Ursula von der Leyen, Joe Biden, Charles Michel
MERICS Briefs
MERICS Europe China 360°
5 min read

EU-US Trade and Technology Council will be a litmus test for transatlantic coordination on China

The EU-US summit held in June signaled the transatlantic partners’ ambition to reinvigorate their cooperation – including on issues pertaining to China. The two sides explicitly noted plans to “closely consult and cooperate on the full range of issues in the framework of our respective similar multi-faceted approaches to China”. However, it is the technical Trade and Technology Council (TTC) that may prove to be the most efficient channel for developing common responses to systemic challenges posed by China. 

Initially proposed by the European Council in December 2020, the TTC will cover a plethora of issues that will shape the future of global economic and digital governance, from technical standards and collaborative innovation to the security of information and communications technologies.

Exhibit 1

Supply-chain resilience and technology protection are ripe for cooperation

Among the stated priorities is the security and resilience of supply chains, especially semiconductors. Following the Covid-19 pandemic, discussions about strategic vulnerabilities arising from economic interdependencies with China have gained momentum, with both Brussels and Washington conducting critical supply chain reviews. This is not merely a China issue: Strengthening the innovation and industrial base and building resilience are priorities shared across the Atlantic. However, Beijing’s plans to absorb global value chains and dominate a wide range of sectors and technologies have added urgency. Through the TTC, the two sides could ensure that their efforts to diversify supply chains reinforce each other, rather than creating duplicative or conflicting investments.

Technology protection is another area that presents opportunities for cooperation, given shared concerns about China’s technology transfer programs. The TTC could facilitate the creation of a cooperation mechanism between the Committee on Foreign Investment in the United States (CFIUS) and the EU-wide investment screening regime, which became operational last October. The Council will also work on export controls, where new technologies are pushing the boundaries of policy in terms of approaches, methods and purposes. Meanwhile, the related work stream tackling the “misuse of technology threatening security and human rights” could foster common approaches towards Beijing’s military-civil fusion strategy and tech-enhanced surveillance programs.

TTC could prompt the EU to sharpen its approach to economic security

The new format is no panacea for tackling China-related challenges at the intersection of technology, economics and security. However, it may be useful in aligning approaches – not just across the Atlantic but also within the EU. Member states still have wide-ranging views when it comes to economic and technological security. Through processes such as the investment screening mechanism, the development of risk mitigating measures for 5G security, and a proposed new instrument for deterring and countering economic coercion, Brussels has already pushed national governments to think more strategically about the blurring of boundaries between geopolitics and economics. But the bloc has yet to reach consensus about the geopolitics of technological competition, as well as the structures and actions required to navigate them. By bringing related issues to the top of the agenda of an institutionalized transatlantic format, the TTC could stimulate the EU to intensify internal convergence.

The EU side has more appetite for issue-based cooperation on China

A key constraint for transatlantic cooperation on China remains the divergence on how political the two sides would want it to be. While Washington is keen to alienate Beijing by solidifying a camp of free market democracies through joint political actions, Brussels leans towards using technical, country-neutral instruments to address China-related concerns. The TTC offers a chance for both sides to bring the development of joint responses to challenges posed by China to a practical level, thereby depoliticizing the discussion and diffusing the reservations of Brussels and other European capitals. The TTC would address China within the context of wider challenges, without necessarily pointing the finger at Beijing.

Technical nature means TTC needs to deliver to succeed

The TTC stands to benefit from the political momentum currently existing on both sides of the Atlantic. However, its success will depend on the EU’s and the US’ ability to sustain that momentum and translate it into concrete deliverables. Memory of the failed Transatlantic Trade and Investment Partnership, a comprehensive EU-US trade agreement that fell apart after fifteen rounds of negotiations following the change of administration in the United States, will likely be a cautionary tale for the EU. The TTC will be under pressure to deliver in a relatively short time frame. 

The TTC’s ability to deliver will also be a litmus test allowing Brussels to see whether Washington’s interest in transatlantic tech and trade agenda is indeed constructive and affirmative, or if it is merely an extension of its China policy. That was, for instance, the case with the Trump administration’s Clean Network initiative, which reduced the complex task of securing networks to keeping “critical data and our networks safe from the Chinese Communist Party”. 

A democratic digital agenda will have to be global in scope

Another challenge for the new Council will likely lie in its ability to deliver on a democratic and value-based vision for digital governance. The Commission was keen to include that as a major goal of transatlantic cooperation. As China promotes its own rules and norms for digital transformation and Internet governance, ensuring that the values democracies uphold are reflected in the technologies and platforms their companies design and control is a growing priority. To tackle this, the TTC will embark on the ambitious task of bridging the transatlantic divide on data governance and online platform regulation. 

At the same time, the new format’s announcement stopped short of mentioning how the two sides plan to leverage their renewed digital partnership in support of innovation, connectivity and digital rights in the Global South. This line of effort would be critical to compete with China, given Chinese tech companies’ inroads into developing and emerging markets through the Belt and Road Initiative. 

At this stage, the TTC seems to be primarily focused on nurturing a competitive transatlantic tech space and overcoming divisions on the digital rulebook – both important and complex tasks. Further down the line, it will be key to watch how the Council engages other partners and organizations.

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Author(s)
Rebecca Arcesati
Rebecca Arcesati
Analyst

China’s foreign economic policy; Digital Silk Road; technology and innovation in EU-China relations

Grzegorz Stec
Grzegorz Stec
Analyst

EU-China relations; Central and Eastern Europe-China relations

Author(s)
Rebecca Arcesati
Rebecca Arcesati
Analyst

China’s foreign economic policy; Digital Silk Road; technology and innovation in EU-China relations

Grzegorz Stec
Grzegorz Stec
Analyst

EU-China relations; Central and Eastern Europe-China relations