The US-EU Trade and Technology Council (TTC): Another Economic Cooperation Attempt Doomed for Failure?

by Leonie Klüver, 8,5 minutes

Geopolitical tensions…

The election of President Joe Biden sparked hopes among EU officials to embark on a new period of transatlantic alliance with a US counterpart that would again act upon liberal democratic values. Although President Biden, opposite to his predecessor, has rejoined numerous agreements and protocols, the most important being the Paris Climate Agreement, the US-EU relationship is still not on a honeymoon. Relations are especially strained after the rushed withdrawal of US troops in Afghanistan that left Kabul vulnerable to the Taliban. Further, diplomatic relations between France and the US were strained after Australia backed out of the submarine deal it had with France only to announce the US as its new partner. Regarding security matters, the EU feels pushed to the sidelines as President Biden and Russian President Putin negotiate over Putin’s current military pressure at the Ukrainian border. EU’s High Representative Josep Borrell emphasized that the EU has no security without a secure Ukraine, ultimately indicating that this security matter cannot and should not be solved without the EU at the negotiation table. In terms of the economy, Biden has to this day failed to lift the tariffs on steel and aluminium imposed by Trump which ultimately lead Europeans to question US eagerness to restore a fruitful transatlantic alliance. 

The new Trade and Technology Council

Although these are a few of the various tensions that the US-EU relationship is currently facing, the US-EU summit in June 2021 caused optimistic headlines on the actor’s cooperation and mutual interests in regard to trade and technology. On 29 September 2021, the inaugural meeting of the US-EU Trade and Technology Council (TTC) took place in Pittsburgh. Its goal is to deepen the transatlantic trade and coordinate key global trade, technology, and economic issues between both actors. The first meeting identified 5 key areas of TTC cooperation (all information from this factsheet):

1.     Export Controls 

The EU has started to properly control dual-use items which are goods and software in one that can serve both militarily and civilian purposes. Especially in cyber-surveillance technology are dual-use items employed. Cooperation on regulations between the US and the EU on dual-use items will allow for control mechanisms across the Atlantic.

2.     Foreign Direct Investment Screening

In the last years, concern has grown inside the EU and US that foreign direct investment is used to influence strategic assets by third actors. Thus, both parties have agreed to share experiences and ways to identify cross-border risks and screening methods to keep foreign direct investment safe.

3.     Secure supply chains

Both the EU and the US attempt to increase semiconductor production to pertain supply and demand in the semiconductor supply chain with their European Chips Act and US CHIPS Act. The cooperation is based on creating semiconductor value chains, strengthening domestic semiconductors ecosystems, consultation with stakeholders, and improving the semiconductors supply chain resistance.

4.     Technology standards (including AI)

Although both the EU and the US recognize the advantages that AI can bring, they also are united in their fears of actors misusing AI thereby threatening values and fundamental freedoms. Hence, the US and EU are committed to cooperating closely to ensure that human rights and shared values are not threatened by AI. 

5.     Global trade challenges

The US and the EU are united in their identification of challenges for global trade. Through the TTC cooperation, they hope to unitedly complement the work of the WTO. This predominantly entails exchanging information on third-country non-market distorted practices and on measures related to the respect for fundamental labour rights and prevention of child and forced labour. Further, they hope to cooperate on trade-related climate and environmental issues and their domestic measures taken against distortive practices.  

Based on these areas of concern, 10 working groups were set up to tackle the outlined concerns. A statement about the TTC published by the European Commission argues that the TTC will allow the EU and US to “fight climate change, protect the environment, promote workers’ rights, combat child and forced labour, expand resilient and sustainable supply chains, and expand cooperation on critical and emerging technologies”. Although this appears like a desirable and crucial list of issues that should be faced, the question arises to what extent a TTC has the competencies and resources to tackle these issues. 

Past failed efforts

Not only do the geopolitical tensions as outlined above continue to persist, but past economic cooperation between the EU and the US were all unsuccessful. Between 1995 and 2019 the New Transatlantic Agenda (NTA), the Transatlantic Economic Partnership (TEP), Transatlantic Economic Council (TEC), and lastly the Transatlantic Trade and Investment Partnership (TTIP) all proved unsuccessful due to enduring regulatory differences. To exemplify, the TTIP was declared obsolete because the EU and US could not agree on regulatory standards and investor-state dispute settlements (ISDS). 

A Sight of Hope?

Even though the US and EU have a history of bilateral disagreements on trade and technology, the TTC has chances to become a success, nonetheless. Firstly, the TTC focuses exclusively on a very limited set of topics that are, however, strategically important for both actors. While agricultural topics were oftentimes met with disagreements, the US and EU are perceived to find easier agreements on these very limited and strategic issues. Secondly, the TTC is a work in progress rather than a final agreement that both sides need to sign off upon which lifts the pressure on diplomatic negotiations. Thirdly, the stakes for a successful TTC are high on both sides. A failure would continue to undermine the transatlantic alliance which would be fatal since the pressing issues of climate change, misuse of economic policy tools, the technological innovation that suppresses human rights, and distorted competition, are best tackled jointly. Nonetheless, it remains to be seen how compromises are achieved as it is likely that the US will attempt to exert pressure on the EU’s tech regulations. Further, the EU must ensure that it does not rely on the TTC solely to respond to sanctions by third countries.

To sum up, the TTC is a crucial and necessary first step to reconvene the transatlantic relationship after an icy four years under the Trump government. The Council allows for a direct channel of EU and US policymakers that can build trust and allows for repeated economic cooperation. Although the EU’s statement on the goals of the TTC is potentially too ambitious, the working group framework and concise topics that the TTC aims to tackle appear to be achievable.