Gina Raimondo and Margrethe Vestager on transatlantic approaches to trade, AI, and China

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Speakers

Gina Raimondo
US Secretary of Commerce

Margrethe Vestager
Executive Vice President of the European Commission for a Europe Fit for the Digital Age

Moderator

Frederick Kempe
President and CEO
Atlantic Council


FREDERICK KEMPE: Good afternoon. Thank you for joining us. I’m Fred Kempe, president and CEO of the Atlantic Council.

I’m delighted to welcome two of the Atlantic Council’s favorite global leaders, US Secretary of Commerce Gina Raimondo and American—and European Commission—

MARGRETHE VESTAGER: I have no problem with that.

FREDERICK KEMPE: Just don’t—be careful what you ask for. European Commission Executive Vice President Margrethe Vestager.

So, Madam Secretary, Madam Commissioner, welcome to the Council.

MARGRETHE VESTAGER: Thank you.

FREDERICK KEMPE: You’ve been here before. You’ve just come from the fifth meeting of the US-EU Trade and Technology Council, where you both serve as cochairs. And we look forward to hearing your insights on that. Since the TTC first met in 2021, it’s been a key element in the renewed and revitalized US-EU relationship, critical tool for cooperation together, and at a time when we’re facing a set of daunting challenges together.

Addressing these issues is what the Atlantic Council has been committed to long before the TTC was the TTC. The deepening economic relationship between the US and Europe was a core part of our founding mission since we were created in 1961. Our Europe Center, run by Jörn Fleck, leads our engagement for this set of talks through our TTC Track-2 Dialogue series. Our Geoeconomics Center leads the charge on cutting-edge work on friend-shoring, semiconductor supply chains. Our Digital Forensic Research Lab has forty staff, seventeen countries. Cutting-edge research on online ecosystems. Our Global China Hub is working on China. So across the Atlantic Council, working on our sixteen programs and centers, ranging from global energy to Africa, we basically drive transatlantic cooperation and relations across all of these realms. And so this is a very special meeting for us.

But let me get straight into the questions. And start with just a reminder to our virtual audience—we always have a large virtual audience. And you see here we’ve got standing room only here. That they should use the hashtag #ACFrontPage on social media and online. But let’s get started talking about TTC. So, Madam Secretary, Madam Commissioner, this was the fifth TTC ministerial. It’s been eight months since you met. A lot happened in that period of time in artificial intelligence, in EVs, in semiconductors. So talk to us first quickly about what issues and developments were at the top of each of your agendas for this edition, and how was the tone? How was the—how were the issues different than in previous? And maybe, Madam Commissioner, visiting from Brussels, maybe you could go first.

MARGRETHE VESTAGER: Well, first and foremost, thank you very much for hosting us. Congratulations on all you do. I think it’s really important. And the long history of the Atlantic Council, I think, also shows why it’s really, really worth investing in this relationship, as we have been doing now for the last three years. 

And we’ve learned a lot in these three years. And what we’re pushing for is, of course, to show that cooperation is useful. It must be felt to make a difference for people, for businesses, for our stakeholders. So, as you say, we’ve been discussing semiconductors. We had, I think, a very intense roundtable this morning—Gina, Thierry Breton, and myself—to sort of figure out, well, what is it with the—? They will be important for decades still to come. How to make sure that we cooperate and prevent shortages or being captured by Chinese production on those things. And I think it’s a very good illustration of how we try to make economic security a real thing. 

We also discussed one of the things that are very close to heart, which is artificial intelligence. It was one of the first things on our common agenda, to agree on having a risk-based approach. So not to regulate technology, but to focus on the risk—on the use cases where risks are involved. And I think what we have done with pushing for the G7 code of conduct, the executive order that we have here in the US, and the European AI Act that will come into force in two years’ time, we have a very much aligned approach. That will serve the business community, but maybe even more important it will serve us as citizens because the aim is to make artificial intelligence secure, trustworthy, and make sure that it serves people.

And I think those sort of very tangible achievements is what has characterized the cooperation. And this is also why I think if you were a fly on the wall, you’d see that there is also a very safe and trustworthy atmosphere in the room when we meet. With that, also a very noticeable feeling that we really want to serve people.

FREDERICK KEMPE: Madam Secretary.

GINA RAIMONDO: Well, first, thank you, Fred. Thank you for having us. And thank you to the Atlantic Council for hosting us and for all that you do.

I agree with everything that the EVP just said. I think it’s useful, though, to remember where we were when we started this. President Biden came into office. Tensions—US-EU tensions were high; not a lot of collaboration in the five years that preceded us coming into office. And we said we need to really lean into our longstanding allies, the Europeans.

And so we created this Trade and Technology Council to frankly get back together. We have a one and a half trillion dollar trade relationship. We argue, of course, over certain things as it relates to technology and trade. There are irritants for sure. But fundamentally what binds us is massively more consequential than the irritants.

And so the TTC was created—we had our first meeting, you know, six months after the president took office. It was a real statement, I think, that we said we’re going to prioritize this. We’re going to find concrete areas where we can work together as it relates to technology, trade, emerging technologies. And we have done that.

I mean, due to the trust that we’ve created, the collaboration, the information sharing, we resolved this deal on aluminum tariffs that had existed at the time we came into office, US-EU 232 steel and aluminum tariffs. We worked with unbelievable speed to put the export-control regime in place. We brought thirty-six countries together when war broke out in Russia to deny Russia a lot of technology that they need to conduct the war.

We are now working now, as Margrethe has said, on semiconductors. We’re working together in the way we’re implementing our CHIPS Acts. You know, I have fifty billion dollars of US taxpayer money to invest. The EU is putting a great deal of money to work. We can’t—we have to work with each other. We shouldn’t compete against each other. It shouldn’t be a race to the bottom. We can’t allow companies to play us off of one another and get us into a subsidy race.

So I’ve been to Spain and Italy and other member states and Brussels and we say how do we work together? We took electric vehicles. You know, there’s no surprise, China is coming on incredibly strongly with respect to electric vehicles; creates market distortion issues as well as data security issues. Similar, our interests are aligned. So—and AI. You know, I won’t be repetitive to what was said.

But I feel we’ve done quite a lot, tangible results in a short period of time; breathed a new—we’ve reinvigorated the US-EU relationship, I think, in a very concrete way. And as we move forward, AI, EVs, semiconductors, AVs, there’s so much work to be done.

MARGRETHE VESTAGER: And as Gina said, today we have a forum where we can complain about each other in a constructive manner.

FREDERICK KEMPE: So I would like you to—

GINA RAIMONDO: It is true.

FREDERICK KEMPE: I’d like you to do that in front of the audience right now. So where do you see your most pronounced areas of differences that need some working out? And maybe on the flip side of that, today where did you feel you came together? Is there any news in that respect that you could share with us?

GINA RAIMONDO: I’ll answer that in the following way. I think we don’t disagree as it relates to the principles and the goals. The disagreements are—you know, we have two—we have differences in our systems of government. We have, you know, political realities. So, for instance, one of the first things I did when I got this job was come to some resolution around the privacy shield. And I think, you know, I credit the TTC with that.

US and Europe fully agree we want trusted data flows, data privacy protection, et cetera. We have different systems of government. We should but don’t yet have a data privacy law federally. So we work through it. The same is true with sustainability. You know, we’re working on a global steel arrangement. We need to prioritize our trading partners that have green steel, green aluminum, sustainable, you know, sources of energy. We don’t have a Carbon Border Adjustment. We have a different—you know, different way of getting to that. But the goal and the values are the same.

Cybersecurity. We have the same —you know, we have—we share democracy. We share a commitment to protecting individual rights and people’s data and having data security. We share a desire to protect our data from autocratic regimes. We go about it in different ways. 

So I think the irritants develop in the details and we have to work through the details. Today I talked about the cyber certification scheme. We’ll figure out the differences on the implementation. But frankly, it’s fantastic to have a partner who shares our, you know, values, way of government, and principles.

FREDERICK KEMPE: Madam Executive Vice President, Madam Commissioner what do—

MARGRETHE VESTAGER: No, I’d add to that because I fully share that this is the approach that makes us come together, and the second thing that should not be underestimated is that one thing is that we meet as principals but before that while we meet after that the teams are coming together, which means that literally hundreds of people have gotten to know each other really well. 

During their work for the Russian sanctions, you know, it went so fast with very little sort of bumps on the road because people knew each other, and I think it’s really important not to underestimate what it means that you know who to call. 

And then we’ve had, you know, continuing discussions. One of them would be on the Open RAN. So we had the same ambition to make sure that our networks, they were safe, that we didn’t have untrusted vendors in those. 

We had a different approach as to how to achieve that when it comes to untrusted vendors, and as a follow-on debate we’ve had the debate about Open RAN. Is that sufficiently secure? What is the energy use of Open RAN compared to other solutions, getting to, I think, a balanced view that you need to keep developing Open RAN and you need to be neutral in your approach so that those we work with they may have a preference but we shouldn’t push a preference. And I think it’s a good example of an approach that comes out of a discussion that was not trivial initially.

GINA RAIMONDO: I think we will see—I think the TTC will prove to be exceedingly valuable now and in the months and years to come as it relates to artificial intelligence, right. We have spent the past two and a half years developing the TTC, developing the relationships, as you said, having our teams with stakeholders. You know, there’s a lot more stakeholder engagement across the border today. We had a fantastic meeting with semiconductor companies, half European, half American, you know, talking. 

So now we’ve built up this trust. Enter AI, enter generative AI, where we have to now write the rules of the road together and we had an extensive discussion today about standards— how do we together develop standards that will govern AI and the development and use of AI, which is all new? It’s all new, and so now we have this muscle that we’ve built up. 

You know, as Margrethe says, we have the G7 code of conduct. We have the AI Safety Institute. You have the AI office. It’s all so new. TTC will play a key role in bringing us together to write the rules of the road of AI. 

FREDERICK KEMPE: Could you drill down on that? You have the executive order—US executive order. You have the EU AI Act. The technology is moving ahead faster than, I would say, the regulatory world is. I’m not sure that’s entirely a bad thing. 

But who does write the—where will the standards be made? Who does write the rules? You say TTC will do this together but how will that be then rolled out? How are you balancing the need to mitigate risks but not stifle the incredible innovation that’s going on?

MARGRETHE VESTAGER: Well, first, for me a very fundamental point, which is I think that governments’ legislative bodies are legitimate in dealing with technology. So this idea that we will always be behind and technology will just have to lead the way I think that is just plain wrong because we have a responsibility to make sure that technology also respects the fundamentals of our society and this is what is expressed, I think, in the executive order by the president. 

This is what is expressed in the G7 code of conduct. This is what is expressed in the AI Act in Europe, that there are some fundamentals where we have full legitimacy in saying this is how we want things done. Where we can help industry and make sure that the market is as big as possible is, as Gina said, to develop standards.

So what does watermarking look like? We all want watermarking so that we know what is fake and what is real. What is red teaming? How deep should that go to be real, that you can sort of tick the box I have done red teaming so that I know my AI is safe? And one of the things we started on very early was to say, listen, we need to be much more present in standardization foras because they are being more and more dominated by nonmarket players, or Chinese players for that matter, and we need to have a presence. We need to coordinate. We need to be much more strategic. So in all the different foras where these things are being dealt with, we need to have a presence and we need to coordinate. And here the TTC setup comes in extremely handy.

FREDERICK KEMPE: But is that, then, a transatlantic approach, joint regulatory? What comes out of this for AI?

GINA RAIMONDO: I think, yeah, absolutely it’s a transatlantic approach. Whether joint regulation, I don’t know if that’s feasible, obviously.

But, look, it will be some time before the US Congress passes a law that relates to the governing of AI. I’m just going to stipulate that—and I’m sure everybody’s going to agree with me. So, between now and whenever that—and we need that. To be—to be clear, we need that, right? To have a regulatory structure with enforcement mechanisms and penalties, we need a statute to do that. And we will get there.

In the absence of that, there’s an awful lot of work to be done, for example, with standards. Right now—right now, one thing I do hope Congress does is there is a bipartisan agreement to invest ten million dollars in the AI Safety Institute which we are standing up in the Department of Commerce, a tiny amount of money, to focus on these standards, exactly what you said. You know, what is adequate watermarking? What is safe? You know, what does it mean to say the red teaming is adequate? What does it mean to say certain guidelines around what testing equals safety? So that’s what we are going to be thinking about at the AI Safety Institute. I do hope Congress funds that.

But all of those standards and all of this, of course, happens in not just bilateral standard-setting bodies, but global standard-setting bodies. I promise you if the US and the EU don’t show up, China will, autocracies will. We’ve had our lunch eaten over the years in—like, in the ITU, that standard-setting body for the internet. You talk about ORAN, telecommunications. This is, I know, really boring-sounding stuff, but it matters.

FREDERICK KEMPE: Yeah.

GINA RAIMONDO: So, anyway, we’re going to harmonize our approach.

And was it you that said this today? Somebody said this; I thought it was really smart. You know, normally we go about our thing, other countries go about their thing, and then we try to harmonize. With AI, we can harmonize from the get-go because we haven’t yet, you know, written these regulations or rules or standards.

FREDERICK KEMPE: So you’ve both mentioned China, so let’s go there and we can circle back on other issues as time allows. But you know, can one harmonize, is one trying to harmonize toward China? So, Madam Commissioner, on electric vehicles, it’s become a major issue in DC as well as Brussels. The Commission has launched an investigation into support Beijing is providing domestic manufacturers. China’s responded with a dumping probe, including French brandy, which I’ve been to some parties where it seems to have been dumped. But in any case—so I’d love to—are we at the start of a more contentious trading relationship with China?

And then, how are the two of you looking at the—in the context of TTC but also beyond, how are the two of you looking at this? You know, we’ve been tracking the rapid expansion of Chinese manufacturing, noticed lower-cost producers increasingly look to export. And so also from your side, Madam Secretary, this is a—this is a big issue. So talk a little bit about this.

MARGRETHE VESTAGER: It’s a very big issue. So from Europe, when we look at China, we see a very complex relationship. We need China as a partner in fighting climate change. Without China on board, it will not happen. But China is also a systemic rival in how they see their mode of governing versus our democracies. 

And they’re an economic competitor. And in order to materialize that view, we have our strategy for economic security. And we just gave that some muscle last week to say we need member states to have, you know, a toolbox for research organization to do their due diligence to know who they are actually dealing with. We’ve done that already for Horizon Europe, that big European research program. We need everybody to be able to do the screening of foreign direct investments. Now twenty-two European countries would do that. We need everybody to come on board. It’s important.

We need a European prism for export controls. Each country has their own competences, but we need to have a European prism to look at that. And then we have taken the first steps to try to figure out how to prevent that some which circumvents export controls by outbound investments. And be very careful, because Europe is really open for business. So a lot of investment is coming in. Lots of investment is going out. So we want, of course, to be very precise, because the point of globalization is that we may calibrate it right now, but we still, you know, really benefit from it. We have complex value and supply chains. So what we’re doing now is to sort of de-risk our interdependencies. And, of course, Chinese dependencies are one of those that we focus on.

FREDERICK KEMPE: And this new economic security package, how does this affect US-EU dialogue? What knock-on impact will it have on that?

MARGRETHE VESTAGER: Well, as a matter of principle, our package is country neutral. But just to tell you about the differences. So, for instance, on quantum, it is on the list of critical technologies where you can be exempted, or you can be not allowed to participate in our research programs. Well, we were just talking about today how can we do a memorandum of understanding on quantum to do some things together? And I think that’s a very good illustration of the differences as to whom we will not work with, and with whom it is absolutely essential.

FREDERICK KEMPE: And, Madam Secretary, how does one manage this China issue across the Atlantic? Particularly considering if you’re looking at AI you can set whatever you want to set, but if China goes in a totally different direction, then it’s messy?

GINA RAIMONDO: Yeah. AI, in particular. AI knows no boundaries. These models freely travel across boundaries, et cetera. All the more reason to work with allies. And I think, as it relates to China, Europe, and the US, it’s in each of our self-interest to work together. Listen, we—both of our—Europe and the United States have huge trading relationships with China. Hundreds of billions of dollars. And that is a good thing. Selling goods to China creates jobs in both of our countries.

Having said that, there are real national security concerns for both of us. Once again, we share values. And we have to be eyes wide open about that and work together to protect the people of our countries. Export controls is a perfect example. We worked in a trilateral relationship, in that case with the Japanese and Europeans and the United States, to deny China the most sophisticated semiconductor equipment. We need to move in that direction. Electric vehicles. Electric vehicles we have to keep our eye on. The number of Chinese-made electric vehicles being sold in Europe today is vastly more than even a year or two years ago. Why is that? What is really going on in China? How is the government subsidizing the whole ecosystem?

That’s a trade distortion. Separately, there’s a national security distortion. Tesla is not allowed—you can’t drive a Tesla on certain parts of Chinese roads, they say for national security reasons. Well, think about that. What are the national security concerns—forget about trade, OK? Forget about trade. Forget about tariffs. Forget about the economics of it. I’m just talking national security. We talked this morning with Jim Farley, the CEO of Ford. A sophisticated EV, and then an autonomous vehicle, is filled with thousands of semiconductors and sensors. It collects a huge amount of information about the driver, the location of the vehicle, the surroundings of the vehicle. Do we want all that data going to Beijing? That’s a question for you. So—and it’s a question for you.

So I think that that’s just one example, EVs. You could ask the same questions about semiconductors, many of which are made in China. We had a session about that this morning; same thing. US and European interests, economically, but even more important national security, are really intertwined. And the way you do it—AI, CHIPS, quantum, EVs—together.

FREDERICK KEMPE: And on that score, where does your investigation right now stand of the subsidies for Chinese electric vehicles in Europe? When can we expect some findings from that?

MARGRETHE VESTAGER: It’s my colleague Valdis Dombrovskis who’s heading it.

FREDERICK KEMPE: Yes.

MARGRETHE VESTAGER: And I don’t know what is the state of play of this investigation.

FREDERICK KEMPE: You raised something at the beginning, Madam Secretary, about elections, what came before, what could come after. This was suggested. The EU first suggested this menu for discussions in the summer of 2022—2020, late in the Trump administration. All the ministerials, however, have taken place, including you and also EVP Dombrovskis and Ambassador Tai, have taken place during the Biden administration.

How are you and your respective administrations thinking about how to ensure the format of TTC and the cooperation it’s enabled continue? What can one do? We have elections on both sides of the Atlantic. These things change.

GINA RAIMONDO: Yes. We talked about this today. And, look, I think we have to be realistic, right? There’s only so much you can put in cement. But I would offer a couple of things.

Number one, we have been, I think, very good at engaging stakeholders in our work. So wholly apart from what we government folks do, I hope there’s demand from industry and civil society to keep the TTC going. At every convening, we have robust stakeholder engagement. And I think they think it’s been successful, and I think they’re going to require the TTC to continue the work we’ve done.

Separately, we decided today we’re going to re-execute and renew all of the MOUs that we have. We have the task force for future growth. We’re going to reup all the members on that to continue the work. We have a robust agenda for our April meeting. So we’re just going to put on paper the plans and execute the contracts that we have and just sort of assume that it will go forward.

MARGRETHE VESTAGER: And no matter who will be at the helm, there are also things that we have learned. And we would also like to sort of put on paper what have we learned over these years? What should be done better in the next generation of the TTC? How can we make our precious stakeholder outreach more effective? Can we make it more strategic, more focused?

So try to also look back, not to, you know, a pointed finger for the future, but just to say this was what we achieved. Now next iteration of the TTC, what can you learn from our experiences? And I think that’s a way to go about it instead of being prescriptive, then trying to enable people to sort of get a sense of the experiences that we have gained.

FREDERICK KEMPE: Well, the—our time has run out. There’s many more questions I would like to ask you, drilling deeper. I hope we can invite you back to the Atlantic Council at another time; perhaps at the next TTC, if not before. But thank you so much, Madam Secretary and Madam Executive Vice President.

GINA RAIMONDO: You’re welcome.

FREDERICK KEMPE: Thanks for your time.

GINA RAIMONDO: Thank you.

MARGRETHE VESTAGER: Thank you.


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Image: US Secretary of Commerce Gina Raimondo and European Commission Vice President Margrethe Vestager speaking at an Atlantic Council Front Page event on January 30, 2024.