On 16 June the first EU-US Summit since President Biden took office (and the first in seven years) was held in Brussels. Dubbed ‘Towards a renewed Transatlantic partnership’, the meeting saw President Biden joined by Commission President Ursula von der Leyen, executive vice-president Vestager, executive vice-president Dombrovskis, high representative Josep Borrell and Council President Charles Michel. The packed agenda covered COVID recovery, climate change, trade and investment, and security. In terms of outcomes and conclusions, much remains high level but nonetheless clear areas of consensus emerged as well as a shared willingness to work together over the coming months and years. Here are the main takeaways.
From a geopolitical perspective, both sides aligned on strong treatment of China and agreed to closely consult and cooperate on approaches (this goes beyond existing commitments on supply chains, tech, shared values and rules-based multilateralism that are already aimed at Beijing). Indeed the main value of the summit was geopolitical from the outset: the entire orchestration was aimed at making a strong, joint stand as Western democracies, and to show that the US is back on the international scene. In that respect it was a success. For businesses, however, some of the more interesting developments lie in the detail, with progress on technology but lingering disagreements on how to address the sustainability challenge, notwithstanding the Biden administration’s strong commitment on climate.
On trade, investment and technological cooperation, both sides, as expected, reaffirmed their commitment to a rules-based multilateral trading system while at the same time driving forward the digital transformation agenda. Crucially they agreed to cooperate on the development and deployment of new technologies based on shared democratic values, including respect for human rights. To achieve this, the EU and the US announced the establishment of a high-level EU-US Trade and Technology Council (TTC) which should, among other things:
- coordinate, seek common ground and strengthen global cooperation on technology, digital issues and supply chains;
- cooperate on the development of compatible international standards;
- facilitate regulatory policy and enforcement cooperation and, where possible, convergence; and
- promote innovation and leadership by US and European firms.
More concretely, the TTC will initially include working groups with agendas focused on technology standards cooperation (including on AI and the Internet of Things, among other emerging technologies), climate and green tech, network security and competitiveness, data governance and technology platforms and the misuse of technology threatening security and human rights. It will also include a working group tasked with reviewing and strengthening the most critical supply chains, in order to rebalance, for example global supply chains in semiconductors with a view to enhancing EU and US security of supply.
Both parties also committed to establishing an EU-US Joint Technology Competition Policy Dialogue that would focus on approaches to competition policy and enforcement, and increased cooperation in the tech sector. Finally, while it had been reported that President Biden was hoping to push for a ‘political agreement’ to fast-track negotiations over the successor to the EU-US Privacy Shield, in the end it was only agreed that the two jurisdictions would continue to work together to ‘strengthen legal certainty in Transatlantic flows of personal data’ (this wording would seem to reflect the EU’s insistence that any successor arrangement would need to stand up to legal challenge).
Going further: Over the coming months it is expected that no fewer than 10 separate working groups will be to established as part of the TTC. It is clear that the overarching ambition of the TTC will be to provide an alternative model to China which in many areas, including for example AI, is is already ahead. China continues to leverage its vast market, more lax regulatory regime, and significant investment in the technology which is of increasing concern to Biden and von der Leyen. For the EU and US, the focus remains tech at the service of individuals in full respect of human rights and democratic values. In practice however, both sides are also taking different paths, although with the same goal in mind. In the US the focus is on investment and 'building by doing’, whereas the EU continues to shape its vision through legislation which it hopes will inspire other jurisdictions and set a global standard. Much more will also be required to make the political ambition on data flows a reality – the EU continues to wait for legally-binding commitments from the US but there are no indications yet that they will materialise. Much like digital regulation and policy, on the competition front – despite similar goals having being spelled out – the EU and US are expected to crack down on platforms and Big Tech in differing ways. Finally, it is telling that there was no mention of global taxation despite the EU’s upcoming digital taxation plans, of which the US remains very critical in light of the recent G7 deal and the potential of an agreement in parallel OECD discussions.
In terms of climate change and sustainability, the EU and US committed to establishing a High-Level Climate Action Group, with both parties reiterating their unwavering support for becoming net zero economies no later than 2050, aiming for an ambitious outcome at COP26 and continuing to support the Paris Agreement. In addition, the existing EU-US Energy Council will continue to lead coordination on strategic energy issues, including decarbonisation of the energy sector, energy security, and sustainable energy supply chains. Furthermore, both sides will work towards a Transatlantic Green Technology Alliance to foster cooperation on the development and deployment of green technologies, as well as promote markets to scale such technologies. Finally, the EU and the US have pledged to jointly promote a successful and ambitious post-2020 global biodiversity framework at the 15th UN Biodiversity Conference of the Parties (COP15).
Going further: What still is not clear is how the US will respond to the EU’s upcoming Carbon Border Adjustment Mechanism (of which Washington is critical given its potential to hit US businesses), or more broadly on how to jointly put a price on carbon. In addition, where the EU is going through a painstaking process to define precisely which economic activities are sustainable and which are not as a means to guide investment, the US is holding back on signing up to a sustainable finance taxonomy even though it recognises the importance of climate disclosure. Where the EU is targeting climate change with regulations and tariffs, the US is banking on innovation, technology and private investment: a fundamental difference of approach (and one that is echoed in the tech space) which will require a lot of back and forth before common ground is found.