US, EU tech policy is divided by more than the Atlantic. Can the new Trade and Technology Council realistically bridge the gap?

Profile picture for user slauchlan By Stuart Lauchlan September 29, 2021 Audio mode
Summary:
Can a new tech talking shop bridge the divide between the EU and US attitudes towards digital regulation? The views of US Secretary Raimondo and European Commissioner Breton are upbeat, but are they realistic?

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The US-EU Trade and Technology Council (TTC) meets for the first time today to try to find common ground between Europe and the US on a number of key digital strategy policies. But can this new organization really bridge a gap between the two blocs that at times has seemed insurmountable?

The TTC was set up in June this year, announced in Brussels by European Commission President Ursula von der Leyen and US President Joe Biden during his visit there. Its mission statement was outlined as:

The TTC will serve as a forum for the United States and European Union to coordinate approaches to key global trade, economic, and technology issues and to deepen transatlantic trade and economic relations based on shared democratic values.

The Council is due to meet at political level at regular intervals to steer co-operation in a number of key areas, including:

  • Expanding and deepening bilateral trade and investment.
  • Avoiding new technical barriers to trade.
  • Co-operating on key policies on technology, digital issues and supply chains.
  • Supporting collaborative research.
  • Co-operating on the development of compatible and international standards.
  • Facilitating co-operation on regulatory policy and enforcement.
  • Promoting innovation and leadership by EU and US firms.

It’s all very admirable in its intent, but it’s got a lot of heavy lifting to do in terms of turning all that into reality. On matters tech and digital, Europe’s intentions have long been eyed with skepticism and at times open hostility from the US, while there are those in Brussels over the years who have appeared hellbent on beating off the US tech sector with a regulatory big stick and just a tad too much obvious zeal.

Ex-President Donald Trump regularly pitched a lie to the MAGA faithful that the EU had been set up with the purpose of doing down America. That’s utter drivel, of course, but suspicion of Europe and its digital activities pre-dates him, with Barack Obama at one point accusing Brussels of naked protectionism, arguing:

Oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out their commercial interests.

It’s that kind of historical context that leads to an op-ed article at Barrons by Myron Brillian, Head of International Affairs at the US Chamber of Commerce, which bluntly notes:

Unfortunately, some EU officials seem to think the best way to boost the fortunes of European tech firms is by discriminating against their US competitors—including through unilateral taxes and onerous regulatory requirements that single them out. These measures aim not just to assert the EU’s “technological sovereignty” but to bolster the EU’s standing as regulator to the world. Our experience with the General Data Protection Regulation suggests that once EU policies are set, there is little room for flexibility, and the emphasis is on pushing other countries to follow suit.  

Ouch! In other words, it’s not just the Atlantic Ocean that divides Brussels and Washington.

Talking shop? 

So can there be rapprochement and common purpose with the TTC or will it be another talking shop with suitably PR-friendly headlines on the other side of it?

My eye was caught by a debate at last week’s Dreamforce in San Francisco between US Secretary of Commerce Gina Raimondo and Thierry Breton, European Commissioner for the Internal Market, which helpfully went over some of these questions and provided some useful color in advance of today’s inaugural gathering.

It got off to a conciliatory start with Breton rejecting the idea that the EU is more fixated on regulation of the tech sector than the US:

I we don't think that we are in a race here. I believe that we share the same values, we share the same view.

That was a sentiment welcomed by Raimondo who stated:

I don't think of it either as leading/following. I fundamentally agree we share the same values, whether that is promoting innovation, promoting market-based competition, keeping consumers safe, and having the appropriate level of regulation in order to do all that without stifling innovation.

But there’s a but coming - and in this case, it was the EU Digital Markets Act (DMA) that provided the trigger as Raimondo went on:

We have a great many concerns of the DMA. I hear [this] from the tech industry all the time. It's not that we disagree on the fundamentals. That's why...we're going to meet and we're going to talk and find how to structure regulations that are consistent with [EU] values and respect their different governments and different court systems. I would say there's fundamentally so much more about which we agree than disagree.

Competition clash

That opened up a discussion on the subject of competition and free markets. This is where the EU and the US have been most divided, with the advance of the US tech sector into Europe regarded with alarm by many European politicians and legislators. The harsh reality is that the global tech sector is led by US firms. Being perceived as trying to regulate to prevent competition is a touchy topic as Raimondo went on to prove, albeit in diplomatic terms:

The challenge with setting broad policy is that if you over-regulate, you have the effect of stifling innovation. In certain circumstances if there's too much M&A and too many mergers in a particular industry, it is certainly true that any given company, through these acquisitions, can become too big, can buy up all the intellectual property in an area. That is cause for serious concern and  we have to look at breaking that up or taking actions.

Having said that, I worry we worry about being overly-broad in regulating an entire industry or discriminating against any particular industry, because at the end of the day, it is innovation and our market based economy that is the engine of growth and productivity.

But that’s not likely to change many hearts or minds in Brussels, as Breton responded:

We have seen some situations that we believe are not exactly matching good behavior in competition in the digital space. Of course, it's extremely complex, because the last time we organized the digital space, at least in Europe, was in 2000, 20 years ago. Since then, nothing's happened. It doesn't mean that we need to do this every 10 years... things that we are doing now, we think it should last hopefully for the next generation.

And for every bit of 'America First' rhetoric that crosses the aisle in Washington, Brussels looks ready to match it. Breton stated bluntly:

At the end of the day, I think it's important to understand [that] what we are doing - at least us in Europe - it's for our European fellow citizens. We don't do this against anybody. We don't do this against any companies. We are just doing this for our people because it is our mission and as a Commissioner in charge of digital, it's my job.

So, how to bridge the gap? This, of course, is where the new TTC is intended to do its good works. Raimondo said:

This relates to the work we're going to do in the US-EU Trade Technology Council. It's extremely important that like-minded democracies that share the same values about market-based competition, about privacy, about protecting the consumer, about security, that we together write the rules of the road. That's why I think even though we will disagree, we sit at the table long enough to find common ground.

My take

When we sit down to work, I think we will be able to get a lot done.

It’s an optimistic point of view from Secretary Raimondo, but one that I struggle to see coming to much fruition in practical terms. The EU in general was upbeat when Joe Biden replaced the Trump administration in the hopes that better relations might be resumed.

But as diginomica has noted on multiple occasions, the fact that Biden isn’t as openly aggressive towards the EU doesn’t mean he’s not going put his own political policies first. The recent AUKUS nuclear submarine alliance between the US, UK and Australia and the resulting diplomatic fury from the Macron administration in Paris makes Trump’s threats of a wine war with France look like small beer.

For all that Breton and Raimondo talk up shared values, the reality is that there are massive areas of divide, not least around data privacy and data transfer policies. With the EU doubled down on GDPR and the US unable to get a Federal consensus on the matter, Washington at this point looks more likely to approve of the UK’s opportunistic edging away from stricter regulation than to Brussels dogmatic stance. 

I genuinely wish the TTC well. It could be a vehicle to do a lot of good if vested interests on both sides can be contained. The trouble is, I don’t believe they can. There’s too much at stake. It’s that old standards body cliche again - pose happily for the cameras and issue high-minded statements of positive intent around the greater good; then fight like a bag of cats to protect your commercial interests as soon as the cameras go away.