Russia looms large at EU-US trade and tech talks in Paris | Business | Economy and finance news from a German perspective | DW | 16.05.2022

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Russia looms large at EU-US trade and tech talks in Paris

A trans-Atlantic forum meant to bring Washington and Brussels closer on digital and trade issues has switched gears to tackle global trade and supply chain disruptions sparked by Russia's ongoing aggression in Ukraine.

US Secretary of State Antony Blinken, center and US Secretary of Commerce Gina Raimondo, right with France's Foreign Minister Jean-Yves Le Drian

The TTC's agenda has changed dramatically in the wake of Russia's invasion of Ukraine

The second meeting of the EU-US Trade and Technology Council (TTC) near Paris on Monday had one overarching topic on the agenda — the global fallout from the Russian invasion of Ukraine.

The joint statement from the meeting mentions Russia several times, highlighting the council's groundwork in coordinating export controls and sanctions against Moscow.

"We already had a working structure in place at the TTC, lots of contacts and members in the working groups in the EU and the US were already working together when Russia invaded Ukraine," a senior European Commission official involved with the negotiations said in a briefing.

"So it was easy for us to change track and help target Russian trade and technology," he said.

The statement from the meeting said the US and EU plan to "enhance their cooperation" and information exchange on dual-use technologies and export controls.

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That refers to curbs on companies selling products to Russia that could have a military use. The aim is to limit Russia’s access to advanced technology for things like drones, software for encryption devices, semiconductors and advanced electronics.

'War has changed not just Europe, but also the world'

The focus on blunting Russia’s military and industrial capabilities shows just how much has changed since the inaugural meeting of the TTC was held in Pittsburgh last September. At the time, the meeting was nearly canceled after an angry diplomatic row with France over a quietly negotiated US defense deal with Australia to supply nuclear-powered submarines.

This time, the EU and the US are closing ranks to shut Russia out of the global economy as well as to shore up their own capabilities for everything from critical minerals to advanced microchips.

"The war has changed not just Europe, but also the world," Margrethe Vestager, European Commission executive vice president in charge of the bloc's digital agenda and one of the co-chairs of the TTC, told DW in an interview.

Margrethe Vestager

Margrethe Vestager, the EU's digital affairs chief, is known for taking on big tech

She added that the global instability sparked by the Ukraine conflict had eclipsed lingering irritants in EU-US relations.

"There are simply bigger things that we need to tackle together," Vestager said. "Our main task in the unstable geopolitics of today is to make sure we remain strong and that we work together much more closely with like-minded partners than we have done before."

Fighting disinformation despite differences

That has also meant closer coordination in the TTC on fighting information manipulation, interference and propaganda from Russia, as well as Russian disinformation campaigns in third countries, also relating to its invasion of Ukraine.

"It's remarkable how aligned we've been with the US in the sanctions on [Russian broadcasters] Russia Today and Sputnik as entities of war and propaganda to a degree previously unseen," Vestager said. 

"But the alignment is also increasing when it comes to online platforms because there is a fundamental respect for what legislators in a democracy decide to be illegal and not seeing that as limiting freedom of expression," she said.

Vestager recently spearheaded landmark legislation in the EU that would force Facebook, YouTube and other internet platforms to combat misinformation, disclose how their services amplify divisive content and take down flagged hate speech and incitement to violence — arguing it's needed to protect the fundamental rights of Europeans.

Paris US-EU Trade and Technology Council Treffen TTC

Trans-Atlantic cooperation focuses on everything from microchips and global trade standards to helping Ukraine

It's a stance that has sparked unease in the US, where regulating free speech remains a controversial issue. Washington has advocated a hands-off approach, warning that too many rules could hamper innovation.

"It's a sensitive topic because we don’t want to prevent freedom of speech but we need to identify and take action against Russian propaganda," Vestager said. "It's a big challenge we need to raise in the EU but also together with the US."

The TTC now speaks of pushing online platforms to make their algorithms more transparent and share more data with researchers. 

"We recognize the global nature of online platform services and aim to cooperate on the enforcement of our respective policies for ensuring a safe, fair and open online environment," Monday's joint statement said.

Beyond Russia, the TTC aims to fight wider cybersecurity threats and clampdowns on freedoms. Technology is being used to "perpetrate human rights violations and abuses, engage in forms of repression and undermine the security of other nations," the statement added.

'Early warning system' for semiconductor shortages

A key focus for the TTC has been making supply chains more resilient. The joint statement on Monday spoke of diversifying supply chains for rare earth magnets, the solar supply chain and, in particular, semiconductors — key components needed to make devices from smartphones to cars. 

A persistent industry-wide shortage of chips has hampered production in the car and electronics industries. The Ukraine conflict has further disrupted supplies of neon and palladium — crucial materials for microchips.

"Trans-Atlantic collaboration on supply chains and digital technologies is crucial to defend our common interests and values," Thierry Breton, EU commissioner for internal markets, said during Monday's TTC meeting. 

Semiconductor chips

The semiconductor crisis has hammered the production of cars and advanced electronics

The TTC statement talks of setting up an early warning system to better predict and address potential semiconductor supply chain disruptions and a trans-Atlantic approach to semiconductor investments to boost their production in the US and Europe.

Both sides were careful to point out they want to coordinate subsidies to chip producers to avoid a "subsidy race" spurred by separate US and EU acts to boost semiconductor research and production.  

The China factor

The elephant in the room is how to deal with China. With its focus on the Russian invasion of war, the TTC on Monday barely mentioned China in its joint statement.

But, many of its initiatives — investment screening, trade challenges, semiconductor supply chains — were initially directed at China.

China remains the dominant player in the semiconductor industry, with Chinese-owned firms buying chip companies around the world in recent years. That has raised concerns that Beijing could soon dominate certain sensitive technologies and use that as a strategic advantage.

China also looms large over Europe’s "green transition" as countries move away from Russian fossil fuels and invest heavily in renewables, increasing their reliance on China. The Asian giant dominates in key parts of the value chain when it comes to wind power, solar energy and electric batteries.

Unlike the US, EU officials have been keen to stress TTC should primarily be about working together, rather than targeting one particular country. 

"I don't think it should be an anti-China council," Vestager said. "We try to push a nuanced relationship with China. It's a systemic rival because we are strong democracies, it's an economic competitor but it’s also a partner, for example in fighting climate change."

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Edited by: Hardy Graupner

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