Welfens, P.J.J.; Hanrahan, D.: The EU-US Trade and Technology Council: Developments, Key Issues and Policy Options

JEL classification: F02, F13, F55, F69, O38

Key words: EU, US, Trade, Innovation, Trade and Technology Council, ICT, Win-Win, Innovation Policy, Transatlantic Cooperation

Summary: 

Following the failure of the Transatlantic Trade and Investment Partnership project, the European Union and the United States have considered options on how to organize transatlantic cooperation within what may be considered an adequate framework – a different approach has been agreed in the Trade and Technology Council (TTC). Such initiatives are fundamental pillars of transatlantic economic integration. The US and the EU have indeed started a new initiative which is based on ten policy fields which have potential for enhanced cooperation; there is a triple focus, namely on common values, on options for better joint standard-setting and on cooperating in new fields, e.g. the digitalized economy. With the Russo-Ukraine War, the relevance of more transatlantic cooperation has been reinforced, not least since this military conflict indirectly raises the issue of to what extent economic relations between the West and China could also deteriorate in the medium term. While the ten areas considered by the EU and US within the framework of the TTC indeed stand for crucial fields, one should not overlook that three additional fields have been largely neglected so far: (i) ICT market integration and the transatlantic integration of internet-based markets, respectively; (ii) challenges for transatlantic cooperation – indeed win-win opportunities – in the field of climate-stabilizing innovations; and (iii) the crucial role of reducing barriers to transatlantic foreign direct investment. The latter have been shown to be of critical relevance for output dynamics and the current account-Gross Domestic Product ratio, namely in the FDI-enhanced DSGE macro model of Roeger/Welfens (2021) which allows in a new way to consider, for example, the national and international effects of product innovations and process innovations. It should also be emphasized that the international spillover effects of ICT innovations imply that there is a broader need for transatlantic policy cooperation which, paradoxically, also requires more cooperation between national governments of EU countries and the governments of US states. As regards enhanced transatlantic economic policy cooperation, new initiatives here should not mistakenly be considered a substitute for long-term cooperation in the fora of international organizations.

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