Modest Proposal: Focus US-EU Cooperation on Handling China’s Technological Rise

The incoming Biden administration has created a renewed opportunity for US-EU cooperation on technology, particularly in dealing with China’s technological rise. To that end, the European Commission (EC) on December 2 released an ambitious document, “A New EU-US Agenda for Global Change.” The agenda is as aspirational as it is sprawling, advocating greater cooperation on everything from climate and Covid to technology. The tech section alone references a laundry list of issues, including digital taxation, data governance, online privacy, and antitrust.

Viewed from 40,000 feet, there is broad US-EU alignment on supporting liberal democracy and countering “rival systems of digital governance” (read: China). But looking at many of the specific tech issues mentioned in the EC’s agenda, Washington and Brussels are often far apart, if not in direct conflict. Even within the United States, partisan divides complicate the formation of any national position on these issues. Given those complications, taking US-EU tech cooperation from aspiration to reality will require narrowing the scope considerably.

On the technology front, effective cooperation could first focus on the main area of genuine agreement: using technology policy to shape China’s technology capabilities and influence abroad. Below are three broad and modest suggestions on how to advance that shared goal.

1. Don’t let trade irritants derail tech cooperation
2. Focus on export controls and standard setting
3. Don’t overlook the developing world

1. Don’t let trade irritants derail tech cooperation

Central to the EC’s recommendations is creating a new “EU-US Trade and Technology Council” to address everything from technology and World Trade Organization reforms to “solving bilateral trade irritants.”

Trade and technology certainly intersect, but the prospects for cooperation on trade or WTO reform remain dim. US domestic politics on trade have shifted considerably, and that’s not changing any time soon. President-elect Biden recently put it bluntly: “I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers.” The selection of Katherine Tai as the new US Trade Representative also suggests an immediate focus on implementation of the USMCA or the phase one trade deal with China.

By contrast, US-EU cooperation on technology issues—especially vis-a-vis China—likely has better prospects in Washington. The digital infrastructure being built today will have major impacts for years to come, and these developments aren’t waiting for the US-EU alignment on trade. The proposed council should clearly segment the trade and tech work streams, placing a greater emphasis on tech.

2. Focus on export controls and standards setting

Even within technology, both governments are faced with a menu of issues. In prioritizing among these, they should focus on two where some common ground already exists and where actions today may lock in long-term trends: export controls and technical standards.

Coordinating export controls on key technologies presents the highest-leverage opportunity for capping Chinese capabilities and blunting illiberal uses of technology. But recent US government attempts to restrict semiconductor-related exports to China hinged on informal agreements with allies and have frequently been stymied by unilateralism. Harmonizing US and EU export controls won’t be easy—it will likely require alternative solutions to offset the loss of export markets by existing players.

Figure 1. Beijing Municipal Government Subsidies for Standards SettingSource: Beijing Municipal Administration of Market Supervision.

In international technical standards-setting, both governments are mulling a more active role to counter alleged manipulations by China, such as bloc voting by Chinese technologists and government subsidies (see Figure 1). Here, light-touch US-EU cooperation can promote interoperability, and modest resources can go a long way by ensuring technologists can, at a minimum, send fully staffed delegations to meetings.

3. Don’t overlook the developing world

The risk of focusing on transatlantic cooperation is missing the forest for two big (and wealthy) trees. While the US and EU are pivotal producers of technology, the majority of future consumers are spread across diverse low- and middle-income countries. This is where American and Chinese apps are fiercely competing for new users (see Figure 2), and where Chinese surveillance technology is helping governments track activists.

Figure 2. China vs US Market Share of Top 10 App Downloads in 2015 and 2019Notes: *“Market share” refers to the percentage of total downloads out of the top ten non-gaming apps in each country, not downloads of all apps in those countries. The data includes downloads from the App Store (Apple) and the Google Play Store, and does not include apps that come pre-installed on Android and Apple phones. 2015 data for Nigeria and Egypt is from the App Store only.
Source: Sensor Tower.

If US-EU cooperation aspires to influence outcomes globally, it will require proactive engagement with governments, entrepreneurs, and technologists in the developing world. This is ambitious in scope and will take patience, but it has to start somewhere. So an important first step is to start filling in deficits of knowledge and build connections.

One very modest proposal for facilitating those connections: begin every meeting of the EU-US Trade and Technology Council with a presentation by, and dialogue with, a technologist from a developing country covering key issues in their own tech ecosystem.

As connectivity grows, further steps would include ensuring that technical standards account for accessibility issues, and that transatlantic R&D networks are extended to include researchers in developing countries.

These recommendations may appear modest, but bridging existing divides and building working-level relationships are crucial for making inroads toward a broader and bolder transatlantic cooperation. Concerns about China’s technology practices could well unite the US and EU around a meaningful technology agenda.

Matt Sheehan is a Fellow at MacroPolo. You can find his work on tech policy, AI, and Silicon Valley here.