Normal service restored as EU and US agree to form closer research ties

After four years of strained relations between Washington and Brussels, US President Joe Biden yesterday agreed a series of new joint measures with the EU on research, technology and trade.

A new EU-US Trade and Technology Council (TTC) will help coordinate transatlantic policies on everything from artificial regulation and cybersecurity to securing key supply chains, in particular of microchips. The two sides will also launch an alliance on climate-friendly technologies, and mooted a possible new research initiative on biotechnology and genomics.

US and EU officials are proclaiming that the brief EU-US summit in Brussels, which immediately followed a NATO summit across town and the G7 gathering in Cornwall, on the south west coast of England, shows “the US is back.” America’s relations with the EU atrophied under its previous president, Donald Trump, who said he saw the bloc as a foe.

But analysts say there are persistent disagreements in technology matters that don’t begin or end with the previous US administration.

“It’s a very important signal after the Trump years,” said Fabian Zuleeg, chief executive of the European Policy Centre, a Brussels think tank. But the strained relations were “not just a hiccup of the Trump era,” he said. “I think the new administration in the US has actually gone out of its way to emphasise the partnership with the European Union, in a way that we have not seen for a very long time.”

Despite the fanfare, Biden surprised onlookers by foregoing a post-summit press conference, leaving European Commission President Ursula von der Leyen and European Council President Charles Michel to announce the outcomes without him. Von der Leyen said that the TTC is meant to expand EU-US trade and investment, “but we also want to discuss how we avoid new, unjustified technical barriers,” she said.

Von der Leyen highlighted AI, cybersecurity, and green technologies as high-priority areas for the TTC, which among other things will discuss common technical standards. The EU first proposed the TTC in December last year.

A joint statement published later on Tuesday evening added that Brussels and Washington will also “explore the possibility of developing a new research initiative on biotechnology and genomics, with a view to setting common standards.” Details remain scant for now. Research funding agencies either side of the Atlantic will also set up a staff exchange programme, while the Commission’s Joint Research Centre (JRC) and the US National Institute of Standards and Technology (NIST) will share “a new implementing arrangement” intended to “expand cooperation into new areas.” There will also be a new “Transatlantic Green Technology Alliance” to support the development and adoption of climate-friendly technologies, and to promote markets for them, as well as an EU-US Energy Council for decarbonising the energy sector.

The TTC is also expected to help the two allies respond to China’s grip on technology supply chains, which the COVID-19 crisis has brought into sharp focus. Harsh lockdown measures meant Chinese and Taiwanese factories have been unable to keep up with global industrial demand for microchips, resulting in major shortages of everything from cars to PlayStations.

Von der Leyen said finding ways to tackle the “urgent” semiconductor shortage was top of the TTC’s to-do list. “These are a key component in many industries with many significant supply constraints. and here it’s really worthwhile to work to improve the situation,” she said.The summit also made progress on a 17-year dispute over de-facto subsidies for Airbus and Boeing. The two sides pledged to extend by five years an agreement struck in March, which suspended import tariffs imposed by either side. In a conference call with journalists on Tuesday, US Trade Representative Katherine Tai said the announcement “resolves a longstanding trade irritant in the US-Europe relationship.”

While both sides want closer ties, their motivations differ, said Erik Brattberg, director of the Europe Programme at the Carnegie Endowment for International Peace, a US foreign policy think tank. “The Europeans are very interested in working with Biden on fixing the transatlantic trade agenda, in reigning in big tech in Silicon Valley.” Meanwhile, “the US very much views this as a way to get the Europeans on board in countering China when it comes to digital and technology issues,” he said.

“I think it shows that the EU and the US are willing to talk about it and try to find ways of coming together, but there will be divergent interests,” said Zuleeg. Moreover, “we should not forget that on the EU side we’re not necessarily talking about a unified position of the EU members,” he said.

Peter Chase, a former US diplomat and a senior fellow at the German Marshall Fund, a think-tank focused on relations between the US and Europe, said that while more cooperation is good, the TTC “is nowhere near sufficient to actually improve the broader relationship, and there are other issues that are not, apparently, being addressed,” such as legal obstacles to transfers of Europeans’ personal data to the US, whose surveillance laws the European Court of Justice (ECJ) has found to be at odds with the European Charter of Fundamental Rights.

Such problems are “going to get in the way of collaboration on even cybersecurity, and certainly on China,” said Chase. “How do you deal with China on an issue like [the Great Firewall] when you’re attacking the US for relatively minor issues, and China’s violations of the same things are egregious?” said Chase.

The joint declaration says the two sides will “work together to strengthen the legal certainty of Transatlantic flows of personal data.” But the ECJ ruling is an obstacle Chase does not believe the TTC is equipped to overcome. “All of this is going to end up back in the court,” he said.

Nigel Cory, a trade policy analyst at the Information Technology and Innovation Foundation, a Washington-based think tank, said that while the US is “extremely unlikely” to change its surveillance laws to satisfy the ECJ, “that doesn't mean that there aren’t other ways that the US can improve transparency and oversight in how it manages surveillance and access to data.” A new agreement on data flows should therefore be the TTC’s “first order of business,” he said. Zuleeg said that discussions in the TTC could help to ensure that any such agreement “is as court-proof as it can be.”

Another area of disagreement is corporate tax avoidance. While the Biden administration advocates a global minimum corporate tax rate, the EU is planning to tax digital services, most of which are provided by US firms. That would eat into US tax revenues, because American companies can offset taxes paid abroad against their taxable profits at home.