The EU US Trade and Technology Council (TTC) met for the first time in Pittsburgh yesterday, co-chaired by European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis alongside US Secretary of State Antony Blinken, US Secretary of Commerce Gina Raimondo and US Trade Representative Katherine Tai.
The council is intended to head off a race to subsidise semiconductor fabs in the two regions, where politicians see the US and Europe as having been at a disadvantage during the Covid-19 pandemic, despite the cyclic nature of the semiconductor business. Supporting ‘sovereignty’ in chip production risked a trade war over subsidies.
“We share the aim of avoiding a subsidy race and the risk of crowding out private investments that would themselves contribute to our security and resilience,” said the first statement from the council. “We intend to focus on reducing existing strategic dependencies throughout the supply chain, especially through a diversification of the supply chain and increased investment. We intend to work jointly so that any investment made on our territories is done in full respect of our respective security of supply.”
Which is mostly about making sure neither the US or EU are vulnerable to each other for future supply shortages. This is increasingly important with new fabs being built in Arizona by Intel, TSMC and Samsung that will support the European automotive industry.
The cold war with China is still evident.
“We stand together in continuing to protect our businesses, consumers, and workers from unfair trade practices, in particular those posed by non-market economies, that are undermining the world trading system,” said the council without mentioned China directly.
The council is setting up ten working groups, from tackling the chip supply chain and critical materials, AI standards and climate and clean tech to privacy, governance and support for small companies to go digital.
Alongside a dedicated track on semiconductors, the Secure Supply Chains working group is tasked to focus on advancing supply chain resilience and security of supply in key sectors for the green and digital transition. A key part of that is the transparency of the supply chain. Automotive suppliers in the US have 45 days to provide details of their supply chain
“The United States and European Union reaffirm their willingness to build a partnership on the rebalancing of global supply chains in semiconductors with a view to enhancing their respective security of supply as well as respective capacity to design and produce semiconductors, especially, but not limited to, those with leading-edge capabilities,” said the council. This partnership should be balanced and of equal interest to both sides.”
The dedicated track on semiconductor issues will initially focus on short-term supply chain issues. Cooperation on mid- and long-term strategic semiconductor issues will begin in the relevant TTC working groups ahead of the next TTC Meeting.
“We acknowledge that semiconductors are the material basis for integrated circuits that are essential to modern-day life and underpin our economies. As such, semiconductors power virtually every sector of the economy, including energy, healthcare, agriculture, consumer electronics, manufacturing, defense, and transportation. Through the pandemic, shortages of certain semiconductors have highlighted the importance of ensuring stable, resilient and robust supply chains for these vital products.
“We recognize that the semiconductor supply chain, from raw materials, design and manufacturing to assembly, testing and incorporation into end products, is extremely complex and geographically dispersed. The development and production of semiconductors include multiple countries, with some very concentrated segments. The United States and European Union have some important respective strengths as well as ongoing, significant mutual dependencies, and common external dependencies.
“We share the view that promoting supply chain transparency, in partnership with industry and all relevant stakeholders, is essential to strengthening investment and addressing the supply and demand imbalance in the semiconductor industry. With the goal of identifying bottlenecks pertaining to supply and demand across the various segments of the semiconductor supply chain, we intend to enhance cooperation on measures to advance transparency and communication in the semiconductor supply chain. To this end, we intend to engage with our respective stakeholders in discussions of relevant measures.
“In the short-term, we underline the importance of jointly identifying gaps and vulnerabilities, mapping capacity in the semiconductor value chain, and strengthening our domestic semiconductor ecosystems, from, research, design to manufacturing, with a view to improving resilience, through consultation with stakeholders, and the right incentives,” said the council.
The first working group is for Technology Standards, including AI and other emerging technologies
“The United States and European Union consider that artificial intelligence (AI) technologies have the potential to bring significant benefits to our citizens, societies and economies. AI technologies can help tackle many significant challenges that we face, and they can improve the quality of our lives. The United States and European Union acknowledge that AI technologies yield powerful advances but also can threaten our shared values and fundamental freedoms if they are not developed and deployed responsibly or if they are misused. The United States and European Union affirm their willingness and intention to develop and implement AI systems that are innovative and trustworthy and that respect universal human rights and shared democratic values.”
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