Can the US and EU Cooperate to Set International Standards for Emerging Technologies?

In December 2020, Ursula von der Leyen, President of the European Commission ,and Josep Borrell, the European Union’s High Representative for Foreign Affairs and Security Policy, issued a joint statement on the EU’s relationship with the United States. The document put forward “a new transatlantic agenda for global change”, which urged the US to “reactivate proposals for EU-US standards cooperation”, “developing compatible standards and regulatory approaches for new technologies”.

Six months later, under the new administration of President Joe Biden, Washington responded positively to Europe’s call. The two sides agreed to establish a high-level US-EU Trade and Technology Council (TTC). One of the major aims of the TTC is to work on “compatible and international standards development”, focusing on emerging technologies, especially artificial intelligence (AI), the Internet of Things (IoT), and the digital economy.

The US and EU have made the commitment, but will they be able to work together on this aspect of global tech governance? While both have coinciding interests, the two still face significant difficulties when translating words into action. Until they can narrow their differences, their tech alliance may not make much progress.

The majority of existing international standards have been initiated and promoted by the US and EU member states. For instance, the wireless networking standard originated with the Wi-Fi Alliance, a US non-profit association. The Global System for Mobile Communications (GSM) standard is a European second-generation standard that later became international. Both the US and EU have a common interest in protecting their dominant status. But with the rise of other countries, especially China, their leadership is under pressure. In an interdependent world, nations rely on the clout they have to set standards to dominate sectors or have influence over other market players. China has increased its importance in international standard-setting organizations in recent years, which may be emblematic of a geopolitical power shift.

Although some tech sector analysts have applauded aspects of China’s first comprehensive legal attempt to define personal information and regulate the storing, transferring, and processing of personal data, there are concerns that it will also accord authorities greater access to data. As long as a company is defined as a critical information infrastructure operator (the definition of which is very broad), it is subject to China’s data localization and transfers requirement, such as a security assessment by state authorities. Russia’s controversial “sovereign internet” law also grants the government much greater control over personal data.

Certain countries such as China and Russia are pushing an active role for the government, emphasizing state intervention. This approach has triggered much controversy: It violates free-trade clauses under World Trade Organization (WTO) rules as localization and transfer requirements are considered to be non-tariff barriers. If this becomes the international standard, it will disrupt the existing liberal rule-based world order.

By contrast, the transatlantic partnership between the US and the EU is fundamentally opposed to the diffusion of digital authoritarianism and is geared towards the construction and safeguarding of a liberal democratic data governance model for the world. Beyond the rhetoric of collaboration, the focus for the US and EU is whether their words can be effectively translated into action. Shared geopolitical interests and coinciding values may not be sufficient to drive meaningful cooperation. Diverging governing principles, approaches, attitudes and strategies for the development of emerging technologies could well pose major challenges for the EU-US tech alliance heading forward.

The EU, for example, favors an oversight mechanism to mitigate the risks of AI systems, while the US prioritizes innovation and growth over the addressing potential dangers. On April 21, the European Commission announced its first-ever legal framework on AI, the Artificial Intelligence Act (AIA). The AIA may further widen the regulatory gulf between the EU and the US, already opened by Europe’s adoption in 2018 of the General Data Protection Regulation (GDPR), the world’s most ambitious privacy regulation.

Indeed, data governance is another area on which the TTC is focusing. Data is becoming the lifeblood of the new global digitalized economy. The Fourth Industrial Revolution world will generate a vast amount of data, even more than is already produced today. Thus, regulating data in the IoT economy has become and will continue to be a crucial part of global governance. Considering the divergence of policy approaches taken by the US and EU within their respective jurisdictional territory, the likelihood of their setting mutually acceptable international standards for data through cooperative efforts is not promising.

Although both the US and the EU emphasize individual rights, their respective strategies for regulate data flows are fundamentally different. In a nutshell, the US adopts a laissez-faire, minimalist approach, while the EU believes in a relatively more interventionist but not authoritarian model. The US regards data as a form of capital to be shared and used to make a profit. As long as privacy is guaranteed, the US would allow limitless free flow of data across borders.

The Europeans, meanwhile, believe that individuals should have the ability to access and control the data they themselves generate. This is the principle behind the GDPR. The EU has recently released further data governance regulations including the Digital Services Act and the Digital Markets Act, designed to be the rulebooks for the digital economy. Even though the EU and the US agree that individual rights are the most important values in governing data and managing a digital world, they still diverge in how to understand the core concepts in data governance, hence resulting in differing approaches to regulation. The US stresses individual freedom – that everyone has equal rights over data as long as privacy is protected – while the EU emphasizes that individuals should have sovereignty over their own data. This nuance could well be an unbridgeable divide.

Washington and Brussels have rebooted their technology alliance in large part due to Biden’s vow to re-engage traditional allies after his predecessor’s less-than-collegial ways. Indeed, the US and major EU member states are traditional allies with many affinities. Congruent interests and values, however, do not automatically lead to effective and productive cooperation. The revitalization of the transatlantic alliance has set the stage for greater collaboration but contending ideas about regulation and governance could prove a tough hurdle to get over. An impasse could open the way for alternative approaches such as those promoted by Beijing and Moscow to gain traction and legitimacy.