US, EU forge closer ties on emerging technologies to counter Russia and China

The U.S. and European Union plan to cooperate more on technology regulation, industrial development and bilateral trade following President Biden’s visit, in a bid to help Western allies better compete with China and Russia on developing and protecting critical and emerging technologies.

Central to the increased coordination will be a new high-level Trade and Technology Council the two sides unveiled Tuesday. The aim of the TTC is to boost innovation and investment within and between the two allied economies, strengthen supply chains and avert unnecessary obstacles to trade, among other tasks.

“You see the possibility for alignment,” said European Commission Executive Vice President Margrethe Vestager in an interview.

In a sign of both sides’ aspirations for the council, it will be co-chaired on the U.S. side by Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai. The EU side will be co-chaired the Ms. Vestager, the bloc’s top competition and digital-policy official, and fellow Executive Vice President Valdis Dombrovskis, who handles trade.

As the EU’s top antitrust enforcer, Ms. Vestager has gained prominence for her cases against U.S. tech giants including Apple Inc., Google parent Alphabet Inc. and Facebook Inc. Former presidents Barack Obama and Donald Trump both said her policies unfairly targeted American companies.

Ms. Vestager has said her work doesn’t single out any nationality. The TTC, which is slated to hold its first meeting in the fall and oversee many working groups, will allow the EU and U.S. to focus on cooperation, she said. Both sides stressed they would maintain regulatory autonomy within their respective legal systems.

Unstated in the TTC’s official remit is a desire for the world’s largest liberal democratic powers to draw closer vis-à-vis China, Russia and other autocracies that wield increasing international influence. Mr. Biden’s weeklong trip to Europe centered around efforts to strengthen ties with Western allies and unite in response to adversaries.

The coronavirus pandemic has exposed weaknesses in Western economies’ manufacturing bases, resulting in shortages of vital goods from medical masks to microchips. Straining relations, Mr. Trump repeatedly criticized Europe for its economic, security and defense policies.

Mr. Biden has struck a contrasting stance, seeking compromise and partnership with Europe. The two sides agreed Tuesday to suspend a 17-year trade fight over subsidies to jetliner makers Boeing Co. and Airbus SE, the longest and most costly fight in World Trade Organization history.

Ms. Vestager said the trade deal “shows the potential for real, tangible results” from trans-Atlantic cooperation.

Microchips are likely to be an early focus of U.S.-EU cooperation, Ms. Vestager said, potentially via the TTC. The EU recently announced the objective of increasing its share of global chip-making from 10% to 20% and pledged more than $150 billion to the effort, which could come from coronavirus relief funding.

The U.S. Senate recently passed a bill allocating $52 billion to domestic chip manufacturing and R&D. It needs to pass the House and be signed by Mr. Biden to become law.

Washington and Brussels both want to increase domestic chip manufacturing to secure supply chains exposed by the coronavirus and to counter China. Beijing has made technological self-reliance a national goal, and the state and private sector are investing billions of dollars in domestic chip-making, although not all of its endeavors have been successful and Chinese companies still lag far behind Taiwanese, South Korean and U.S. counterparts.

Proponents of state aid for chip projects say it is necessary to level the playing field with Asian countries that have used generous incentives to grow their industries in the past couple of decades, transforming an industry that was dominated by the U.S. and Europe in the 1990s. The cost of building the most advanced chip-making plants has also skyrocketed to around $20 billion in recent years.

“Obviously, there are important assets on both sides,” Ms. Vestager said of the U.S. and EU. “I think it is a bit too early to say what will come of it, but clearly, the potential for cooperation has been registered.”

The TTC will also seek to align policies on regulation and standards for new technologies like artificial intelligence. China has made international standards-setting a national priority, especially for emerging technologies where norms have yet to be established.

AI and related technologies, like biometrics and voice-recognition, have raised ethical issues not encountered with more traditional technologies, and where fundamental differences over privacy and human rights divide the West and autocracies.

“I would really hope that as democracies we could agree on some of the fundamentals when it comes to standards-setting,” Ms. Vestager said. “There’s a possibility to show that when we say that democracies can deliver on the basis of democratic values, there is something real in that.” WSJ