The European Union – United States Trade and Technology Council provides a great opportunity for the Transatlantic partners to resolve their disputes. A bilateral approach to this issue will be very effective at tackling the differences between each market.
Background on the TTC
During the June 15th, 2021 EU-US Summit in Brussels, President Biden pledged, together with the EU, to protect the rules-based order. The stakes were high. In recent years, the US and EU slammed each other with billions of dollars in tariffs, the EU nearly completed an investment deal with China (signed by the Commission but not ratified by the European Parliament), and Germany issued a contract to Gazprom to build the Nord Stream II pipeline.
During that June summit, Washington and Brussels created the EU-US Trade and Technology Council (TTC). Co-chaired by the US Secretaries of State and Commerce, the US Trade Representative, and their respective EU counterparts, the council seeks to create trade standards for the two Atlantic powers to bring the two markets closer together. The TTC has already proven itself effective, facilitating compromise to retract the Steel Tariffs and achieve a truce in the Airbus-Boeing case, two enormous issues in international economics. Uniquely, the TTC provides a space for the two allies to negotiate without the legal and political bounds of a World Trade Organization or Organization for Economic Cooperation and Development meeting. The TTC can bridge the differences between the two markets, which could create higher income for both sides. In this text, this article will present the benefits of this new body, and the potential for strategic advantage that multilateralism can provide for the US and the EU.
The Goals of the New Council
There are two pieces of wording to be noted in the mandate of the TTC:
“Promote innovation and leadership by EU and US firms”
The EU now wants, through collaborating with the private sector, to become a global investment leader, changing the precedent of certain European countries burdening their firms with high taxes. The French Presidency of the EU Council in the first semester of 2022 and their recent push for the private sector to develop technologies hints at a new approach to competition policy. Quite significantly, the EU specifies that they wish to work with the US to achieve international corporate leadership together.
“Cooperate on key policies on technology, digital issues, and supply chains”
This is the most ambitious wording within the TTC’s mandate. Privacy practices within American technology companies have alarmed European governments in the past. The TTC has set a goal to mitigate those privacy differences and find common ground. There is potential for both markets to establish stronger consumer protection regulations and to revisit unmatched strong regulations.
The TTC, however, also mentions a larger issue affecting both the US and EU: microchips. For months, we have been hearing about the “supply chain crisis”; and as one of its consequences, the pandemic has slowed down exports from Taiwan. 54% of the semiconductor (microchip) market is produced by the Taiwan Semiconductor Manufacturing Company (TSMC).
The TTC has a working group focused on semiconductors, with the White House recognizing the “need to readapt the rules of the 21st century economy.” Microchips, although seemingly only a piece of the puzzle, are necessary for computers, cars, airplanes, and machinery to work. The EU and the US have faced this issue as a path for cooperation, with the “European Chips Act” and the US “COMPETES Act” as means to ensure chip access to their markets.
Consequences for the US
America’s unipolar era faces competition. As China’s influence expands worldwide through its Belt and Road Initiative and multilateral institutions, the US needs to mobilize its allies to remain a hegemon. Through the creation of this council, the US is listening to Europe’s concerns and vice versa. These conversations, as we have seen, are already having real impacts. The TTC provides a major opportunity for the US to re-engage the EU as a key ally and partner.
On the business reality: as years have gone by, trade between the EU and the US has only grown, (except the pandemic consequences of 2020) tying the two economies closer together. There are, however, vast resources spent in bureaucratic processes, and non-tariff barriers that prevent businesses endeavors from reaching their full potential. Through the creation of the TTC, American policymakers have the opportunity to make European markets more friendly to US investments, which could translate into higher revenues for US companies.
Consequences for the EU
Meanwhile, the EU finds itself at a defining position in great power competition. Both the United States and China have expressed willingness to strengthen their partnerships. As one of the world’s largest GDP per capita, the EU’s investments will create a substantial difference in the global arena. The TTC provides a chance for one of the two hegemons to listen to Europe, and to amend their economy to EU standards, thus redesigning the rules of international economics. The Commission must seize this moment to expand European interests.
From the business perspective of this agreement, the EU can only win. For years now, Brussels has asked Washington to regulate GMO products and strengthen privacy regulations, with little diplomatic ground to negotiate. The TTC allows for the EU to tackle the obstacles hampering business operations between two Atlantic markets. Eliminating these restrictions could mean higher revenues, new mergers, and cooperation.
From the geopolitical perspective, however, the EU is not only embracing the United States, but rejecting China’s takedown of the rules-based order. Whilst the German government and French President Emmanuel Macron have made it clear that they want China to comply with intellectual property laws and human rights, this move is certainly not improving EU-Sino relations.
The EU US Trade and Technology Council has the potential to change the rules for global trade and to redefine the playing field of supply chains and international economic policy. Its benefits are also too significant in both economics and geopolitics, making it a stable and profitable partnership.