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U.S. and EU discuss ways to solve the global chip shortage: Here’s what you need to know

Katherine Tai, U.S. trade representative, from left, Gina Raimondo, U.S. commerce secretary, Antony Blinken, U.S. secretary of state, Valdis Dombrovskis, trade commissioner for the European Union (EU), and Margrethe Vestager, competition commissioner of the European Commission.

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LONDON — The United States and the European Union have agreed to a “rebalancing” of global supply chains when it comes to semiconductors, in what could be the first of many trade and tech focused meetings.

The U.S.-EU Trade and Technology Council, referred to as TTC, emerged in the wake of Joe Biden‘s presidential victory as the European Commission, the executive arm of the EU, looked to overcome transatlantic disputes in these areas. The Trump administration had slapped tariffs on the EU and the bloc had been keen to find a solution with the new president.

Pittsburgh hosted the group’s first gathering on Wednesday. Preparations for the meeting were held up following Australia’s decision to cancel a submarine deal with France, instead opting for a U.S. agreement which angered the French.

French irritation reportedly watered down the statement issued by both sides at the end of the meeting on Wednesday evening.

Cecilia Bonefeld-Dahl, director-general of DigitalEurope which represents tech companies and trade associations, told CNBC that she hopes the U.S. and the EU will keep geopolitical and industrial issues apart.

“It’s also in the interest of the U.S. to have a strong digital Europe,” she said over the phone.

What was agreed?

For now, both sides agreed “to identify gaps in the semiconductor value chain and strengthening our domestic semiconductor ecosystems.”

In a joint statement, the group added that it is committed “to building a partnership on the rebalancing of global supply chains in semiconductors.”

This area has seen major disruption in the wake of the coronavirus pandemic. Demand for chips has outgrown supply in the past months, which has impacted the production of many products, including cars, TVs and many other electrical appliances.

This is a concern for the EU given that it is currently heavily dependent on international supply chains.

As such, the commission is working on new policies to boost chip production in the bloc and reduce its dependence on other parts of the world.

In addition, although the final statement doesn’t mention China, some of the pledges certainly seemed to be targeted at Beijing.

“We intend to work closely together to address non-market, trade-distortive policies and practices, improve the effectiveness of our respective domestic measures,” the U.S. and the EU said.

Officials have on numerous occasions criticized Beijing for not giving the same level of access to foreign business as to what is granted to Chinese companies abroad.

“Very happy with today’s exchange and joint statement with our transatlantic partners,” Europe’s competition chief, Margrethe Vestager, said on Twitter following the meeting.

U.S. Trade Representative Katherine Tai also said she was “energized” by the meeting and looked forward “to strengthening our tech and trade partnership with the EU.”

What about trade tariffs?

However, there has been no breakthrough yet on the tariff front.

The U.S. and the EU agreed earlier in the summer to find a compromise to ongoing steel and aluminum tariffs, imposed during the Trump presidency, by the end of November.

Speaking earlier this week, the EU’s trade chief Valdis Dombrovskis told Bloomberg that “time is running out.”

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