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The EU and US have hailed the dawning of a “new chapter” for cooperation on trade after the two sides met for the inaugural Trade and Technology Council (TTC) meeting, where they pledged to strengthen critical supply chains, curb the threat posed by China and minimise barriers for technology exporters.

On September 29, US and EU representatives gathered in Pittsburgh for the first session of the TTC to discuss how the transatlantic allies can deepen trade and economic relations.

In the days leading up the event, there had been suggestions the EU would postpone or even cancel the meeting amid French anger over last month’s surprise announcement of the Aukus security pact between the US, UK and Australia.

Pressed to confirm these reports in a September 22 interview with the Atlantic Council, Thierry Breton, European commissioner for the internal market, declined to comment, saying however that it is “probably time to pause and reset our EU-US relationship”.

“After the latest events, there is… a strong perception that trust between the EU and United States has been eroded,” he added.

But following a conciliatory call between President Biden and Emmanuel Macron the following day, a European Commission spokesperson confirmed that the TTC summit would proceed as planned.

Senior officials from both sides attended the inaugural session, including US secretary of state Antony Blinken, secretary of commerce Gina Raimondo and trade representative Katherine Tai, as well as European Commission executive vice-presidents Margrethe Vestager and Valdis Dombrovskis.

 

Key outcomes?

How the EU and US regulate large tech companies, the flow of disinformation and the misuse of technologies such as artificial intelligence (AI) will be some of the key questions posed at the TTC.

Working groups, chaired by relevant US government agencies and European Commission services, have been created on 10 key topics: standards for emerging technologies, green tech, securing supply chains, ICT security, data governance, misuse of technology, export controls, investment screening, support for SMEs and global trade challenges.

But in a post-Pittsburgh statement, the US and EU say there are five specific areas the TTC will focus on in the coming months with a view to achieving “concrete outcomes” by the next meeting.

These include foreign investment screening, the use of AI, the need to secure semiconductor supply chains, export controls for sensitive technologies, as well as joint efforts to tackle global trade challenges such as non-market and trade-distortive policies and practices.

Raimondo told reporters that a “great deal” of the discussions in Pittsburgh focused on semiconductor issues.

“The US and the EU are experiencing similar challenges in the semiconductor industry with respect to shortages, and we have agreed to… collect data from industry so we can have greater transparency and trust in supply chains, and over time really look to collaborate as we increase supply on each of our shores,” she added.

Companies across a range of sectors have been rocked by a chip shortage in the past year, with automotive companies being some of the worst affected.

For much of this year major American firms such as Ford and General Motors (GM) have been forced to shutter factories as a result of the crisis. Just last month, in early September, GM stopped production at eight of its 15 assembly plants in North America.

But beyond the short-term chip supply constraints, concerns have been growing in Washington and Brussels over the grip Asian countries hold over the semiconductor manufacturing sector.

The US-based Semiconductor Industry Association (SIA) estimates that 75% of all semiconductor manufacturing is now based in East Asia, while 92% of the world’s highly advanced logic semiconductors are made in Taiwan.

Against this backdrop, in mid-September, European Commission president Ursula von der Leyen announced plans to present a European chips act.

Likewise President Biden also pledged to provide billions of dollars towards incentivising chip companies to set up factories in the US.

 

Tackling China?

For now it’s not altogether clear whether the TTC will have a sizeable and lasting impact on the US-EU trade relationship.

The TTC will have to avoid suffering a similar fate to the George W Bush-era Transatlantic Economic Council (TEC) and Barack Obama era-Transatlantic Trade and Investment Partnership (TTIP), which was sunk by a dispute over chlorinated chicken.

In the coming months, the working groups will be tasked with conducting technical work on key issues such as semiconductors, export controls and investment screening. A date is yet to be set for the next political-level meeting, but the EU and US say that these sessions will take place “periodically”.

In any case, some experts say the EU and US will struggle to find common ground in one key area of discussions.

The US has increasingly sought to combat what it perceives to be Beijing’s use of non-market and trade-distortive policies and practices, with former president Donald Trump kickstarting a trade war in 2018 as a result of these concerns.

The Export-Import Bank of the United States (US Exim) has likewise criticised China’s export credit system for pursuing a strategy that it says is driven by geopolitical motivations – rather than commercial sense.

Stephen Olson, a senior research fellow at the Hinrich Foundation, says that while the EU is looking to rebuild trade ties through the TTC, the White House views the council as being “as much (if not more) about China than transatlantic relations”.

Issues could arise given the EU is less willing to take an overtly confrontational stance against China, Olson says.

“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 [state-owned enterprises]. But the most the US and EU were able to agree on was a pledge to ‘exchange information’.”

“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.”