Last month, the U.S.-EU Trade and Technology Council (TTC) met in Paris-Saclay for the second time since its launch in June 2021. (The first ministerial took place in Pittsburgh in September. France hosted this session as holder of the rotating presidency of the Council of the EU.) The meeting was co-chaired by Secretary of State Blinken, Secretary of Commerce Raimondo, and U.S. Trade Representative Tai, and European Commission Executive Vice Presidents Vestager and Dombrovskis. European Commissioner Breton also joined the discussions and the French ministers for foreign affairs, economy, and trade (Le Drian, Le Maire, and Riester) hosted the opening dinner.

The TTC is a new model of economic integration through regulatory coordination. Although both sides reserve their “regulatory autonomy,” they have also invested significant political capital, time, and effort into this process. The TTC spans broad policy areas including tech standards, climate, supply chains, export controls, and investment screening. It operates through ten working groups, which meet at staff working levels and seek input from outside stakeholders. For instance, the European Commission sponsors a “Trade and Technology Dialogue” facility to conduct outreach to the private sector and civil society. Through this technical work, the TTC’s aim is to shape the “rules of the road” for the global economy to favor liberal democracies, leveraging the transatlantic community’s half of global GDP. The ministerials set the themes and political direction for the working groups.

Against the backdrop of Russia’s ongoing aggression against Ukraine, the U.S. and EU noted that the TTC has become a “central pillar” of the transatlantic partnership, “indispensable” in facilitating coordination on sanctions and export controls. It will serve as a forum to monitor and discuss the Russia sanctions and may coordinate their eventual removal. Indeed, the TTC has arguably become more of a geopolitical tool than originally intended. Its 48-page joint statement reflects the breadth and depth of the underlying discussions and signals various future policy directions.

Tech Outcomes

Tech policy is at the forefront of the TTC’s discussions, perhaps even more so than trade. The Paris ministerial launched a new subgroup on Artificial Intelligence to help develop standards for “trustworthy AI,” which is at the core of the European Commission’s proposed regulation on AI. The subgroup will seek to develop a “joint roadmap on evaluation and measurement tools for trustworthy AI and risk management.” Given that the two sides currently have somewhat different approaches on AI regulation, this subgroup’s work will be important in shaping policy in this area.

The TTC also launched a U.S.-EU Strategic Standardisation Information (SSI) mechanism to facilitate information-sharing on international standards development. As noted above, the overarching aim is to shape international tech rules to advance U.S. and EU values and interests, rather than those of authoritarian actors, such as Russia or China. To this end, the two sides committed to collaborate in international standards institutions.

The two sides also emphasized the need for resilient supply chains, particularly in the area of semiconductors, and resolved to coordinate policy to avoid subsidy races. For instance, the TTC noted shared risks in the rare earth magnets supply chain and exchanged thoughts on how to mitigate these. Similarly, it discussed vulnerabilities of the critical medicines supply chain.

The parties also discussed content moderation, disinformation, emerging technologies, as well as a U.S.-EU guide to cybersecurity best practices for small- and medium-sized companies.

Trade Outcomes

In the area of trade, the TTC discussed both restrictive and facilitating measures.

To penalize Russia’s aggression against Ukraine, the EU and U.S. resolved to further a range of sanctions. They also agreed to deepen their exchange of information regarding exports of critical technology to Russia, as well as other malevolent actors, in an effort to restrict authoritarian countries’ access to such technology. To address the looming food crisis, the TTC launched a policy dialogue to develop solutions to mitigate the consequences of food shortage and to provide support to affected third countries. The parties also agreed to reduce unnecessary barriers to trade and investment.

One new issue addressed by the TTC is labor. The two sides launched a tripartite “Trade and Labor Dialogue” among the EU and U.S., trade unions, and businesses to promote internationally-recognized labor rights with the aim of ending illegal practices such as forced and child labor.

The TTC also discussed further measures to improve trade both between themselves and with third countries. To that end, the U.S. and EU agreed to establish an early alert dialogue regarding trade issues with third countries. The dialogue will allow both parties to consult each other at the earliest stage and preempt the establishment of trade barriers that may harm the U.S., EU, or both. However, there are no current signs that the TTC will mark the beginning of a new U.S.-EU trade agreement, as the talks do not cover issues such as market access.

The co-chairs also highlighted the need to reform the WTO in an effort to create an effective and resilient global trading system. In light of the WTO’s 12th Ministerial Conference planned for mid-June, and with the cooperation of allies outside the TTC such as Japan, the U.S. and EU hope to establish a structure capable of countering trade-distortive nonmarket practices and to develop the rules and enforcement tools necessary to counter these. However, the trilateral talks among the U.S., EU, and Japan on reforming WTO rules on subsidies that had run since 2017 have not resumed under the Biden administration. And while concrete steps on WTO reform are unlikely in the near-term, the TTC may serve as a useful forum to prepare these measures.

China

China was barely mentioned in the Paris-Saclay ministerial conclusions, but is always in the background of the TTC’s deliberations. In particular, cooperation on non-market behavior is an important part of the transatlantic agenda. The EU and U.S. have also discussed coordinating on measures targeting China’s violation of labor rights in the Xianjing province. Transatlantic cooperation on export control and investment screening is also part of this joint approach toward China.

Next Steps

The TTC’s activities now return to the staff level to implement this political direction across the ten working groups. The next ministerial will take place in the United States before the end of 2022.