First TTC Meeting Points to 'Concrete' Export Control, FDI Screening Actions, Experts Say

While too early to declare a success, the U.S.-European Union Trade and Technology Council has set both sides on a path toward tangible progress on more export controls and investment screening collaboration, experts said. During the inaugural TTC meeting last week, the U.S. and EU agreed to develop “convergent” export controls and share more information to catch malign foreign investments (see 2109290083), which could result in meaningful changes within the next year, the experts said.

“I think we should consider it maybe not a success, but at least quite good,” Cecelia Malmstrom, the European Commission’s former trade minister, said during an Oct. 1 event hosted by the Center for Strategic and International Studies. “The short-term issues that were discussed on the deliveries on investment screening, on export controls, on artificial intelligence, on semiconductors -- I really think that there will be something more concrete coming out in the spring.”

Robert Atkinson, president of the Information Technology and Innovation Foundation, said he is pleased the council discussed some “important things,” including exports, investment screening and addressing market-distorting trade practices. “I think it was a good start,” he said. “The real question I think is whether they can move forward with real concrete steps that can implement these very good statements.”

Atkinson particularly wants to see more U.S.-EU harmonization on export controls. “Clearly, you can't have effective export controls by the U.S. unilaterally,” he said. “It's not good policy for anybody.” He also called more investment screening cooperation a “no-brainer,” particularly because both the U.S. and the EU are seeing foreign investments from Chinese companies that hide their affiliations with the Chinese government. The U.S. revised its Committee on Foreign Investment in the U.S. last year to better catch those deals, which China uses to acquire sensitive U.S. technologies (see 2101220034).

“We just need to formalize that process where our people on the U.S. side who are looking at that are formally sharing information with their European counterparts, and vice versa,” Atkinson said. “I think that one just needs to be instituted.”

Officials at the Commerce Department’s Bureau of Industry and Security, which oversees dual-use export controls and contributes to CFIUS reviews, are also hopeful about the council. Matt Borman, BIS deputy assistant secretary for export administration, is “optimistic” the council can “at least start by identifying lower hanging fruit,” he said during a defense industry conference hosted by IDEEA one day before the TTC meeting. He said the “challenging part” will be “aligning on outward-facing requirements and policies and restrictions” related to export controls.

“Our secretary is very interested in this and will be frequently asking us how we're doing and what progress we're making,” Borman said. “So I think there's quite a bit of promise in the Trade and Technology Council.”

Melissa Griffith, a technology and security expert with the Wilson Center, said the council meeting was a “very good first start” toward more technology cooperation, particularly around standards and emerging technologies. “Technology cooperation is one of the areas we have the most opportunity to make progress on,” she said, particularly around “foundational technologies like semiconductors. I think there's a lot of room there.”

Although the U.S. and the EU didn’t publicly mention China after the meeting, panelists said some of the council’s published statements were clearly aimed at addressing unfair Chinese trade practices. Atkinson said he hopes the two sides can address China’s improper semiconductor sector subsidies, particularly as the U.S. and the EU work more closely to identify issues in semiconductor supply chains and address the global chip shortage.

“I'm not saying that the TTC has to evolve into a China-bashing thing. It shouldn't do that. But I think we need to keep in mind that this is a big challenge to both Europe and the U.S,” Atkinson said. “The Chinese, what they’re doing, is a challenge to the [World Trade Organization], to the global trading system, to human rights, and we need to keep that in the back of our mind as we work together.”