U.S. and EU Conduct Fourth Meeting of the Trade and Technology Council
On May 31, 2023, the United States and European Union held the fourth ministerial meeting of the U.S.-EU Trade and Technology Council (“TTC”). The TTC is a consultative forum created to coordinate approaches to key global trade, economic, and technology issues, and to deepen transatlantic economic relations. The TTC’s joint statement can be found here.
The fourth ministerial meeting covered a wide range of topics that focused on countering obstacles to the G7’s international rules-based system, including, among other things, diversifying supply chains, sanctions coordination, investment screening, and addressing emerging technologies such as quantum. Below is a select outline of the TTC’s outcomes and what to look for from the U.S. and EU going forward.
Cooperation on export controls and sanctions. Following Russia’s invasion of Ukraine, the U.S. and EU developed chains of communication to ensure that measures put in place to punish Russia for its actions were watertight. In particular, both the Treasury Department’s Office of Foreign Assets Control and the Commerce Department’s Bureau of Industry and Security have issued statements outlining the cooperation between the U.S. agencies and their European counterparts.
The TTC seeks to grow this cooperation through the consistent exchange of information on the application of controls as well as working to address enforcement and circumvention risks. Indeed, the U.S. and EU are coordinating with third countries to counter evasion of export restrictions on sensitive items and are conducting capacity building projects to enable third countries’ authorities to target export control evasion and circumvention more effectively.
Additionally, the TTC is working towards simplifying re-export procedures for exporters and developing a common understanding of how U.S. and EU export regulations are applied on both sides of the Atlantic. To that end, the U.S. and EU are also enhancing their technical consultation on regulatory developments.
Inbound investment screening. Last year, the U.S. announced measures aimed at strengthening its inbound investment screening mechanism, the Committee on Foreign Investment in the United States (“CFIUS”). The TTC recognizes the importance of CFIUS and similar EU mechanisms in flagging national security risks related to specific sensitive technologies and critical infrastructure. The TTC resolved to enhance U.S. and EU cooperation on inbound screening.
Outbound investment screening. Earlier this year, the U.S. took initial steps to “address the national security threats emanating from outbound investments from the United States in certain sectors critical for U.S. national security” and identify “the resources that would be required to establish and implement” such a screening program. The EU is also looking at developing a similar screening process for outbound investments. At the ministerial, the TTC recognized that addressing outbound investment concerns could be important to complement existing tools of controls on exports and inbound investments, and to that end, the TTC will be working on a coordinated response to outbound investment concerns pertaining to national security.
Semiconductors. One of the TTC’s overarching goals is securing supply chains for equitable use, which especially includes semiconductors as a critical technology. To that end, the TTC has developed an early warning mechanism for disruptions in the semiconductor supply chain. The TTC is also mindful of the competing U.S. CHIPS and Science Act and the European Chips Act. To prevent a “race to the bottom,” the TTC has put in place a consultation process to facilitate communication that will prevent further subsidy escalations.
Quantum technology. The TTC, recognizing the complex and fast-paced nature of the advancement of quantum technology, has established a joint Task Force to address open questions on science and technology cooperation in quantum technologies. The Task Force will be responsible for ensuring collaboration in research & development, the identification of critical components, standardization, defining benchmarking of quantum computers, and export control related issues for this technology.
Critical minerals. The TTC emphasized the need for the U.S. and EU to work together on supply chains for critical minerals, metals, and material inputs. The U.S. and EU are both reliant on imports, often from limited sources. This reliance leaves the countries vulnerable to disruptions such as geopolitical shocks and natural disasters. The TTC will be prioritizing securing the critical mineral supply chain going forward.
The U.S. and EU, despite recent irritants regarding subsidies in the aforementioned CHIPS and Science Act and the European Chips Act, will continue to develop their policy coordination and implementation on amicable terms. The transatlantic economic relationship still has a lot of room to grow with a laser focus on boxing out countries that are looking to circumvent the G7’s international framework. While there may be challenges in implementing some of the outcomes of the TTC’s meeting, the U.S. and EU will likely be able to contain any potential setbacks through constructive dialogues established by the TTC.