Analysis

June 11, 2021

The Hidden G2 for Democratic Tech Governance is the EU-US Relationship

A Starter Kit

The EU and the United States are expected to launch a Trade and Technology Council (TTC) on the sidelines of the US-EU Summit in mid-June, which could present a rare opportunity to jumpstart the EU-US technology relationship. Against the backdrop of rapid technological change, a transatlantic digital technology community could be a 21st-century answer to the Coal and Steal Community – a big democratic project that reaches across borders, knits like-minded communities together in a manner that reinforces shared values, and codifies standards of market access, increased interdependence, and intensified political dialogue.

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U.S. President Joe Biden, France's President Emmanuel Macron and European Commission President Ursula von der Leyen
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Below you will find the executive summary and introduction of this analysis. To read the paper in its entirety – including all info graphics, footnotes, and citations – please download the PDF here.

Key Findings
The EU and the Biden administration have a rare opportunity to jumpstart the EU-US technology relationship in the service of global democratic tech governance. The Trade and Technology Council (TTC) could offer a unique vehicle for such cooperation. 
The EU and the United States should focus on five interrelated lines of effort: technological industrial policy, deepening the democratic tech space and ringfencing market access for critical technology and data, drafting the digital rule book, ICT connectivity in the Global South as a counter to China’s Digital Silk Road, and digital rights. 
The EU-US relationship has experienced multiple false starts in attempts to marshal systematic technology, trade, regulatory, and standard-setting convergence. To avoid the pitfalls of past efforts, Brussels and Washington must get the TTC parameters right. 


Executive Summary

In the battle over the protection of fundamental rights, adherence to international law in IP protection, cyber stability, and democratic technology, the EU and the United States must deepen their cooperation. The antics of the Trump administration and the general deterioration of American democracy have justifiably driven the EU’s desire to hedge its bets. But Europe’s tech policy choices have primarily pushed against US tech dominance, rather than China’s increasingly important role as a digital player or ideological clashes between democratic and authoritarian visions of the digital international order.

The EU and United States remain the two great democratic tech blocs, amid a techno-autocratic China, revisionist Russia, and rising India. In many ways, given their democratic values, innovation industrial base, market size, and regulatory power, they are the hidden G2 for democratic tech governance. Especially when their work allows for open participation from democratic allies including the UK, Japan, Australia, and South Korea, as well as multi-stakeholder actors like large tech companies, the start-up community, and civil society. But that potential remains somewhat untapped. 

Five Lines of Effort in EU-US Digital and Technology Cooperation: 

  1. Create Strategic Interdependence through tech industrial policy: The EU and United States should focus on high-end semiconductors, an incentives plan to raise EU-US ICT private sector engagement in 5/6G technical standard-setting bodies, and the need for data portability and interoperability between cloud providers.  

  2. Establish a New Market Space for Critical Technologies and Data: The two sides of the Atlantic could work together to create the basis for a Coordinating Committee for Democratic Autonomy, a 21st-century version of the Coordinating Committee for Multilateral Export Controls (CoCom), to support tech supply chain resilience and restrict access to strategic technology for authoritarian states. They should also initiate coordinated EU-US sanctions on state-linked or backed cyber incidents. 

  3. Draft the Digital Rule Book: The EU and United States must get to a Privacy Shield 2.0 Roadmap: Create a transatlantic interagency process to discuss regulation proposals at IPC level at multiple stages before their passage. 

  4. Coordinate ICT Connectivity and Stability in the Global South: Support clean ICT connectivity and data gateways on Europe’s periphery and time zone; the EU should join the Blue Dot Network. 

  5. Embed Digital Rights: The two sides should join with representatives of the Global South to establish the Digital Rights Pillar of the Summit for Democracy. 

The Structure for a Possible Trade and Tech Council: 

  1. Have a two-track structure that will engage principles in strategic thinking while simultaneously advancing technical work on tangible deliverables that can lend the TTC legitimacy.
  2. Bracket out unnecessary stumbling blocks that have prevented past success.
  3. Give the TTC a limited mandate, perhaps 36 months – timed directly before the 2024 legislative cycles in both blocs.
  4. Launch a TTC Innovation and Resilience Board with high-level American and European participants from the private sector and civil society, with a co-chair from each side of the Atlantic. 
  5. Provide docking mechanisms for interested third countries to participate in democratic tech governance. 

Introduction

A cottage industry has sprung up around sketching the modalities of potential democratic tech alliances, including the D10, T12, and a host of other potential clubs. The British G7 has valiantly taken on marshalling the first ever G7 Digital and Technology Ministerial in April, which included an ambitious agenda for tackling supply chains, connectivity infrastructure, and the techno-authoritarian challenge posed by China. These efforts have driven the debate around democratic tech governance forward and broadened ideas about how to include democratic tech powers like India, Japan, and Australia. But without a solid EU-US double helix at its core, it is difficult to see how these efforts will collect the critical mass, institutional capacity, and innovation needed to succeed. 

Even amid the COVID-19 crisis, climate change, US political upheaval, and heightened US-China clashes, the world is barreling toward a new technological era. Crucially, multiple general-purpose technologies are coming into usage simultaneously, shaking the economic and geopolitical balance of power. China is automating and exporting its ideology through artificial intelligence (AI), network hardwire, social media platforms, e-commerce, and digital currency. Russia is engaging in disinformation operations that exploit online discourse while at the same time attempting to divorce itself from the global Internet – repatriating its domain name system, intensifying diplomacy on cybercrime that would make digital authoritarianism easier, and severing its dependence on international physical infrastructure from undersea cables to data centers. The China-linked Hafnium data breaches on Microsoft Exchange and Russia-linked SolarWinds exploitations hit both the United States and Europe. State-linked ransomware attacks such as those on Colonial Pipeline, DC Police, and the Irish health service are becoming more frequent. Association of Southeast Asian Nations (ASEAN) states, India, Brazil, and Turkey are eying authoritarian ICT infrastructure, data localization, more pervasive AI-surveillance, and other means of repatriating control from a global, open Internet.


Against this backdrop, the EU has extended a useful olive branch based on EU-US tech governance cooperation. The European Commission’s EU-US Agenda for Global Change proposed joining forces to shape the global tech order. At the 2021 World Economic Forum in Davos, the Munich Security Conference, and in direct conversation with US President Joe Biden, European Commission President Ursula Von der Leyen spoke about a new era of cooperation with the United States to set the ground rules for digital technology. The EU and the United States are expected to launch a Trade and Technology Council (TTC) on the sidelines of the US-EU Summit in mid-June, which could present a rare opportunity to jumpstart the EU-US technology relationship.

Tech policy touches on everything from digital taxation to cybersecurity, undersea cables, and cryptocurrencies. All are worthy of transatlantic attention, but there is a trap. While each of these areas is salient to the ability of the transatlantic relationship – and the broader democratic community – to thrive in the digital landscape, but the multitude of issues can obfuscate any strategic prioritization. As a result, transatlantic digital and tech cooperation could seem overwhelming, unfocused, and even adrift; if everything is a top priority, nothing is. Issues like a global framework for minimum corporate tax rates that capture digital services are best managed in the G7 and OECD contexts. Standard setting on green technology should best remain a central topic at the COP26 in Glasgow and include China, the world’s largest major CO2 emitter. Funding for defense-based tech start-ups and innovation for the military could bring in NATO member states, coordinated by NATO. 

But given their democratic values, innovation industrial base, market size, and regulatory power. The EU and the United States would be best served focusing on a discretely defined agenda aligning the unique capabilities and objectives of the two blocs while creating the docking mechanisms for like-minded actors such as Japan, the UK, South Korea, and Israel, as well as the private sector and organizations like NATO. To do so, here are five interrelated lines of effort that might serve as a starting point: 

  • Strategic interdependence with a focus on technological industrial policy; 
  • A joint quest for “democratic autonomy” by deepening the democratic tech space and ringfencing market access for critical technology and data; 
  • Drafting the digital rule book, starting with the EU’s regulation package as the basis for discussion; 
  • ICT connectivity and stability in the Global South as a counter to the Belt and Road Initiative (BRI) and the Digital Silk Road; and
  • Digital rights. 
     
Bibliographic data

DGAP Analysis No. 2, June 11, 2021, 18 pp.

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