TTC

Tech lobby eyes opportunities created by new EU-US Trade and Tech Council

Tomorrow EU and US counterparts will sit down together for the first meeting of the EU-US Trade and Technology Council (TTC). This is a new transatlantic 'regulatory cooperation' effort with a special focus on the tech sector. Much is at stake in these discussions: from regulating tech giants to standards for artificial intelligence. Corporate lobbyists are keen to get a new industry-driven tool.

“The US should not enact new privacy or technology trade control regulations without consulting with the EU; the EU should pursue bilateral consultation to ensure technology initiatives like the Digital Markets Act reflect the EU-US values-based alliance.”

This appeal was made to President Joe Biden by Karan Bhatia, Google’s Vice’ President of Government Affairs & Public Policy, urging him to accept the EU’s proposal to set up an EU-US Trade and Technology Council (TTC).

The TTC is a new forum for regulatory dialogues between the EU and the US put forward by the Commission President Von Der Leyen in December 2020. This body is a new attempt to restart the trade relationship with the US Administration, after the rough patch during the Trump Presidency. Tomorrow it will meet for the first time.

The launch of the Council, with a particular focus on the tech sector, comes at a time when both blocs are looking at new ways to address the growing power of Big Tech firms and new technologies like Artificial Intelligence systems. Proposals at the EU level are particularly advanced as the EU institutions are currently discussing new rules to tackle the excessive market power of Big Tech and rules for handling illegal and harmful content (including disinformation); as well as high-risk artificial intelligence technology (including facial recognition and manipulative or discriminatory systems).

Von Der Leyen’s pitch to Biden included the need to work together on issues such as reducing trade barriers, agreeing “compatible standards and regulatory approaches for new technologies”,“deepening research collaboration and promoting innovation and fair competition”; but also foreign investment screening, intellectual property rights, forced transfers of technology, and export controls.

For anyone that followed the collapse of the trade talks between the EU and US for a Trans-Atlantic Investment Partnership (TTIP), and the ensuing failed trade negotiations with the Trump administration, this renewal of activity is ringing alarm bells. Despite its benign-sounding name, regulatory cooperation is heavily criticised for its threat to protections for consumers and the environment. Previous iterations of regulatory cooperation threatened to lower regulatory standards to a minimum common denominator, and even put companies being regulated in the driving seat of this process.

The words of Google lobbyist Karan Bhatia betray a new sense of enthusiasm from industry about the possibility that the TTC presents.

Regulatory cooperation emerged in the 90s via disputes between the two sides over sensitive regulatory issues, including chemicals, ozone depleting substances, food standards, data privacy, and more. Unable to deal with them in open talks on trade, the two sides instead opted for behind-closed doors fora, in which civil servants or ministers would attempt to find solutions, often in close cooperation with corporate lobby groups from both sides. Regulatory cooperation has broad implications for decision-making, for instance, it can enable another country to intervene at all stages of decision-making to ensure rules being made do not differ too much between blocs in a way that might affect free trade.

The intention was always to remove 'trade barriers', which all too often are regulations in the public interest. In fact there is one very important example of how a deal was brokered under regulatory cooperation that not only trampled on privacy rights, it proved to be in violation of EU law – the EU-US data transfer agreements.

This time around the Commission announced the approach would be slightly different: focused mostly on the technology sector via the creation of the Trade and Technology Council, matched with a Joint Technology Competition Policy Dialogue, at a time when the two blocs are looking for new ways (and some old ones) to regulate and rein in Big Tech.

Yet the words of Google lobbyist Karan Bhatia (a former Deputy US Trade Representative) betray a new sense of enthusiasm from industry about the possibility that the TTC presents.

In calling for the EU and the US to have to consult each other before passing new privacy rules or proposals like the DMA, Bhatia is also calling for these rules to be evaluated under the framework of eliminating ‘trade barriers’. This type of consultation has historically favoured the interests of multinationals.

Bhatia is saying the quiet part out loud. Regulatory cooperation can make it hard for each bloc to approve regulations, prioritising as it does the protection of free trade over the protection of people’s fundamental rights – whether it is to stop the abusive corporate surveillance of users, or to prevent tech giants from abusing their monopolistic market power – on both sides of the Atlantic.

Google’s interest in EU-US trade discussions is not a surprise. The tech giant has spent a good part of its lobbying in the past year pushing back against EU proposals for regulation of online platforms (read more here and here) and part of that strategy has been to paint the proposed rules as a threat to transatlantic relations.

Yet Google is not the only company interested on the proposal for a Trade and Tech Council. Via a mix of freedom of information requests and public position papers, we can now start to offer an overview of what industry is hoping to get out of this new chapter in EU-US trade relations.

If industry’s plans succeed, the EU-US Trade and Technology Council could become a threat to proposed new rules put forward by the EU to address high-risk AI systems and new responsibilities for the biggest tech companies to stimulate fair competition and prevent the spread of illegal and harmful content, including disinformation.

And there are troubling signs. Early leaked draft agreements included encouraging mentions to joint concerns regarding “gatekeeper power by major platforms" and their responsibility to protect democratic processes from the impact of their business activities.

The focus on the impact by the largest online platforms has been diluted in the latest leaked draft. In its place, a softer commitment to discussing “illegal and harmful content and their algorithmic amplification, transparency, and access to platforms’ data for researchers as well as the democratic responsibility of online intermediaries” and the appropriate measures to ensure fair competition.

President Von Der Leyen and President Biden

A new chapter of an old story

Corporate lobbies have long been pushing for regulatory cooperation between the EU and the US to be put back on the agenda. During Trump’s administration, the EU attempted to re-start negotiations with the US by proposing regulatory cooperation and conformity assessments covering a variety of sectors, to no avail.

In March 2020 US tech lobby group the Information Technology Industry Council, issued a set of recommendations for a 'European Tech Agenda' which included calls for the EU to develop the EU-US trade relationship by setting up a “structured dialogue between the US and EU to deepen trade engagement and facilitate greater cooperation on areas of common concern”. The group repeated the message in September 2020 in its submission to a Commission consultation.

Similarly, in July 2020 BusinessEurope – the group representing European employers’ associations plus firms like Google, Facebook, and Apple – contributed proposals on how the EU and the US ought to “build a positive agenda”. These included setting up a “formalised platform for high-level strategic dialogue related to trade and economic cooperation,” and called for the EU and US to “enhance their regulatory cooperation in various sectors, tailoring the approach to the specificities of each sector – especially in new and rapidly growing fields like digital technologies, artificial intelligence, cybersecurity, and smart textiles – and should implement a structured dialogue on regulatory cooperation".

Not surprisingly, the December 2020 announcement that the EU Commission was trying to revamp its trade cooperation with the US was met with warm support from the majority of business associations and multinationals.

facebook with frame

Tech lobbies quick to jump in

Just a week after President Von Der Leyen announced she would seek to create a TTC, Facebook sent an email to Valdis Dombrovskis, the Commissioner responsible for trade. Facebook wanted to “reconnect and discuss the outlook for EU-US transatlantic relations, international data flows and the new EU tech agenda, as outlined in the forthcoming EC’s Digital Services Act (DSA) and the Digital Markets Act (DMA)”.

Just two days after President Biden's inauguration on 20 January 2021, five US corporate lobby groups with Big Tech members wrote a joint letter to the new President urging him to accept the EU’s proposal to set up the US-EU Trade and Technology Council.

The tech lobby group ITI waited until after the Christmas holidays – they sent a letter to Commissioner Dombrovskis on 7 January 2021. ITI asked for a meeting to discuss approaches to digital trade and added they “are very supportive of the proposals for a Trade and technology Council”. IBM got in the fold in late January also asking for a meeting to share “some thoughts on the Transatlantic relationship and policy agenda as we enter this new phase of EU-US relations”.

In February 2021 the Trans-Atlantic Business Council (TABC) – a lobby group for multinationals with headquarters in the EU or the US – wrote to the Trade Commissioner to express their keen support for the EU’s proposals to set up a EU-US Trade and Tech Council “aimed at creating opportunities for market- and industry-driven transatlantic collaboration, strengthening EU-US technological and industrial leadership and expanding bilateral trade and investment”.

The TABC is blunter than most. The Commission proposal had indeed described the EU-US Council as being market-driven, but industry-driven is an addition from the lobby group.

Just two days after President Biden's inauguration on 20 January 2021, five US corporate lobby groups with Big Tech members (the Software Alliance, the Computer & Communications Industry Association, ITI, the Internet Association, and the National Foreign Trade Council) wrote a joint letter to the new President urging him, among other things, to accept the EU’s proposal to set up the US-EU Trade and Technology Council.

In February 2021 business lobby group the US Chamber of Commerce publicly urged President Biden to accept the creation of the TTC. Talking with Politico reporters, the Chamber's Senior Director for European Affairs disclosed that the group had held “a couple of conversations with the State Department” about the proposal.

Google went beyond asking the US to accept the EU’s proposal, they wanted the US government to “build on it”.

Tech lobby groups aren’t simply asking for support for the current proposal, they are actively trying to shape it, define the topics it should cover, what angle to prioritise and, importantly, trying to get a seat at the table of negotiations. They are trying to turn it into an industry-driven Council.

What should be up for discussion in the TTC?

In its meeting with Commissioner Dombrovskis, Facebook focused its attention on data transfers. The issue is of particular relevance for the social media giant as it has been in deep waters for its practice of transferring EU users' data to the US where users’ privacy might be violated due to the US’ surveillance policies. Activist Max Schrems then complained about the company's practice and the case was escalated all the way to the Court of Justice of the European Union. What came to be known as the Schrems I ruling ultimately struck down a data sharing agreement between the EU and the US – Safe Harbour.

Safe Harbour had been agreed between the two sides under regulatory cooperation. It was a response to US concerns over EU privacy rights, which they saw as an obstacle to trade and a major hassle for some sectors in particular. Under Safe Harbor it was agreed that, provided US companies would sign an agreement in which they promised to respect EU data privacy rules, there would be no further checks and balances to monitor compliance. The industry lobby group TABD was one of the protagonists pushing this through. As evidence mounted a decade later that many acted in breach of EU rules, the Safe Harbor Agreement came under pressure and the Schrems I court case finished it off (read more about it here, page 23).

After Safe Harbour failed, the EU and the US quickly negotiated a follow up: Privacy Shield. Yet this was also contested in court and struck down last year, in what came to be known as the Schrems II decision.

Now business lobbies are back, trying to find a quick fix to data transfers between the EU and the US. In its meeting with the trade commissioner, Facebook suggested that data flows should be on the agenda of the proposed Trade and Tech Council.

DigitalEurope has added detail to this push. It knows that renegotiating a data sharing agreement will take time so they want the TTC to “foster EU-US alignment on solutions to common challenges, such as government access, and drive our common goals in the international context”.

ITI is pushing for “global, industry-driven, voluntary consensus standards – including services standards – as a means of demonstrating conformance with new regulatory requirements”.

BusinessEurope also sees the Trade and Tech Council as an appropriate forum for transatlantic discussions on “safeguarding trusted data flows across the Atlantic, complementing the ongoing negotiations to agree in the short term on a robust EU-US privacy shield successor as well as work to operationalize 'Data Free Flows with Trust', and upholding workable data transfer mechanisms”.

The European Commission’s position seems to be that data transfers between EU-US is to be dealt with separately and at the World Trade Organization level. However, according to Politico's reporting, the US wanted data flows to be included in the Council. According to ITI lobbyists it doesn’t even matter whether data flows are a part of the TTC agenda, as they told Politico they were sure it would it would be discussed even if unofficially.

Joint standards on emerging technology and conformity assessments

The inclusion of the development of joint technology standards seems to be a common line for the industry lobby. BusinessEurope recommends, for instance, that the group deal with standards for everything from AI, to the Internet of Things, to 6G, to health data, to biotechnology. According to them, the aim should be to foster “innovation and market-driven standardisation" and that while fully harmonising the rules was not always possible “interoperability of frameworks should be the goal”.

ITI, on the other hand, is pushing for “global, industry-driven, voluntary consensus standards – including services standards – as a means of demonstrating conformance with new regulatory requirements”.

DigitalEurope argues in a similar vein but zeroes in on the upcoming new EU standards for Artificial Intelligence. The lobby group wants the EU and US to work together, alongside industry experts, to develop the AI standards which would “then be available to be referenced by regulation both in the EU and US".

The TABC argues the Trade and Tech Council should cover “specific areas that are of critical relevance for the future competitiveness of EU and US”, which in their view includes market access, data governance, cybersecurity, artificial intelligence, regulation and standards, digital resilience and platforms governance, and low carbon technologies. TABC then suggested that the TTC should also include “a relaunch of the EU-US engagement on conformity assessments”.

DigitalEurope wants mutual recognition for the conformity assessments to be applied directly to issues relating to cybersecurity, product safety, and “new AI rules, such as the proposed EU AI Act and its chapter on market access obligations”.

BusinessEurope wrote to Commissioner Dombrovskis and called for “a more active involvement of the European and US business communities in the relevant TTC discussions”.

Mutual recognition of conformity assessments, alongside regulatory cooperation, has been the goal of many industries for many years. Its expansion was promoted by the EU in the previously failed trade talks (read our 2019 report on it here). Under mutually recognised conformity assessments, one bloc could effectively be charged with ensuring that new products or systems follow the rules of the other bloc. This dynamic risks a race to the bottom in terms of public interest standards.

Applying these solutions to emerging technologies could mean, for instance, that new rules currently being developed for high-risk AI systems at EU level, could be assessed in the US where the approach to regulating AI is much looser.

TABC frame

A seat at the table for an industry led dialogue

The ultimate line from business lobby groups seems to be that they want to have a seat at the negotiating table. The TABC said it quite plainly to Commissioner Dombrovskis: “The TABC has traditionally played an official businesses representation role in the framework of various EU-US official fora, including for example the Transatlantic Economic Council and the EU-US IPR Working Group. We thus stand ready to thoroughly engage with a future TTC, and look forward to a regular and structured partnership with the TTC on behalf of the transatlantic business community”.

Additionally, DigitalEurope wants the forum to directly involve “industry expertise” via “a permanent and regular transatlantic digital industry dialogue as part of the TTC stakeholder track, including political representation at the highest level”. According to the tech lobby group, this should be matched with “regular stakeholder engagement at the working level” to guarantee “a frequent and comprehensive exchange between policy makers and industries”.

Similarly, just this month, BusinessEurope wrote to Commissioner Dombrovskis asking for the ability to give its input for the “different work-streams on a regular basis” and called for “a more active involvement of the European and US business communities in the relevant TTC discussions”.

The negotiations are so far very opaque, though there are constant leaks to the press. The European Commission’s original plan seems to have been to hold these discussions in a closed forum. But in recent months the Commission has changed its stance. In April 2021 Commissioner Dombrovskis and Commissioner Vestager replied to TABC saying that they “see the involvement of stakeholders, including the Trans-Atlantic Business Council, as important partners in this endeavour. This will also be part of our discussions with the US.“

EU consumer organisations have spent most of the previous year pushing back against the secrecy of the negotiations. US consumer organisations, on the other hand, have complained they were mostly ignored. The U.S. Department of Commerce, for instance, has organised a digital trade briefing with stakeholders where the TTC was discussed but the discussion was designed to receive input from US businesses.

Consumer organisations asked for the meaningful involvement of civil society and for the protection of consumers to be recognised as a priority, not labelled a ‘trade barrier’.

In June 2021 ahead of the EU-US Summit, the Trans-Atlantic Consumer Dialogue, a network of over 70 EU and US consumer organisations, published a checklist for the revamped EU-US discussions. Its demands included calls for cooperation dialogues to be made fully transparent, including the publication of the trade and cooperation proposals, agendas, minutes of meetings, and list of participants. The TACD also asked for the meaningful involvement of civil society and for the protection of consumers to be recognised as a priority, not labelled a ‘trade barrier’.

The European Parliament has called on the European Commission "to be transparent in its cooperation with the United States by, inter alia, publishing all proposals sent to the US and by guaranteeing the involvement of Parliament and civil society in the development of these proposals so as to enhance consumers’ and citizens’ trust."

A leaked TTC draft statement shows that the two sides are set to discuss a proposal under which the TTC would “make available points of contact, where stakeholders may submit their inputs, comments and views. Moreover, regular exchanges with the stakeholders will be organized through diverse channels, both at the level of working groups and political principals, as well as by each of the respective parties or jointly. This is to encourage the transatlantic stakeholder community to provide common proposals on the work pursued by the TTC.”

We have to wait and see what the outcome of the negotiations will deliver, but if this is the full extent of the ambition, then it is far from the transparency and the meaningful engagements with civil society needed.

EU and US must avoid making the Trade and Tech Council an industry tool

The corporate lobbying surrounding the TTC shows how the business community sees these talks as an opportunity to once again put trade above the public interest.

Both EU and US are currently looking into novel ways of regulating the tech giants but the approaches between the two are still quite different. This is even more so when looking at the regulation of Artificial Intelligence and other emerging technology.

Going ahead at full throttle with the TTC cannot mean that the ongoing discussions at EU level to regulate the tech industry – the Digital Services package and the Artificial Intelligence Act – get blocked or watered down all in the name of transatlantic trade. Both the EU and the US need to ensure that the TTC will not become yet another de-regulatory industry driven tool.

Cooperation between the two blocs can only succeed if the priority is to protect users and fundamental rights; if it is done transparently; with meaningful participation of civil society organisations; and, crucially, is put under parliamentary scrutiny.

The TTC talks are only just beginning, and after tomorrow we will know more about the EU-US plans. Corporate Europe Observatory will continue following as these develop. Other civil society groups, activists  and policy-makers should too.