Trade Wars

The fault lines hampering plans for a strong US-EU alliance on technology and trade

These differences could undermine the council’s broader goal of determining how the world is dealing with the challenges posed by emerging technologies like artificial intelligence. And they do not bode well for President Joe Biden’s attempts to smooth international alliances after the trade wars and tensions sparked by former President Donald Trump.

Officials on both sides of the Atlantic see the meeting as a much-needed opportunity to reset their difficult relationship and tackle technological issues.

“Future conflicts will be fought in very different ways,” EU Trade Commissioner Valdis Dombrovskis said in a speech in Washington ahead of the meeting. “The struggle for technology will be the new battleground for geopolitics. “

Those charged with rebuilding the shabby relationship this week include Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo and Trade Representative Katherine Tai on the US side. Besides Dombrovskis, the European Commission sends Margrethe Vestager, its competition manager.

Executives plan to come out of the inaugural meeting with five areas to focus on, including how to regulate artificial intelligence, tackle export controls and do so-called investment screening. . While this is just the first of many expected meetings, it will set the tone for their cooperation, especially against China’s rise as a tech superpower.

“The US and the EU have aligned interests in ensuring that the next generation of technology is based on democratic principles,” said Tyson Barker, Technology and Global Affairs program manager at the German Council on Foreign Relations and former official of the State Department. “The potential is there, but it’s already bogged down by the tyranny of the headlines,” he added.

In practice, the board will have to overcome several other challenges. Here are four key questions that lie ahead:

Will France be a voluntary partner?

An unrelated outbreak this month between Washington and Paris nearly derailed the council’s start. A new security pact between Australia, the UK and the US surprised EU officials and caused a Paris-backed company to lose a multibillion-dollar submarine contract. France lobbied the EU to delay the Pittsburgh meeting and had help from the Germans, who asked Washington to postpone the event in bilateral talks last week.

Although the council is progressing as planned, relations between the United States and the French have not returned to normal. France has succeeded in diluting commitments on semiconductors to focus solely on the near-term global shortage of microchips. More in-depth discussions on the link between US and European chipmaking will take place at the next transatlantic rally scheduled for spring 2022, most likely somewhere in France, according to two US and EU officials who spoke on condition of anonymity.

Biden and French President Emmanuel Macron are expected to meet in Europe next month to continue easing tensions. But some European leaders believe that trust between longtime allies has been shattered, especially after Biden pledged a hard reset after Trump’s controversial era and Europe’s dissatisfaction with how the withdrawal of Afghanistan has been managed.

European officials hoping to rekindle closer ties with the United States, however, have played down the stalemate or sought to work around the problem.

“Especially in times of difficulty, it is important that we keep our communication channels open; that we discuss how we overcome these difficulties, ”Dombrovskis told reporters on Tuesday. “We, in a sense, shouldn’t let these disagreements cloud our outlook.”

What’s going on with data privacy?

Privacy and data ownership are at the heart of several issues the Business and Technology Council hopes to resolve. These include plans to align US and EU approaches to regulating artificial intelligence and the way governments regulate data. Other topics of discussion include how to prevent authoritarian governments from accessing sensitive technologies and preliminary discussions on tackling disinformation online, according to drafts of the final meeting communiqué obtained by POLITICO.

Washington and Brussels have been locked in parallel data talks trying to find a successor to the so-called Privacy Shield, a deal that has allowed companies to transfer personal information of individuals from the EU to the highest state court. United of Europe invalidated the current agreement in July 2020.

This is the second time that the Court of Justice of the European Union has ruled that a transatlantic data agreement does not sufficiently protect the information of European citizens. The failure of the deal raises the question of whether the privacy rights of Europeans can be respected in the United States, where surveillance laws give agencies wide latitude to collect and use people’s information.

Dombrovskis insisted on Monday that the absence of a transatlantic confidentiality agreement will not hamper the council’s work. Officials on both sides have pledged to continue these talks over the next few months, and a deal could be finalized by the end of the year.

The business sector is, however, stepping up pressure from both sides to find a solution – even though the Privacy Shield deal won’t officially be on Wednesday’s agenda.

“Data flows are the lifeblood of the modern economy, certainly the lifeblood of the transatlantic economy,” said Marjorie Chorlins, senior vice president of European affairs at the US Chamber of Commerce. “If we can’t get it right, it’s hard to see how the TTC is getting really meaningful results, because so much of what should be on the TTC agenda has a direct link to the data. . “

What’s going on with China?

China has become a wedge issue between Brussels and Washington since Biden took office. This conflict is also played out in the Trade and Technology Council.

The United States sees the rally as a great opportunity to push back against China by forging common technology and trade standards, but the EU has been careful to downplay the sense that Beijing is a target.

EU countries, especially economic powers France and Germany, are reluctant to push China too hard because of their important economic ties to the world’s second-largest economy. Internal feuds within the bloc of 27 countries have left Europe divided over whether to push back the rise of China.

“We are not speaking with one voice on this issue,” said an EU official. “We still have to meet on an internal position before we can discuss it in detail. “

Differences in how to approach China were discussed until the last few days before the meeting, according to several officials directly involved in the talks. For example, there was disagreement on whether to include fishing in the Council’s final declaration on combating forced labor, several EU countries opposed.

China took note of the divisions. Chinese Foreign Minister Wang Yi on Tuesday suggested that Brussels and Beijing hold their own high-level trade and technology talks while praising the EU for not embracing America’s “new cold war” against China.

What is happening with domestic politics?

The US and EU are still trying to bolster their respective semiconductor manufacturing with subsidies, while debating how to regulate AI and digital giants like Facebook. So far, Brussels has taken the lead in crafting such digital rules, but the US Congress is starting to turn the gears with its proposals.

Lack of clarity on what will happen to national rules could hamper transatlantic efforts to work together in areas such as tackling online disinformation and addressing the online dominance of technology.

Without national agreements, US and EU officials are unable to make commitments with each other internationally, and the two sides still have divergent views on the need for technology regulation. In Wednesday’s statement, Washington and Brussels will make it clear that the transatlantic talks do not replace any regulations that can be adopted at the national level.

EU officials, for example, were delighted that language on the need to reduce damage from artificial intelligence was included in the official written statement for this week’s meeting. But neither Washington nor Brussels have agreed on house rules for the emerging technology, and it is unclear to what extent lawmakers will be guided by the council’s discussions.

Barbara Moens contributed to this report.