With all eyes on the Indo-Pacific, a burgeoning tech alliance is taking form within the Euro-Atlantic
The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the technology sector and world politics.
On September 29th and 30th, three senior Biden cabinet members and two senior EU officials gathered in a converted steel mill in Pittsburgh that is now serving as a startup accelerator to form the US-EU Trade and Technology Council (TTC) . The TTC – if it takes root – could be a Euro-Atlantic answer to the quad in the Indo-Pacific: an embryonic technology alliance and a building block for a new democratic technology arrangement.
When you look at the technology-foreign policy nexus in political Washington, all eyes seem to be on the Indo-Pacific – especially China. But in terms of data, software and hardware, the US-EU relationship remains an equally important technology corridor, if not more important. For reasons of proportionality, Euro-Atlantic data transfers are 55% higher than those between the US and Asia.
With the TTC, the Euro-Atlantic partnership now has a strategic place to take advantage of this vast democratic, digital corridor, especially given the global geotech race in which the US, China and the EU are the three main players.
Read more about the TechCrunch Global Affairs Project
The 17-page statement by the Pittsburgh TTC outlines a roadmap for future work and a series of working groups that will address critical issues such as technical standards, secure supply chains, data governance, foreign direct investment screening (FDI), green technology, technology abuse in deal with human rights. Abuse and Open Economies. While the word China does not appear once, the joint statement is full of language about “non-market economies”, “civil-military merger” and the use of “social scoring” by “authoritarian governments”, all of which are code for China .
Get the latest international news updates delivered to your inbox
Please enter a valid email addressSuccess! You have subscribed to the Yahoo newsletter.
The story goes on
Three immediate areas stand out. First, the US and the EU are rethinking their approach to technical standards. There is a saying whirled around in China that “third-party companies make products, second-level companies create technology, and first-level companies create standards.” In September, the Chinese government released its standards strategy, which focuses on greater internationalization of Chinese technical standards, accelerated adoption of standards, and more efforts by the private sector to develop standards.
Both the US and the EU have taken note of how standards can be instrumentalized for geopolitical purposes. The US and EU are increasingly realizing that their private-sector standard-setting model has been losing ground as corporations, alongside the Chinese Communist Party (CCP), have standardized bodies such as the International Standards Organization (ISO) and the International Telecommunications Union colonized (ITU). In light of China’s aggressive international steps, the two sides have rekindled the dialogue between the National Institute of Standards and Technology (NIST), the US agency responsible for technical standards, and their EU counterparts. Both want to use the TTC to coordinate their standard setting strategies, including working with the private sector.
Second, COVID disruptions and technical tensions between the US and China demonstrated the vulnerability of Euro-Atlantic technology supply chains, especially in semiconductors, given the Entity List’s limitations and the precarious situation of Taiwan’s chip champion TSMC. The US share of global chip manufacturing has shrunk from 37% in 1990 to 12% in 2020. The EU has seen an even more dramatic decline, from 44% in 1990 to 8% today. Both Washington and Brussels are determined to reverse this trend. Congress recently passed the US $ 52 billion CHIPS Act in the United States, and the upcoming European Chips Act could draw on the € 93 billion Horizon Europe fund, the EU’s 750 billion euro recovery fund after COVID and coordinated national efforts in the semiconductor industry.
But while this may have raised fears of competing industrial policies in the past, both European Commission Executive Vice President Margrethe Vestager and US Commerce Secretary Gina Raimondo in Pittsburgh stressed the desire to avoid “a subsidy race” in technology. Indeed, the TTC’s “Dedicated Track on Semiconductors” provides a “medium to long term” runway for a more ambitious shared agenda for collaboration in high-end semiconductor production. All indications are that they should coordinate, and the Pittsburgh Declaration stressed that it should be “balanced and of equal interest to both sides.” One can easily imagine a transatlantic consortium, the heart of which is a “mega-fab” project – the largest green field project in Europe.
Third, amid restrictions on Huawei 5G devices, new revelations about Xiaomi phone censorship in Lithuania, and buying spree from companies like Tencent across Europe, both sides are scrutinizing how they manage overseas flows of critical technology. Levers like export controls, FDI screening, and trusted vendors are all on the table. In the past, the EU and the US introduced dual-use export controls based on traditional principles: nuclear, chemical and biological, but also increasingly at the cyber level.
However, recent developments have created new challenges in managing digital spaces, especially when it comes to reviewing investments and trusted providers. Regulators are also concerned about how to maintain democratic data rooms and protect research and intellectual property in areas like AI, semiconductors, 5G, games, AR / VR technology, and maybe even digital services and smartphones. For American authorities such as the Bureau of Industry and Security (BIS) and the Committee on Foreign Investment in the US (CFIUS), it is becoming increasingly important to create channels for the exchange of information with their European counterparts, as the EU member states take over the controls and market access restrictions expand capabilities.
If it works, the TTC could be the machine through which the US and EU write the global rulebook for tech companies. In recent years, the EU has been forced to go it alone in regulating digital technology and take the lead in areas such as data protection, content moderation and market power of online platforms.
While some in Washington appreciate Europe’s efforts in the absence of meaningful US regulation (Washington was perceived as completely absent from tech foreign policy in the Trump years and caught up in big tech in the Obama years), it has so-called “Brussels -Effect ”also to tensions, especially in the data flows and the future of the digital cartel.
The free flow of data between the Atlantic has been pending after a 2020 GDPR-based court ruling invalidated the Privacy Shield, the primary “passport” for European personal data to the United States. On the cartel side, big players like Meta (Facebook), Amazon, Google and Apple are fighting hard to water down the EU’s signature law against the market dominance of online platforms. The Biden government itself has not yet agreed on a clear position.
In general, many Europeans remain skeptical about the USA as a partner. The Snowden affair (which uncovered widespread NSA hacking of European leaders), Trump’s 2016 election, the Cambridge Analytica scandal and most recently the Facebook Papers have led not only to geopolitical – but also digital – alienation in the Euro-Atlantic Relationships led. In a recent survey by the German Council for Foreign Relations, 92.7% of Europeans are of the opinion that Europe is too dependent on US companies for cloud computing, 79.8% on AI and 54.1% on high performance computing. 54% of European stakeholders say they want to remain independent in a technology confrontation between the US and China, while 46% want to move closer to the US
Meanwhile, the question arises whether the two key European powers France and Germany are invested in the TTC. Both France and Germany’s support for the idea of “technological sovereignty” in recent years raises the question of how much Europe’s greatest powers are really invested in the success of the TTC.
Transatlantic relations were built in the industrial age of coal and steel; Now, in the digital age of semiconductors and AI, the TTC is a bridge to ensure the Euro-Atlantic alliance can face the rise of techno-authoritarianism around the world. Both sides get it. Maybe that’s what worries them most.
Read more about the TechCrunch Global Affairs Project