TTC Highlights Progress on Export Licensing, US Stresses Enforcement

The U.S. and the EU continued to discuss export controls, investment screening and other economic statecraft tools during the sixth meeting of the EU-U.S. Trade and Technology Council last week, saying they have made progress harmonizing export licensing decisions and plan to soon launch a new investment screening initiative. The two sides also renewed a mechanism to pinpoint and prevent global semiconductor supply chains issues and announced a new forum to coordinate on critical minerals trade.

The TTC convened senior officials in Belgium on April 5 for the final time before elections in both the U.S. and Europe later this year, which could affect whether the council continues (see 2404030044). In a joint statement, the two sides said the “achievements” of the council “demonstrate the enduring ties between the European Union and the United States and the importance of maintaining an operational forum for cooperation on strategic trade and technology issues of common interest and geopolitical relevance.” They said the TTC will continue “technical work” until the elections.

The talks in Belgium were held just over two months after the last meeting in Washington, where the two sides said they were making progress collaborating more closely on export control and investment screening (see 2401300070). Officials last week said the U.S. and EU are now making similar decisions on export license applications for controlled goods to Russia and Belarus. The joint statement said the U.S. and EU hold “regular exchanges of information about authorisation and denial decisions.”

The statement also said they’re working to ease restrictions and “administrative burdens” faced by exporters trying to send controlled technology between the U.S. and EU, which companies have long pushed for (see 2212090026, 2206010007 and 2206150038). The Bureau of Industry and Security in January said the two sides were specifically making progress on more closely aligning their encryption-related export controls (see 2401260058).

The U.S. and EU are “mapping out measures that would help streamline this trade, while maintaining a well-functioning and effective export control regime,” the statement said about general technology exports. “For example, the United States has expanded licensing exceptions to European Union Member States.”

The statement didn't specifically mention export restrictions against China, but Commerce Secretary Gina Raimondo said she wants European countries to join the U.S. in doubling down on their efforts to stop illegal semiconductor exports to China. Although she said she's "pleased with where we are," she also said there's no "end game." It's "constant work," Raimondo said during an April 5 news conference on the sidelines of the TTC meetings. "And every time we see any sort of diversion, we need our allies to work with us to crack down on the diversion, to enforce, to share information, and to be more thoughtful about our approach."

She added that the "Chinese wake up every day trying to figure out how to do an end run around our export controls so that they and potentially their military can access our most sophisticated technology including chips," so "we have to wake up every day just as motivated to protect the citizens of our country. And we do that in collaboration with our partners, in this case the Europeans."

EU Executive Vice President Margrethe Vestager wasn't asked about export controls on advanced chips, but she said Europe has spoken with the U.S. on how to be more "forward-looking" on more mature, legacy chip technology. She noted both sides have launched surveys of their mature-node semiconductor industries. "We will compare notes in order to take measures forward to make our supply chains resilient," she said during the news conference.

As they work to align their restrictions, the U.S. and EU said they are also prioritizing export controls against Russia and efforts to “combat circumvention.” They said they recently created a “platform” to exchange data on Russia-related export licensing and “plan to continue to exchange information on outreach activities, including to third countries and industry.”

The joint statement also touched on efforts to screen inbound and outbound foreign investments. The EU is studying whether to follow the U.S. in creating an outbound investment screening regime (see 2401240078 and 2403150031), but the statement stopped short of making any new commitments. It said both sides “will continue to exchange information on the security risks, risk analyses, and on our respective approaches around this issue, and how to address this new challenge.”

But the U.S. and the EU unveiled plans for a new inbound foreign direct investment initiative that they suggested will help companies and governments better identify investment risks. The two sides have “carried out joint work to identify certain best practices on FDI screening with the intention to eventually bring these to the attention of screening authorities and stakeholders more broadly,” the statement said. “We will soon launch a joint repository that will provide additional resources to EU Member State and United States investment screening professionals.”

The U.S. and the EU also agreed to renew a semiconductor early-warning mechanism announced in 2022 (see 2205160033), which is designed to help the two sides address chip supply chain issues before they snowball. They extended that effort -- along with another mechanism to share information about government-led funding for the American and European chip industries -- for another three years.

Although the statement’s portion on the early-warning mechanism didn’t mention China, the U.S. and the EU said the tool has “already proven useful in monitoring developments in the gallium and germanium markets,” two key minerals that China placed export controls on last year (see 2404020012).

The U.S. and EU said they “share concerns about non-market economic policies and practices that may lead to distortionary effects or excessive dependencies for mature node (‘legacy’) semiconductors,” the statement said, adding that they held talks with chip industry officials in January to discuss the issue.

The two sides plan to “continue to collect and share non-confidential information and market intelligence about non-market policies and practices” and “commit to consult each other on planned actions,” the statement said. They may also “develop joint or cooperative measures to address distortionary effects on the global supply chain for legacy semiconductors.”

The TTC meeting also focused on other trade issues, including critical minerals supply chains. The two sides couldn’t reach a critical minerals deal (see 2307210058) but announced a new Minerals Security Partnership Forum, which they said will help eventually “strengthen EU-US supply chains in critical minerals for electric vehicles batteries” and “reinforce the protection of labour and environment in international critical minerals supply chains.”

The forum will expand “existing engagements with minerals producing countries, with a particular focus” on “promoting discussion of policies that contribute to diverse and resilient supply chains,” among other things, the statement said. A European Commission news release said the EU and the U.S. will invite other countries in North America and South America, Africa, Asia and Europe to join the forum.