EU and US leaders met on the University of Maryland’s campus in a conference room adorned with robots and lab equipment for the third Trade and Technology Council (TTC). While they notched up small victories on technical or feel-good issues, such as common AI standards and electric car chargers, they sidestepped and failed to deal with the most explosive issues bedeviling transatlantic tech relations, including protectionism on electric cars, chips, and the cloud.
When the European Commission and the Biden Administration launched the TTC in 2021, transatlantic relations could only improve.
Under Donald Trump, ties had reached historic lows. Trump saluted Brexit. He derided and sidelined the European Union, perceiving “trade as a zero-sum game based on tit-for-tat deals rather than a rule-based multilateral trade system.” The US goods trade deficit with EU countries reached $169 billion in 2018, a 77.1% increase since 2008. Germany accounted for two-thirds of the surplus. Even though this ignored a US trade surplus in services, President Trump imposed a 25% tariff on European steel imports and 10% on aluminum imports.
Data sharing emerged as another giant irritant. The European Court of Justice had ruled that flows of European personal data across the Atlantic were illegal because they exposed the data to snooping by US spies.
President Joseph Biden moved to repair some of this damage. On a visit to Brussels this past spring, he cut a data-sharing deal with European Commission President Ursula von der Leyen for Privacy Shield 2.0. The European Commission is soon expected to give its green light with a so-called “adequacy decision” to the US executive order establishing designed to reassure Europeans. European courts will have the final say, but their decision is at least several years off.
The two sides also worked well together to impose export controls on tech sales to Russia. These sanctions included restrictions on the export and re-export of technology for the Russian energy and defense industries. Although the European sanctions contained some loopholes, they have been strong enough to hobble key elements of the Russian war machine, such as the resupply of munitions.
Other victories for transatlantic cooperation include corralling more than 60 other countries to sign the White House-drafted Declaration of the Future of the Internet. Europeans supported the US candidate Doreen Bogdan-Martin for president at the International Telecommunications Union, the UN body with potential oversight over the Internet. She defeated Russian candidate Rashid Ismailov, by a healthy margin. Lithuania’s Tomas Lamanauskas was elected deputy secretary general.
In Maryland, Europeans and Americans notched additional small technical victories to add to the TTC’s resume. They announced connectivity projects in Jamaica and Kenya to counter China’s Belt and Road Initiative in the developing world. They struck a deal to cooperate on common standards for electric vehicle charging stations and to build an early warning mechanism to spot semiconductor supply chain problems.
But the TTC meeting failed to address some of the biggest problems shadowing transatlantic tech relations. While the Biden Administration preaches cooperation, European critics say it practices Trumpian protectionism.
The biggest challenge comes over the US’s Inflation Reduction Act that pumps public funds into electric vehicle manufacturing and green technologies – but only if they’re made in the US. The EU has cried foul. During a meeting this month with French President Emmanuel Macron, Biden vowed to make “tweaks.” In Maryland, though, officials announced no concrete progress – and it seemed they didn’t even discuss the dispute.
Other unresolved tension flows from Europe’s quest to achieve “digital sovereignty.” France has imposed a special digital tax on US tech platforms. The EU is set to enact its own semiconductor subsidy program which could, if pursued, conflict with or complement the US’s own CHIPS Act. Europe is considering a cybersecurity certification scheme that could prevent US cloud providers led by Amazon, Microsoft, and Google from bidding on many contracts.
The two sides are moving at different speeds to regulate tech. While the EU has enacted the landmark Digital Services Act requiring internet platforms to police illegal content, from counterfeit tee shirts to Holocaust denial and the US Supreme Court considers doing the same, no transatlantic discussion exists on content moderation. Major EU legislation designed to pry open digital markets from Silicon Valley leaders, including the Digital Markets Act, Data Governance Act, and Data Act, remained unaddressed.
The TTC also failed to secure an agreement on semiconductors, a crucial tech sector in the growing competition with authoritarian China. The US has pushed the EU to limit exports of advanced chips to China, with the EU pointing out that many of the same restrictions don’t yet apply to US firms. Europeans fear Washington is using the ‘China threat’ to handicap the EU technology industry.
Transatlantic tech leaders are next scheduled to meet this spring in Sweden. Unless they make real progress on the key pressing trade disputes, the Council’s report card risks receiving an F.
Alexander Wirth is a Program Officer with the Digital Innovation Initiative at the Center for European Policy Analysis.