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Trade and technology

Quick Take: US-EU Trade and Tech Council reveals transatlantic fissures


Published 30 September 2021

The statement of the EU-US Trade and Tech Council did not mention China by name. But the conclusion of the meeting signals that prospects for a transatlantic "united front" against China might be overblown from the start. Here are the takeaways of the latest effort to shore up trade and investment dynamics between two superpowers.

The inaugural meeting of the US-EU Trade and Technology Council (TTC) has just concluded in Pittsburgh. The purpose of the council is to deepen and expand transatlantic trade and investment ties and update trade rules to reflect 21st century realities. Specific issues to be tackled include technology standards cooperation, supply chain security, and data governance and technology platforms.

The official statement released at the conclusion of the meeting painted an upbeat picture. Both sides expressed their strong support for the continued growth of the technology, economic, and trade relationship. To accomplish this goal, 10 working groups were established along with five separate “annexes”, on investment screening, export control cooperation, artificial intelligence, semiconductor supply chains and global trade challenges.

Despite the positive spin, it is instructive to note the two very different perspectives each side brings to the endeavor. The council was proposed by the EU in the aftermath of Joe Biden’s election in November 2020. After four years of rocky relations under the Trump administration, the EU was eager to establish a vehicle that could put the relationship back on track. The Biden administration did not formally agree until June 2021. It quickly became evident that the US viewed the council as being as much (if not more) about China than transatlantic relations.

Here are the key takeaways from Pittsburgh:

  • Both sides needed a cooperative vibe to emerge from the meeting. The last official attempt to comprehensively deepen US-EU trade ties was the Transatlantic Trade and Investment Partnership (TTIP) launched during the Obama administration. That initiative promptly went nowhere fast. It was important therefore to send a clear signal that the TTC is not going to be the TTIP redux.
  • Both sides would like to normalize transatlantic relations, but face challenges in accomplishing that goal. The Biden administration has struck all the right rhetorical notes in expressing its commitment to the relationship. But it has been surprisingly unable or unwilling to follow through in concrete terms, failing to even consult with its “partners” on major strategic initiatives. European consternation over lack of consultation on the Australia-United Kingdom-United States (AUKUS) defense agreement was significant enough to threaten postponement of the Pittsburgh meeting.
  • The EU initially viewed the Biden administration as a “breath of fresh air” but is now increasingly wondering how much Biden will differ from Trump. The EU envisions a full partnership. It has no interest in serving as a mere adjunct to policies set in Washington. It remains to be seen how amenable the Biden administration will be in accommodating the European view, leaving Brussels to wonder whether the US is looking for partners or deputies.
  • Both sides largely agree on the challenge posed by China. The recent EU Indo-Pacific strategy paper highlighted many of the same concerns held by the US. But the devil is in the details, and there is wide divergence on tactics and strategies. The US is more comfortable with an overtly confrontational stance. The EU prefers a more oblique approach not specifically targeted at China, which it hopes will “nudge” China in the right direction.
  • The EU is attempting to walk a narrow tightrope. It wants to assert its interests vis-à-vis China and take a strong stand at least rhetorically when China’s actions violate European values. But it does not want to “rock the boat” economically or jeopardize the commercially beneficial arrangements so many European companies have in China. This will become progressively more difficult as China has signaled that the West should not hope to compartmentalize its relationship with China. For example, it will be difficult to criticize China’s human rights practices on one hand, and also look to cooperate on climate change or commercial matters. The picture is further complicated by divergent views across the 27 EU member nations on how to best engage China.
  • Views within the US policy community have meanwhile converged. An emerging consensus suggests that the pursuit of deep levels of economic integration with China has been a strategic miscalculation. This policy has dissipated US global technology leadership, disadvantaged US workers, and strengthened an increasingly assertive China in economic and geostrategic terms. The Trump administration took this view, but Biden has taken things a step further. He casts the US-China relationship as a competition between authoritarian and democratic values.
  • The TTC statement did not mention China by name. Instead, it referenced several of China’s most controversial practices, including forced technology transfers, subsidies, and non-market activities of SOEs. But the most the US and EU were able to agree on was a pledge to “exchange information”. Deeper discussion on mid to long-term strategic semiconductor issues were put on hold until 2022.

What’s the bottom line?

Biden’s election raised expectations for a much closer US-EU partnership in response to the challenges posed by China’s technological and economic rise. As I have argued in a prior article, prospects for a US-EU “united front” have been overblown from the start. The first meeting of the TTC in Pittsburgh demonstrated that while both sides are keen to project the image of a united front, considerable differences remain on the finer points.

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Author

Stephen Olson

Stephen Olson is a Senior Research Fellow at the Hinrich Foundation with over 30 years of international trade experience. Previously, he was an international trade negotiator in Washington DC and served on the US negotiating team for NAFTA negotiations.

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