EU Weekly | Trade & Tech Grandees Meet in France to Bolster Transatlantic Cooperation
Also — Brexit is Back, Solidarity Lanes, Child Abuse
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EU-US TTC Holds Second Meeting in Paris
EU and US tech grandees met in Paris on 15-16 May for the second US-EU Trade and Technology Council (TTC) — with the war in Ukraine, and resulting disruptions in global supply chains, in the backdrop of conversations. The Council saw both parties agree on reinforcing information exchanges on export of critical technologies as well as maintaining a united front against Russia’s war in Ukraine.
TTC 101 • The TTC was originally launched in September 2021 as a forum to “discuss and coordinate on key global trade, economic and technology issues and to deepen transatlantic relations based on shared democratic values whilst upholding each party’s decision-making autonomy”, according to the French Foreign Affairs Ministry. The TTC is divided into working groups which gather officials from the relevant departments. The TTC focuses on five key areas of cooperation : export controls, foreign direct investment screening, supply chains, technology standards, and global trade challenges.
BACKGROUND • According to Rebecca Arcesati, from MERICS, “this TTC ministerial takes place against the backdrop of a radically different geopolitical environment”. Be it the COVID 19 pandemic, the threat China poses to the global economy or the war in Ukraine, requires both sides to rethink their entire value chain resilience policy, affirming a common will to create a green, open, global market based on fair competition among them. Also on their agenda are intensification of the work to resolve existing disputes, cooperation in investment screening, prevention of unnecessary barriers to trade and capital mobility, and reduction of dependencies on unreliable sources of strategic supply.
UKRAINE • The TTC has been hailed as an important forum of EU-US coordination on sanctions against Russia, a role which is reaffirmed by the joint statement. The co-chairs of the TTC agreed to further strengthen export controls to Russia on key military and cyber technologies, especially dual use goods. The TTC also vowed to align on their fight against Russian disinformation.
SECURE SUPPLY CHAINS • Cooperation on war-proofing supply chains has also been at the centre of discussions between EU and US representatives. The focus of talks was building more supply chains in rare earths magnets, solar panels, and of course semiconductors. The overarching goal of the TTC talks is to ‘friend-source’ more of the key bits of global supply chains.
TECHNOLOGY STANDARDS • The TTC agreed to establish a Strategic Standardisation Information (SSI) mechanism, whose aim is to “promote and defend common interests in international standardisation activities”. This is evidently supposed to get the EU and the US back to speed in terms of setting the norms for emerging technologies such as 5G and 6G, where China paves the way.
BIG TECH • A week after Internal Market Commissioner Thierry Breton visited Elon Musk to talk about platform governance, the TTC reaffirmed the EU and the US’ support for an “open, global, interoperable, reliable and secure internet”, citing the recent Declaration for the Future of the Internet and the declaration on European digital rights and principles.
Are technology companies onboard ? Soon after its first inaugural meeting in Pittsburgh, a consultation platform was launched for stakeholders to give their opinion on what transatlantic cooperation should be. Several technology companies, including Micrsoft and SAP signed an open-letter on 13 May. “Coordination — if not convergence — on digital governance is essential to the future of the transatlantic relationship, both in terms of striking the right regulatory balance between trust and innovation, and in aligning and collaborating on countering cyber threats, disinformation, etc. Such norms of digital governance will be stronger and more exportable to open societies in the wider world if they are agreed between its two largest blocs”, the open letter reads.
SUSTAINABILITY • The TTC also agreed on closer cooperation to facilitate the dissemination of green goods and services, align approaches on greenhouse gas lifecycle of products, and the establishment of a Trade and Labour Dialogue, with the participation of social partners on both sides.
NEXT ONE • The next TTC meeting is planned before the end of 2022 in the US.
Commission to Establish ‘Solidarity Lanes’ to Get Ukraine’s Food to the EU
Ukraine’s Black Sea ports, which account for 90% of the country’s food exports, are under a Russian blockade. More than 40 million tonnes of grain destined for the EU are waiting in storage to be exported. The Commission announced its intention to establish “solidarity lanes”.
VIA TRITICUM • The “solidarity lanes” will address transport bottlenecks hindering Ukrainian exports to the EU. One of them is the incompatibility of Ukrainian wagons with most of the EU rail network, because of the difference in rail width, and resulting need to tranship goods to compatible vehicles. Measures that the Commission plans to put in place include:
A matchmaking logistics platform to connect the EU operators and Ukrainian grain sellers to serve as a “one-stop-shop” for agricultural goods exports from Ukraine;
Making additional rail slots available for Ukrainian agricultural export shipments;
Application of maximum flexibility by the national customs offices to accelerate procedures at the border crossing;
Making temporary storage solutions available on the territory of the EU.
EMERGENCY • With 20 million tonnes of agricultural products having to reach the EU by end July and the border waiting time of 16 up to 30 days for these wagons, coordinated and swift effort on the EU side is critical.
INTEGRATING UKRAINE • Ukraine`s integration into the Trans-European Transport Network (TEN-T) is a longer term objective the Commission is trying to reach through these “solidarity lanes”. With the reconstruction of Ukraine in sight, such a move would contribute to the establishment of new infrastructure connections. The country of Eugene Archipenko would increase its export capacity, and potentially make Ukraine eligible for the EU funding as part of TEN-T for the enhancement of its railways.
Brexit is Back
In yet another post-Brexit plot twist, the UK announced last week that it would bring forward legislation to unilaterally disapply parts of the Northern Ireland Protocol, which governs trade rules between Northern Ireland and Great Britain. The controversial move marks a low-point in EU-UK relationship following the agreement of a Brexit deal in December 2020 — and follows historical election results in Northern Ireland last week, which saw the pro-independence Sinn Fein party come on top.
PROTOCOL 101 • The Northern Ireland (NI) Protocol was agreed as part of the wider EU-UK Trade and Cooperation Agreement (TCA) to ensure a seamless flow of goods from Northern Ireland to the Republic of Ireland — a sine qua non condition to avoid erecting a border between both nations under the Belfast (Good Friday) Peace Agreement. In practice, this sees Northern Ireland remaining de facto in the EU’s Single Market, whilst border checks are run in the Irish Sea, between Northern Ireland and the main island of Great Britain — a solution that “squares the circle” between Brexit and Irish political and historical realities, according to remarks by Commission Vice President Maroš Šefčovič on Thursday.
NEIGHBOUR DISPUTES • Trade rules over Northern Ireland have concentrated most of the Brexit-induced acrimonies between the EU and the UK since the TCA was agreed. In October 2021, following grievances that the implementation of the Protocol was impractical, the EU published a set of ‘bespoke arrangements’ to try to ease frictions — ultimately making it easier for Northern Ireland businesses to continue importing goods from the rest of the UK and reducing customs paperwork by 50%. At the time, the UK’s Foreign Secretary Liz Truss had rejected the package, arguing that it would “worsen the current trading arrangements”, taking the UK “backwards, by creating more checks and paperwork”.
Things got even more tense after last week’s UK local elections, which saw the pro-independence, pro-Protocol Sinn Fein party win the most seats in the ‘Stormont’ Northern Ireland assembly. The Democratic Unionist Party (DUP), a vocal critic of the Protocol and runner-up to the elections, has so far refused to engage in the new assembly — a necessary requirement for a Northern Ireland administration to be formed — until its concerns over the protocol were resolved.
ARTICLE 16 • As EU and UK counterparts met last week for the inaugural Parliamentary Partnership Assembly meeting, tensions ran high. In a statement, Liz Truss said that the Northern Ireland Protocol had become the greatest obstacle to forming a Northern Ireland Executive. Breaking from the protocol thus became a matter of domestic peace and the government had “no choice but to act”. It is now rumoured the UK could trigger Article 16 of the Protocol, which would suspend parts of the treaty which are deemed to cause "economic, societal or environmental difficulties".
According to trade specialist and fellow substacker Sam Lowe — whose newsletter Most Favoured Nation we very much recommend reading — the UK’s demands over a renegotiation of the Protocol are numerous, though two stand out:
Reversing the burden of proof — To date, goods entering Northern Ireland are treated as if they are entering EU territory, and relevant customs checks apply. The UK would want to see that turned upside down, such that goods entering Northern Ireland should be treated as staying in Northern Ireland unless there’s a strong presumption that this would not be the case;
Enshrining grace periods — A number of grace periods were introduced to the Protocol over the past 18 months to help keep the trade flow as seamless as possible – even where such exemptions go against EU rules. It is likely the UK will insist on making these grace periods permanent.
In her latest piece on the matter, UK in a Changing Europe’s Katy Hayward explains that: “Two thirds of businesses have adjusted to the new post-Protocol trading arrangements (albeit under its partial implementation). To throw the whole regime up in the air for the benefit of the 8% who are still experiencing ‘significant’ difficulties would be hard to justify unless chaos was intended”
WHAT NOW • Things seem to have reached a standstill, and the UK Government may trigger Article 16 as soon as today. Should the EU feel UK actions create an imbalance, the Treaty allows for “proportionate rebalancing measures”. An arbitration can also be envisaged, which may rule over the validity of the UK’s triggering of Article 16 as well as the proportionality of EU’s countering measures, such as quotas.
As David Henig wrote for the ECIPE in February
“One side (the UK government, unionists and Brexit supporters) thinks that the EU is exaggerating the issues to punish the UK; the other side (the EU, nationalists, Congressional opinion in the US) thinks that the UK government is ideologically, and to an extent naively, putting a pure Brexit ahead of peace”.
EU Proposal Against Child Sexual Abuse Online Raises Privacy Concerns
On 11 May, the European Commission proposed a new set of rules to better combat child sexual abuse online. This comes as the number of online sexual crimes against children has increased by 64% in the past year alone, mostly due to underreporting throughout the Covid pandemic. Commission Vice-President for Promoting our European Way of Life Margaritis Schinas further stated that Europe “shamefully” remains “the global hub” for online child sexual abuse material.
CHILD PROTECTION • Under the proposed rules, providers will be required to report and remove child sexual abuse material from their services. Providers include online services platforms, interpersonal communication in chats apps and Internet access providers. App stores will also be required to implement safeguards to prevent children from downloading potentially harmful apps, whilst the Commission announced it would create an EU Centre on Child Sexual Abuse (EU Centre) to monitor the implementation of the regulation in cooperation with service providers, and provide support to child sexual abuse survivors.
PRIVACY CONCERNS • In a public consultation run by the Commission last year, participants insisted that the technology used to detect harmful content should not come at the cost of confidentiality and anonymity. This is particularly relevant for end-to-end encryption messaging services: in an interview with CNBC, Joe Mullin, a senior policy analyst at US digital rights group Electronic Frontier Foundation, warned: “[t]here’s no way to do what the EU proposal seeks to do, other than for governments to read and scan user messages on a massive scale”. Ella Jakubowska, a policy advisor at the NGO collective European Digital Rights (EDRi), further argued that the proposal as it stood “may constitute illegal generalised monitoring”.
The Commission has acknowledged the risks in the proposal:
“When executing the detection order, providers should take all available safeguard measures to ensure that the technologies employed by them cannot be used by them or their employees for purposes other than compliance with this Regulation, nor by third parties, and thus to avoid undermining the security and confidentiality of the communications of users” – European Commission
NEXT STEPS • The proposals, which build from the July 2020 EU Strategy for a More Effective Fight Against Child Sexual Abuse and the March 2021 EU Strategy on the Rights of the Child, will now be submitted to the European Parliament and the European Council for negotiations.
What’ve been reading this week
The European Centre for International Political Economy (ECIPE) reviews the ‘new wave’ of trade defence measures in the EU, going from the recently minted Anti-Coercion and Anti-Subsidy Instruments to the Carbon Border Adjustment Mechanism.
Emotions are running high, but Europeans must keep their cool and clearly state realistic goals with regard to the conflict in Ukraine, argues Sven Biscop for the Egmont Institute.
Exceptional circumstances show that the EU needs to revise the accession process, according to the ECFR’s Susi Dennison and José Ignacio Torreblanca. A status of ‘associate membership’ would provide the flexibility lacking in today’s overly rigid framework.
For the CEPS, Sophia Russack takes stock of the Conference for the Future of Europe, which, she contends, has shown that contrary to received wisdom, citizens are interested in the inner workings of European institutions.
The ECFR’s report on popular attitudes towards Europe, written by Pawel Zerka, has been released.
EU-UK relations are not doomed to acrimony and petty bickering, says Peter Holmes for the Progressive Economic Forum. In his report, he outlines how the British government that could succeed the present one in 2025 will have the opportunity to seek new terms within the EU-UK Trade and Cooperation Agreement (TCA).
Saying goodbye to Théo
This week, we say goodbye and good luck to Théo Bourgery, who has been co-edited EU Weekly for the past few months in tandem with our editor in chief, Thomas Harbor. Théo joins EURACTIV's Paris office to follow French politics. A graduate of McGill and the London school of economics, Théo joined What's up EU as News Editor after working for three years in the international affairs division of the Financial Conduct Authority (FCA) in London. You can follow Théo on Twitter.
This week’s newsletter is brought to you by Théo Bourgery, Thomas Harbor, Maxence de La Rochère, Kéram Kehiaian, Lyudmyla Tautiyeva, Viktoria Omelianenko, and Marine Sévilla. See you next Tuesday!