible. Both sides largely agreed on the urgent need to identify and close gaps in the semiconductor value chain, and committed to fighting unfair trade practices, a reference to China’s continued use of industrial subsides and theft of intellectual property. The United States and EU also indicated their interest in aligning export control and investment screening practices and establishing standards for artificial intelligence. Significantly, the EU and United States reaffirmed their shared interest in enhanced transatlantic collaboration.

The Transatlantic Trade and Technology Council will meet again next year, likely in the spring. More work needs to be done, however, to ensure that the understandings and agreements struck in September are followed up on and the opportunities for greater alignment are seized. The TTC offers a chance to turn the page on US-EU economic relations by focusing on a limited but strategically important set of issues. Failure to do so would allow long-standing disputes, both large and small, to once again undermine attempts at much-needed transatlantic coordination.