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Comment: EU US Trade and Technology Council better at delivering outside than within its framework

The amount of energy going into the EU US Trade and Technology Council in the Brussels bubble is astounding. It’s at times as if nothing else counted: everyone is obsessed with it. Will the TTC have delivered more on what happened outside its formal framework than within?

There will not be a lot to show for on Monday when the TTC’s political chaperones Katherine Tai, Gina Raimondo, Anthony Blinken, Valdis Dombrovksis and Margarete Vestager get to sit down together in Maryland for a third time on 5 December.

A draft joint statement obtained by Borderlex ahead of Monday’s meeting shows that there will be very little that is very tangible in terms of outcomes. The ‘trade’ aspect of the bilateral high-level dialogue mechanism launched in 2021 is particularly thin.

Ambitions on promised common work on ‘non market economy’ practices has shrunk as both sides embrace industrial policy with related subsidies on a grand scale.

This is no longer about providing joint principles on industrial subsidies that could provide a template for any negotiations with China and others in the World Trade Organization in future. Instead it will be about clamping down together on Chinese ambitions to develop a medical devices industry.

Common work on the WTO and Appellate Body reform the TTC was supposed to move forward is barely mentioned. The word ‘dispute settlement’ is not included in the statement, and the organisation is only referred to in the preamble of the joint statement.

That’s a free fall from earlier ambitions in this systemically vital area for the EU.

The most notable ‘deliverable’ will be a joint roadmap on artificial intelligence regulation and business practices. This is not insignificant at all – it could for the basis of a ‘soft law’-based global standard on AI that could be spread via international organisations such as the OECD in future.

Some deliverables on technical standards

The industry and trade nerds on the Washington-Brussels scene will note that both sides are set to announce they are close to concluding or planning to conclude mutual recognition agreements on technical conformity assessment in two areas they already have agreements in: marine equipment and pharmaceuticals.

The first will build on a mid-1990s MRA and the second on the only outcome of the four-year old TTIP process – the idea being to extend the good manufacturing process certification deal to the area of vaccines.

And yes, there will be common technical standards for electric vehicle charging systems.

Last but not least, the two sides are set to announce a Sustainable Trade Initiative. The draft joint statement contains very little detail of what this will entail in practice.

More happening outside than within the TTC?

Mind you the TTC has served as a good deadline for the bilateral task force established to deal with European Union unhappiness about the United States Inflation Reduction Act.

Not so long ago, European Commission Executive Vice President Valdis Dombrovskis promised “an outcome” on this before the TTC meeting on 5 December. That outcome was delivered – perhaps not in the way the European Commission had hoped.

It came as a press statement by president Joe Biden following a summit with French president Emmanuel Macron on Thursday (1 December). It is a promise to “fix”, what the US president termed a “glitch”, i.e. the discriminatory subsidies provisions in the IRA European carmakers and other renewable technology producers were so aggrieved about.

Nobody in Washington is yet sure how this “glitch” will be fixed without reopening the legislation. But no doubt Washington will find a way.

More generally the TTC might be remembered for what was delivered outside its framework rather than within. The EU and US since the Biden administration came into power have mainly produced other negotiating processes such as a ‘green steel’ deal that has yet to deliver and an aircraft subsidy truce that has also yet to produce a definitive agreement.

Most importantly perhaps, this autumn the EU and US were able to land a Data Privacy Framework to replace the defunct Privacy Shield, therefore preserving the transatlantic digital space from splintering. This is no mean feat.

Export controls and cyber – new friction risks

So far the EU and in particular the United States have been pleased with common work done under TTC auspices on coordinating export controls towards Russia after it invaded Ukraine in February. However, this export control ‘coordination’ – mainly conceived in Washington as a way to align EU exporters with better notice procedures and more clarity with US requirements – could yet turn sour.

The US way of functioning could backfire when it comes to applying new US rules on export controls to China.

The United States for its part will continue to have gripes with the EU’s own digital legislation. One of the latest issues are potentially discriminatory restrictions on cloud services as part of new EU cybersecurity certification rules, where “sovereignty requirement” clauses could yet lead US cloud providers being negatively affected in future.

The TTC, established to repair EU US relations after the turbulent Trump era, has been a constructive diplomatic process that has helped Brussels and Washington keep post-Trump EU US economic relations on an amicable track. So far, however, the TTC appears to have been better at helping the two sides deliver agreements and smooth out disagreements outside its formal framework rather than within.

Let’s hope the lurking export control and cybersecurity issues will not derail the process.

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