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New Atlanticist

March 26, 2024

In this year of elections, the US-EU Trade and Technology Council should get strategic

By Frances Burwell

On April 4-5, the leadership of the US-EU Trade and Technology Council (TTC) will meet in Leuven, Belgium, for what is expected to be the last session until after elections later this year in the European Union (EU) and the United States. This meeting will be crucial for convincing whoever is in power next year that the TTC is an experiment worth continuing. The TTC needs to demonstrate that it has a central role to play in addressing the challenges that the United States and the EU must meet together.

In many ways, this is an unreasonable expectation. Established in 2021, the TTC was initially intended for a much more limited role—finding ways to ameliorate trade conflicts that were likely to emerge from the use of new technologies. As the Biden administration sought to reaffirm the transatlantic partnership and give new prominence to the US-EU relationship, this was a fittingly limited ambition for an untried mechanism. In a world of growing but less-than-urgent challenges, building cooperation on new technologies and avoiding new trade disputes seemed a reasonable way to reinvigorate a bruised transatlantic partnership.

But the transatlantic partnership now faces much larger geopolitical challenges than it did three years ago, including Russia’s full-scale invasion of Ukraine, the Israel-Hamas conflict, and a more acute Chinese threat to European and US competitiveness. In response to this more complicated world, the TTC must take on a more strategic role. Its work to date in addressing technical-level issues related to new technologies—such as artificial intelligence (AI) and quantum computing—should continue, since these efforts are necessary to strengthen US and EU competitiveness. At the same time, the TTC should build on the work it has pursued since February 2022 on export controls, while also strengthening its engagement in sanctions coordination and enforcement. In Leuven, the TTC should make clear that it is stepping up to a revitalized agenda, one that even when focused on technical issues is doing so within a strategic framework.

That framework should be guided by three watchwords:

  • Values, based on democracy and the rule of law
  • Resilience, both in politics and the economy
  • Competitiveness in the global economy

Values

The defense of transatlantic values requires a response to Russian aggression in Ukraine. As Russia continues its unprovoked war on Ukraine, the TTC must continue looking for ways of increasing pressure on Moscow. Sanctions and sanctions enforcement should be formally added to the TTC agenda (there is currently no sanctions working group). Outreach to third countries should continue to be coordinated, so that those who consider violating sanctions will not be able to play off the United States and the EU against each other.

  • In Leuven, the TTC should initiate a defense industry dialogue that draws from the new European Defence Industrial Strategy. The focus should be on incentivizing the defense industry on both sides of the Atlantic to produce at greater capacity, while also alleviating any tensions resulting from the European desire to buy more armaments from their own manufacturers. The discussions could also examine the Ukrainian experience of integrating fast-evolving civil technologies into military capabilities. The TTC could even include appropriate NATO officials at the working-group level.

But support for transatlantic values—especially democracy and the rule of law—includes far more than defense capabilities or sanctions. It also includes defending against disinformation and ensuring that new technologies support democracy and the rule of law rather than eroding them. The TTC has already seen significant convergence in US and EU language over the need for human-centered and ethical AI. It has also served to develop joint support for initiatives such as the Declaration on the Future of the Internet, which makes clear the relationship between an open internet and democracy, committing the parties to support a vision of the internet that “fosters competition, privacy, and respect for human rights.”

  • In Leuven, the United States and the EU should consider not only how to gain more signatories for the Declaration on the Future of the Internet, but also how it could be operationalized into real benchmarks. The TTC partners could also authorize a joint study and reflection on the role of technology in the upcoming elections, including those outside Europe and the United States, to create a workstream at a future TTC meeting.

Resilience

The COVID-19 pandemic and the return of geopolitics has made clear the importance of resilience in the transatlantic system. As the world shifts away from open trade and investment, the United States and the EU have focused mostly on those countries whose technology and investments should be avoided. This is important, of course. During the TTC’s lifetime, the United States and the EU have converged in their attitudes toward China (although often under the “nonmarket economy” rubric), and the TTC has highlighted the importance of investment screening, both inbound and outbound. At the same time, the United States and the EU must avoid stumbling into economic rivalry with each other. The United States and the EU, along with other democracies, must be willing to rely on each other for critical technologies and materials.

  • In Leuven, US and EU officials should undertake more comprehensive discussions on how to manage the transatlantic shift to industrial policy. Such policies—with subsidies, tax benefits, and local content incentives—have great potential to push the United States and the EU into an adversarial path. The TTC has already played an important role in building a more resilient transatlantic economy, especially in helping coordinate US and EU efforts to support greater semiconductor production and monitor government incentives for clean energy. The TTC leadership should now identify other economic sectors—batteries and electrolyzers, for example—that might benefit from the lessons of transatlantic cooperation over microchips. Management of supply chains will also be crucial for resilience, and thus a US-EU discussion of how to cooperate on transparency and tracing in supply chains would also be very useful. The TTC might also launch a study on how to build a “Resilience Club” that would encourage open economies among friends and partners.

Competitiveness

Any attempt to build resilience must account for the cost of that resilience and its impact on European and US global competitiveness. This is already on the European agenda, with a major report on competitiveness expected to be presented by Mario Draghi in the coming months. To date, the TTC has not focused on competitiveness, which is often regarded as a domestic economic matter. It’s also one that risks pitting the EU against the United States, especially given the difference in their respective energy costs. But as the most integrated international economic partnership in the world—one worth seven trillion dollars in 2023 and based on high levels of mutual investment—the United States and the EU should consider strengthening competitiveness to be a joint undertaking. The future competitiveness of this partnership will largely depend on its success in transitioning to a green economy.

  • In Leuven, the TTC should give real substance to the Transatlantic Initiative on Sustainable Trade (TIST). Since it was launched in December 2022, the initiative has made some progress, and a valuable stakeholder event was held on the margins of the meeting in January of this year. But there is an opportunity for real negotiations in the next year. While real market access seems off the table, there is much that should be done on mutual recognition and conformity assessment, as well as on standards and procedures. The work program outlined at the May 2023 TTC meeting in Sweden provided a good roadmap, but now the agenda should move from planning and consulting to joint efforts. A crucial element in this will be finding a way to ameliorate the impact of the EU’s Carbon Border Adjustment Mechanism. While the United States does not have a carbon price, the TTC has already initiated work on compatible means of measuring carbon emissions.

Finally, in this geopolitical age, the TTC can serve as a platform for joint US-EU outreach to the many countries that are essentially sitting on the fence in the struggle between democracy and authoritarianism. To date, the TTC has undertaken some small projects in a few third countries, largely focused on internet access. This limited, country-by-country approach is not sufficient.

  • In Leuven, the United States and the EU should launch an effort to develop a comprehensive strategy for outreach to third countries, bringing together the efforts of the EU’s Global Gateway program and the Partnership for Global Infrastructure and Investment championed by the Biden administration and the Group of Seven (G7). It could also draw on member-state efforts such as Italy’s Mattei plan to promote energy-related development in Africa.

The upcoming TTC meeting in Leuven will set the pattern for the next phase of this transatlantic forum. So far, the TTC has done important but often technical work that does not earn many headlines and too often resembles a laundry list of projects. In April, the TTC needs to put forward a few headline projects that have a real chance of coming to fruition for the next TTC in early 2025. The TIST has the potential to do this. Similarly, a comprehensive investment plan for third countries, a joint supply chain transparency and tracing methodology, or a defense industrial dialogue could help prove the TTC’s value in meeting the challenges now faced by the United States and the EU.


Frances G. Burwell is a distinguished fellow at the Atlantic Council’s Europe Center and a senior director at McLarty Associates.

Further reading

Image: US Secretary of State Antony Blinken speaks next to European Commission Vice President Margrethe Vestager during an event in connection with Trade and Technology Council (TTC), in Lulea, Sweden May 31, 2023. TT News Agency/Jonas Ekstromer via REUTERS