The launch last week of the U.S.-EU Trade and Technology Council (TTC) is, potentially, a big deal. The EU’s readiness to proceed, despite French efforts to delay the meeting, shows the importance both sides attach to this initiative, and for good reason: The centrality of new technologies to our future, defining both the quality of our lives and the way that the world is run, demands a thoughtful and coordinated approach to their use.
European officials proposed a technology-centered trans-Atlantic dialogue in December 2000 to reinvigorate a relationship that had been strained under President Trump. The Biden team was eager to take up the offer, to rebuild that partnership and to ensure that tech focus. The TTC was announced last summer, during Biden’s visit to Brussels, and scheduled to hold its first meeting with top commerce, trade and foreign affairs officials in Pittsburgh on Sept. 29.
The announcement of the Australia-U.K.-U.S. (AUKUS) “enhanced trilateral security partnership” last month and the associated cancellation of the Australia-France submarine deal infuriated Paris, which sought to postpone the inaugural TTC meeting. Cooler heads prevailed in Brussels and the conference went ahead as planned.
The meeting was a success. No big policy announcements were made — but none were anticipated. The two sides agreed on areas of concern and set up 10 working groups to follow up. The big topics will include investment screening, export controls, use of new technologies, supply chains (with an emphasis on semiconductors) and protection of workers and labor rights, with attention to environmental issues. The working groups will get down to business soon and senior officials will meet next year in France.
The tech piece of the conversation has received the most attention, and with good reason; governments are waking up to the significance of new technologies and the inadequacy of existing control regimes. They have focused on military uses and while those matter, equally if not more important is their use (and abuse) for monitoring and social control. As these capabilities are relatively new — a function of the explosive growth of real-time surveillance, data, artificial intelligence and ubiquitous connectivity — they have not been part of the “national security” discussion.
The U.S. has pressed for expanding that conversation as it contemplates the full spectrum of competition with China. Europe is reluctant to challenge China directly — although views are changing; the EU China strategy calls Beijing a “systemic competitor” — but its commitment to the norms and values of liberal democracy demands a change in approach and that it become a champion in this area.
Those willing to slog through the growing mountain of documents (or these columns) will see a theme running through bilateral (U.S.-allies), minilateral (“Quad,” AUKUS) and multilateral (Group of Seven, U.S.-EU and U.S.-NATO) meetings and initiatives: an ever more intense focus on new and emerging technologies. It’s almost as if the Biden administration has a template that it is using to ensure consistency across engagements. The trick is going to be coordination of those many efforts, especially when many of those partners are reluctant to call out China by name.
Financial Times columnist Rana Faroohar argued that the EU and the U.S. will find it easier if they are careful about language and talk about “competition” rather than “China.” She wrote that “All major issues on the table can be just as easily couched in terms of creating fairer markets as they can be positioned as a strategic alliance against China,” adding that “Issues such as IP theft, human rights in Xinjiang, or lack of adequate disclosures by foreign firms listed on the top western exchanges are about making sure that markets are both fair and efficient.”
That argument credits Beijing with a readiness to accept verbal legerdemain. Color me skeptical. Chinese leaders know a duck when they see one and their practice suggests either a complete lack of self awareness or a shrewd understanding of rhetorical judo. And if China is indifferent to how “fair and efficient” markets may be — Beijing has other priorities — then that language isn’t going to buy reluctant governments much breathing room.
You might think that a meeting on trade and technology would tackle the most contentious issue in the trans-Atlantic relationship: tariffs imposed by the Trump administration on Europe’s steel and aluminum exports, sanctions that are part of a global effort to address domestic subsidies, and aren’t aimed just at Europe. You’d be wrong.
While U.S.-EU two-way trade in goods and services totaled $1.1 trillion in 2019, fights are common. One of the longest-running was a 17-year dispute over aircraft subsidies; the two sides agreed on a framework to work that out in June.
The deal generated limited goodwill as EU officials remain angry that Joe Biden hasn’t lifted Trump’s sanctions and have threatened retaliatory sanctions on Dec. 1 if that doesn’t occur. Biden is under pressure from U.S. producers to stand firm until Europe rolls back those subsidies.
Negotiations continue and senior U.S. officials insist that Biden wants to turn the page and focus on collaboration with European partners, but damage has been done. EU Internal Market Commissioner Thierry Breton lamented last week that “something is broken in our trans-Atlantic relations.” Reportedly, the subsidies were not on the TTC agenda.
In Japan, ears pricked up when U.S. Secretary of State Antony Blinken said after the TTC that the U.S. and the EU could “do more” and “probably do better” at sharing information about businesses that might be a national security threat. U.S. Commerce Secretary Gina Raimondo has repeatedly said that trade controls must be multilateral if they are going to work, but coordination demands information sharing, especially the intelligence and law enforcement agencies’ inputs that are essential to any successful investment control mechanism.
Japan has to be — and wants to be — part of that effort. Given its role in developing technologies, some form of participation is a given. Effective participation, by which I mean not only getting information but putting it to good use, will force Japan to up its game. Officials and experts here worry about sharing information about threats not just between governments but between this country’s public and private sectors. There are several efforts under way to fix that.
Tokyo shouldn’t worry about being included. It has the technological chops to necessitate its involvement in any control regime and, as noted, there are similar mechanisms in initiatives in which it is already participating, such as the Quad.
But it still must worry. There’s a whiff of techno-nationalism in the air. Or, in some cases, it’s plain old protectionism. Raimondo has insisted that the U.S. must protect its steel industry because it’s “a national security risk, it’s an economic risk.” While I favor the redefining of national security, it’s a slippery slope.
John Redwood, chief global strategist for Charles Stanley, one of the U.K.’s leading investment management firms, has warned that the market is losing power and “Increasingly authorities do not just ask which is the cheapest and easiest solution, but which solution will reduce foreign and potentially hostile leverage over the home economy.” That is, after all, the essence of any question about supply chains.
When the COVID-19 crisis hit, nationalist considerations prevailed across the world. That raises a much more fundamental set of questions about the future economic order. That lessons of at least the last three years (since the imposition of the Trump tariffs) is that commitments to the global trading order are not carved in stone (and don’t get me started about the World Trade Organization). Responding to Raimondo’s comments about steel, EU officials insisted that “the EU is not a national security threat to the U.S.” You’d think that was obvious, but the need to say that makes plain the fragility of these arrangements, the nervousness underlying these discussions and the potential dangers of a Balkanized world of technology.
Brad Glosserman is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of “Peak Japan: The End of Great Ambitions” (Georgetown University Press, 2019).
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