The Euro-Atlantic Tech Alliance

The Transatlantic Punitive Tariff Conflict

Over the weekend, the United States and the EU reached a truce in their dispute over US punitive tariffs on the Union's steel and aluminum shipments. An agreement concluded on the sidelines of the G20 Summit in Rome stipulates that punitive tariffs will remain in place, in principle, but an exemption quota will be introduced. EU steel exports from up to 4.4 million tons and export of untreated aluminum from up to 18,000 tons and treated aluminum from up to 366,000 tons will no longer be subjected to punitive tariffs. In return, the EU renounces on its retaliatory tariffs imposed, for example, on Harley Davidson motorcycles and US whiskey. US President Joe Biden had been under heavy pressure from the US business community to scrap the tariffs. They provided a few US steel companies minor advantages but imposed additional costs on other sectors, which process steel and aluminum, reduced their profits, and impacted consumers with higher prices for example for cars and washing machines.[1] Last weekend's agreement not only still upholds the threat of punitive tariffs, but it also limits tariff exemptions for a quarter of the steel quota to two years.[2] It will again be up for discussion prior to the 2024 US presidential elections.

The Instrumentalization of Climate Protection

Washington and Brussels are attempting to close ranks against Beijing with their new agreement. Their initial aim is to exclude steel produced in China from the transatlantic markets by using climate protection as an instrument. Over the weekend, US President Joe Biden announced that the United States and the EU want to set trade rules, which will block "dirty steel from countries like China." EU Trade Commissioner Valdis Dombrovskis said, the plan is to seek agreement on common trade rules to restrict "market access" for companies "that do not meet standards for low carbon intensity."[3] It is not clear however, how far Washington and Brussels will be able to agree on this issue. EU plans for a Carbon Border Adjustment Mechanism (CBAM), which follows a similar objective, have so far been rejected by the Unites States.[4] It is also uncertain if climate protection is, in fact, the tool to exclude Chinese companies. In April, US Steel, the second largest US steel corporation announced that it aims to achieve net-zero carbon emissions by 2050.[5] Baowu Steel, China's second largest steel mill is pursuing the exact same goal.[6]

The Trade and Technology Council (TTC)

Washington and Brussels' plans to set newer standards and norms - including climate protection standards - to increasingly isolate China and thereby halt its rise, is being also pursued through the EU-US Trade and Technology Council (TTC), established at its September 29 inaugural meeting in Pittsburgh. The TTC is aimed at setting new bi-lateral rule for trade and high-tech industries. “When we’re working together, we have a unique ability to help shape the norms and standards and rules that will govern the way technology is used," declared Secretary of State Antony Blinken at the inaugural meeting of the TTC.[7] This new format consists of ten working groups on matters ranging from global trade issues, export controls, supply chains, climate, clean tech, investment screening, and technology standards. The two sides affirmed their intention to develop artificial intelligence (AI) systems. There are also plans to jointly tackle the regulation of the major US internet companies ranging from Amazon to Facebook. Last but not least, there is explicit talk of joint efforts in semiconductors.

"The G2 for Technology Management"

In Berlin's foreign policy establishment, great hopes are placed in the TTC. Back in June, for example, it was said that the new trans-Atlantic community could be "a 21st-century answer to the Coal and Steel Community."[8] The European Coal and Steel Community (ECSC) had formed the basis for what later became the European Union. Alternatively, the TTC is also described as "the embryonic basis for "a Euro-Atlantic tech alliance," with the making for what could be the "hidden G2 for democratic tech governance."[9] The activities of TTC are currently being closely monitored by the Technology and Global Affairs Program of the German Council on Foreign Relations (DGAP), which, since October of last year, has been under the direction of Tyson Barker, who, prior to that position, had been an advisor to the US State Department and subsequently been in charge of transatlantic relations at the Bertelsmann Foundation. With regard to possible opposition to TTC, Barker - having the mass mobilization against the Trans-Atlantic Trade and Investment Partnership (TTIP) in mind - maintains that it has the "potential to be a very effective disinformation campaign for the Chinese."[10]

Transatlantic Differences

So far, however, some strongly contradicting views have been colliding with one another at TTC. Above all, the EU and USA do not agree on whether they should prioritize forming a common High-Tech block or whether China's exclusion should be the priority. The former is the position held by Berlin and the EU - due to a powerful segment of German companies having a massive interest in maintaining their business cooperation with the People's Republic of China. The latter being the prioritized position held by Washington. The respective positions are camouflaged behind partially inconspicuous details. According to a joint statement issued after the inaugural meeting in Pittsburgh, artificial intelligence (AI) should "respect universal human rights and shared democratic values."[11] According to western interpretation, this formulation could possibly serve to legitimize China's exclusion from transatlantic AI projects. In the debate about export controls, on the other hand, one of the main objectives is to reach agreement on uniform boycott rules. Currently, US regulations ban the EU's export of commodities to China, if they contain components made in the USA. This provides Washington the possibility for sabotaging European companies' commerce with China at will. In Brussels these regulations, of course, are contested.

[1] The Editorial Board: How Trump's Steel Tariffs Failed. wsj.com 17.05.2021.

[2], [3] Stuart Lau, David M. Herszenhorn: EU and US look to gang up on China after trade war truce. politico.eu 31.10.2021.

[4] Moritz Koch, Annett Meiritz: USA und EU entschärfen Strafzölle aus Trump-Ära - Streit aber noch nicht endgültig gelöst. handelsblatt.com 30.10.2021.

[5] Justine Coyne: US Steel aims to achieve net-zero emissions by 2050. spglobal.com 21.04.2021.

[6] Dan Moore: China Baowu Steel Group to cut output to reduce CO2 emissions. capital.com 10.08.2021.

[7] Matthew Lee: US, EU agree to further trade and technology talks. apnews.com 29.09.2021.

[8] Tyson Barker: The Hidden G2 for Democratic Tech Governance is the EU-US Relationship. A Starter Kit. DGAP Analysis No. 2. Berlin, June 11, 2021.

[9], [10] Tyson Barker: TTC Lift-off: The Euro-Atlantic Tech Alliance Takes Shape. ip-quarterly.com 30.09.2021.

[11] EU-US Trade and Technology Council Inaugural Joint Statement. 29 September 2021.