In early December, the Biden Administration will host the 3rd meeting of the US-EU Trade and Technology Council (TTC) here in Washington, DC. Launched in 2021, the TTC serves as the apex coordinating forum between the U.S. and EU on a range of trade, technology and national security issues. The Administration launched the TTC with great fanfare, announcing that America “was back” and committed to “deepen transatlantic trade and economic relations, basing policies on shared democratic values.”

 

The launch of the TTC came at a critical moment. The Coronavirus pandemic exposed the brittle nature of global supply chains. Governments discovered that the global economy was too integrated and complex for a single country or economic block to fully buffer itself against external shocks. The U.S. and EU recognized the urgent need to strengthen supply chain resiliency through “friend-shoring” in key industry sectors and advance shared values around emerging technologies and the digital economy.

 

But as U.S. and EU leaders prepare to convene in Washington, both sides have drifted from these commitments. If the pandemic and Russia’s unprovoked invasion of Ukraine forced a redefinition of supply chain resiliency, it also encouraged the pursuit of protectionist policies designed to reduce dependence on other countries, including allies. This trend has not been limited to manufactured goods – the rise of “digital protectionism” threatens to further fragment the global data economy, risking economic growth and innovation.

 

We therefore face the threat of the TTC being derailed by new and discriminatory policies. For example, under the draft EU Cybersecurity Certification Scheme for Cloud, the European Commission is preparing new technology sovereignty requirements that would de facto exclude technology players based on where their HQ is located. U.S. technology companies, who are heavily invested in the EU market, could be barred from providing Cloud services to both public and private sector clients.

 

Here in the United States, the Biden Administration has doubled down on “Buy America” rules for Federal procurements. While Buy America has been a long-standing policy, efforts to strengthen the provisions and close perceived loopholes have created anxiety and alarm among EU companies who have strong business ties with the U.S. Federal government. And earlier this year, Congress Passed the Inflation Reduction Act (IRA) which includes a new tax credit for electric vehicles which, as written, is explicitly designed to provide support only to U.S. auto manufactures. The EU has labeled this requirement as inconsistent and “clearly discriminatory” with the shared approach to building resilient supply chains with allies. Some EU leaders have threatened to retaliate against this measure, raising the prospect of a new transatlantic trade war.

 

As a company with over a century driving innovation and growth in both the U.S. and Europe, IBM has long opposed “Buy America” provisions that discriminate against our closest partners and allies and raise costs for the U.S. taxpayer. And we continue to encourage European governments to pursue digital policies that are based on shared values and not where a company happens to be headquartered.

 

It is therefore vital that the US and EU prioritize the issue of protectionism at the December TTC meeting. Specifically, we urge the two sides to:

 

1. Reaffirm an unwavering commitment to faithfully abide by the World Trade Organization’s Government Procurement Agreement.

 

2. Suspend the implementation of any discriminatory policy, regulation or law deemed to be WTO inconsistent until the two sides can address specific concerns through the TTC. The Biden Administration should make a public commitment to seek a legislative fix to the IRA’s discriminatory electric vehicle provisions with the incoming Congress.

 

3. Commit to pursue trade, procurement and technology policies based on shared values and not geography. As ‘fair competition’ and ‘open markets’ are shared values, the EU and the U.S. should remain committed to full transatlantic participation and openness, and refrain from developing policies that exclude each other from their domestic markets.

 

Failing to address the troubling trend of protectionism will only lead to further fragmentation of the transatlantic economy and undermine what should be the core objectives of the TTC: to strengthen technological, trade and economic resilience, drive innovation, and advance democratic values and institutions.

 

 

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