By Carl Schonander, Tech Policy Executive, Global Digital Finance Americas Consultant, Former U.S. Diplomat
Last month, Daniel S. Hamilton and Joseph Quinlan released their annual survey of jobs, trade and investment between the United States and Europe entitled: “The Transatlantic Economy 2021.” The growth of Asia notwithstanding, there is no question about it, this is still the world’s most important economic relationship. Coupled with the security relationship embodied in NATO, there is a natural tendency to ask whether the United States and the European Union should do more together to shape global developments, in particular to address challenges posed by Chinese behavior.
The EU stretched out its hand to the U.S. on December 2, 2020 when it released a Joint Communication
entitled: “A new EU-US agenda for global change.” The proposal to establish an “EU-US Trade and Technology Council (TTC) elicited attention in this context. It was the subject of discussion during the March 24-26, 2021 Wilson Center Transatlantic Conference where considerable skepticism was expressed. After all, we know from the Transatlantic Economic Council (TEC) experience that regulator to regulator conversation is hard.
But maybe a Council can help spur more than expected U.S. – EU tech policy cooperation, despite the EU’s decision to proceed with the EU – China Comprehensive Investment Agreement (CAI) without consulting the then incoming Biden Administration. Perhaps the best way of approaching this is to begin with President Biden’s comment that in politics, timing and pioritization is everything. Let the substance of what needs to be solved determine institutional cooperation, not the other way around.
Digital tax is a great example. Clearly that work has to continue to take place at the OECD. And the Biden Administration’s latest proposals with respect to the topic suggest – contrary to what FT commentator Edward Luce recently posited – that the Biden Administration is willing to “go big” with respect to at least some issues affecting the tech sector. To be sure, details will matter going forward. But assuming countries and sectors do not face discrimination, the Biden proposals could spark real progress.
What about some other issues? Is there any “low hanging fruit?”
Focus on Privacy Shield Successor and OECD Access to Government Data Work Stream
Wilson Center Transatlantic Conference participants talked about “low hanging fruit,” but they seemed to agree that there is not much to be picked. They were certainly all correct in emphasizing the need to come to an agreement on a successor agreement to the EU-U.S. Privacy Shield. In this context, it would be helpful if EU authorities pressed the OECD as aggressively as they have on digital taxation to complete the work stream on government access to data as soon as possible. This is important because if the expectation in Europe is that the U.S. Congress is going to codify a number of U.S. surveillance practices, Congress will likely insist on similar commitments from EU Member States. The OECD work should give EU members cover to do that.
Reach a Transatlantic AI Agreement
The EU is keen on reaching a Transatlantic AI Agreement. Some might even argue that this might be “low hanging fruit, but this may be harder than expected because of the EU White Paper on AI, which diverges from the NIST and OECD approaches. The White Paper also calls for, among other things, prior conformity assessments. Perhaps though, if a Council could come to an agreement on what AI applications are “high risk” and at the same time work on joint standards, for instance on explainability, that could make a significant contribution.
Stay away from competition policy
Competition policy is probably something that a Council would have a hard time productively engaging on. Fundamentally, this is because the EU is set on anti-monopoly enforcement through imposing ex ante rules that will, in effect, discriminate against U.S. firms. The fact is that the EU is philosophically (and politically) looking at market concentration by country of origin. For the EU, the issue borders on industrial policy so on this topic the U.S. will likely be acting defensively and monitoring to ensure U.S. companies are not unfairly disadvantaged.
Make sure money for emerging tech R&D does not lead to “picking winners”
A relatively new issue a Council might productively discuss is how to coordinate on both sides’ willingness to put more money into emerging technology R&D. After all, both the U.S. and the EU profess to the goal of accelerating tech development and making supply chains more resilient, but not “picking [individual company] winners.” So, it would make sense, for instance, for the U.S. and the EU to ensure that their efforts to increase advanced semiconductor production are complementary. True, the controversy in Europe surrounding U.S. pressure to stop ASML exports of extreme ultraviolet lithography (EUV) equipment to China has complicated transatlantic policy coordination in this space. The U.S. must take care to ensure that policy in this area is not perceived as rooted in an effort to favor U.S. competitor companies.
There is not much “low hanging fruit.” But EU policymakers should try to take advantage of the window of opportunity offered by the Biden Administration’s willingness to rethink policy choices as its tax proposals demonstrate.