Indo-Pacific Tech Alliance: A Euro-Atlantic Response

The Convergence of Technology and Global Politics

The TechCrunch Global Affairs Project focuses on the increasingly interconnected relationship between the technology sector and the landscape of global politics. This intersection is becoming ever more critical in the 21st century.

The Launch of the U.S.-EU Trade and Technology Council

From September 29-30, key figures from the Biden administration and the European Union convened in Pittsburgh, Pennsylvania – a former steel mill transformed into a startup accelerator – to inaugurate the U.S.-EU Trade and Technology Council (TTC). If successful, the TTC could serve as a transatlantic counterpart to the Quad in the Indo-Pacific region, representing an initial step towards a new democratic tech alliance.

A Pivotal Tech Corridor

While political attention in Washington often centers on the Indo-Pacific, particularly concerning China, the U.S.-EU relationship constitutes an equally, if not more, significant technological corridor. Data flows between the Euro-Atlantic region are 55% larger than those between the U.S. and Asia, highlighting its importance.

The TTC provides a strategic platform for the Euro-Atlantic partnership to leverage this substantial democratic digital connection, especially given the ongoing global competition in the geotech sphere involving the U.S., China, and the EU.

Key Areas of Focus

The 17-page Pittsburgh TTC statement details a future roadmap and establishes numerous working groups to address crucial issues. These include technical standards, secure supply chains, data governance, foreign direct investment (FDI) screening, green technology, the misuse of technology in human rights violations, and the promotion of open economies. Although China is not explicitly mentioned, the statement contains references to “non-market economies,” “civil-military fusion,” and “social scoring” by “authoritarian governments” – widely understood as allusions to China.

Technical Standards and Geopolitical Influence

Three specific areas are particularly noteworthy. First, the U.S. and EU are re-evaluating their approach to technical standards. A Chinese proverb suggests that companies excel at different levels: product creation, technology development, and standard-setting.

In September, China unveiled its Standards Strategy, aiming to increase the international reach of Chinese technical standards and encourage greater private sector involvement in their development. Both the U.S. and EU have recognized the potential for standards to be utilized for geopolitical advantage.

They acknowledge that their previous reliance on the private sector for standard-setting has resulted in a loss of ground, as entities linked to the Chinese Communist Party (CCP) have gained influence within organizations like the International Standards Organization (ISO) and the International Telecommunications Union (ITU). Consequently, dialogue has been revitalized between the National Institute of Standards and Technology (NIST) and its EU counterparts, with the TTC serving as a venue for coordinating standard-setting strategies and private sector engagement.

Securing Tech Supply Chains

Second, the disruptions caused by COVID-19 and escalating U.S.-China tech tensions have exposed vulnerabilities in Euro-Atlantic tech supply chains, particularly in semiconductors. The U.S. share of global chip manufacturing has decreased from 37% in 1990 to 12% in 2020, while the EU has experienced an even more substantial decline, from 44% to 8% over the same period.

Both Washington and Brussels are dedicated to reversing this trend. The recently enacted $52 billion CHIPS Act in the United States, coupled with the forthcoming European Chips Act – potentially leveraging the €93 billion Horizon Europe fund and the EU’s €750 billion post-COVID recovery fund – demonstrates this commitment.

Despite potential concerns about competing industrial policies, both European Commission Executive Vice President Margrethe Vestager and U.S. Commerce Secretary Gina Raimondo expressed a desire to “avoid a subsidy race.” The TTC’s dedicated semiconductor track offers a framework for a collaborative agenda focused on advanced semiconductor production, with an emphasis on balance and mutual benefit.

Managing Foreign Technology Flows

Third, restrictions on Huawei 5G equipment, revelations regarding Xiaomi phone censorship, and acquisitions of European companies by entities like Tencent have prompted both sides to scrutinize the management of critical technology flows. Tools such as export controls, FDI screening, and trustworthy vendor lists are being considered.

Historically, the EU and U.S. have applied dual-use export controls based on concerns related to nuclear, chemical, and biological technologies, as well as cybersecurity. However, recent developments have introduced new challenges in governing digital spaces, particularly concerning investment screening and trustworthy vendors.

Regulators are also focused on safeguarding democratic data spaces and protecting research and intellectual property in areas like AI, semiconductors, 5G, gaming, AR/VR technology, and digital services. Enhanced intelligence sharing between American agencies like the Bureau of Industry and Security (BIS) and the Committee on Foreign Investment in the U.S. (CFIUS) and their European counterparts will be crucial as EU member states expand their screening and market access restriction capabilities.

A Transatlantic Rulebook for Technology

If successful, the TTC could become the mechanism through which the U.S. and EU establish global standards for technology companies. In recent years, the EU has proactively regulated digital technology, leading the way in areas such as data protection, content moderation, and the regulation of online platform power.

While some in Washington acknowledge Europe’s efforts in the absence of robust U.S. regulation, this “Brussels Effect” has also generated tension, particularly regarding data flows and digital antitrust.

Challenges and Skepticism

Data transfers between the Atlantic region remain uncertain following a 2020 court ruling that invalidated the Privacy Shield. Furthermore, major tech companies are actively challenging the EU’s landmark law aimed at curbing the dominance of online platforms.

Many Europeans harbor skepticism about the U.S. as a reliable partner, citing the Snowden affair, the 2016 U.S. election, the Cambridge Analytica scandal, and the Facebook Papers. A recent survey revealed that a significant majority of Europeans believe their nations are overly reliant on U.S. companies for cloud computing, AI, and high-performance computing.

The commitment of France and Germany, two key European powers, to the TTC is also a question, given their emphasis on “technological sovereignty.”

A Bridge to the Future

The transatlantic relationship, historically built on industries like coal and steel, now requires a new foundation in the digital age of semiconductors and AI. The TTC represents a bridge to ensuring the Euro-Atlantic alliance can effectively address the rise of techno-authoritarianism worldwide. Both sides recognize this imperative, and it is perhaps this realization that concerns them the most.