EU-US trade and tech talks stutter as decisive April meeting looms

Top EU officials struggled to keep EU-US trade and technology talks alive this week, with pressure on both sides of the Atlantic rising to lock in a final policy deal before the November US presidential election.

The EU-US Trade and Technology Council (TTC), a forum launched in 2021 to foster cooperation on strengthening semiconductor supply chains, curb China’s “non-market” trade practices and coordinate regulation of big tech firms, has been gradually losing steam.

“This ministerial meeting is a bit special because we haven’t a statement from the meeting,” European Commission Executive Vice-President Margrethe Vestager told reporters at the start of their US visit on Tuesday (30 January).

“We thought we needed to come together to prepare the steps for the meeting in April in Belgium,” Vestager said, about the sixth and potentially final round of talks in this format, expected to be the last before EU and US national elections this year.

Vestager said she was not certain how many deliverables would result from the next round but added ambitions for the meeting were “very high”.

Senior EU officials have voiced concerns that a second Trump administration could result in the dismantling of the format, removing yet another tool to keep transatlantic relations afloat.

“From our side, the ambition will be to maintain it, maybe in a second generation, but definitely to retain it,” Vestager said. “How the next presidential administration will look at it, is of course up to them.”

Concerns over China

“We have been engaged in intense discussions with the US on how to address discriminatory aspects of the Inflation Reduction Act,” Executive Vice-President Valdis Dombrovskis Dombrovskis said during the visit.

“We have made progress in some areas and addressed some of the concerns,” he added.

According to the top official, the EU side presented the bloc’s new economic security strategy to their counterparts to coordinate efforts with the US on export controls and foreign direct investment (FDI) screening. Efforts are also being coordinated on semiconductor chip production, but those efforts will not align perfectly.

“We are not going to be able to achieve 100% complementarity,” Dombrovskis said. “There is going to be some overlap (…) certain technologies and elements are important to develop on both sides of the Atlantic.”

The push comes as concerns about cheap, excess semiconductor chip production from Chinese companies have sparked EU investment in mega-fabs in countries like Germany, Italy, and France.

Subsidies for the design, implementation, and testing of semiconductor chips are also being considered, so the EU remains competitive in the semiconductor trade.

Vestager said the EU has been “very coordinated” with the US on this subject and a subsidy transparency dialogue is being developed. Hence, businesses are not inclined to relocate to either the US or EU expecting a larger subsidy.

Cheap Chinese production is also outstripping EU and US production when it comes to manufacturing steel and aluminium.

In December, both sides reached yet another interim deal to forgo their longstanding dispute over the Trump-era US Section 232 steel and aluminium tariffs through 2025.

But the short-term deal has been seen as a short-term fix, especially in light of a potential second Trump administration that EU officials suspect could undo and potentially cause further disruptions to the EU far beyond what occurred during the initial Trump years.

“On GSA [Global Arrangement on Sustainable Steel and Aluminium], indeed we regret we were not able to reach an agreement despite major efforts and constructive proposals,” Dombrovskis said.

Critical battery minerals

A battery minerals trade agreement, which would allow European companies to take advantage of generous US tax credits for electric vehicles, had been seen as a key topic of discussion.

Both sides had agreed to launch the battery minerals talks in March 2023 amid concerns that the Inflation Reduction Act (IRA), which provides tax credits for US clean energy investments, would divert projects away from Europe.

However, this week’s talks again failed to reach a trade deal on the issue but both sides vowed to press ahead with talks to create a transatlantic marketplace for minerals and other components.

Dombrovskis told reporters after bilateral talks in Washington that there remain some “outstanding issues” on the European side, including aspects of the IRA that Europeans see as discriminatory.

“I will not now give specific targets or deadlines on this,” Dombrovskis said. “But in this case, we think it fits in our broader agenda of both resilient supply chains and greening of the economy because many of those critical minerals are important for the green transitions of our economies.”

Dombrovskis added that despite differences, “we are willing to continue this engagement and eventually [reach] a comprehensive agreement.”

[Edited by Alexandra Brzozowski/Nathalie Weatherald]

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