US-EU Trade Framework Includes Export Control, Chip Purchase Commitments

The agreement will put the U.S.-EU trade relationship “on a solid footing and will reinvigorate our economies’ reindustrialization,” they said in a joint statement. “The United States and the European Union intend this Framework Agreement to be a first step in a process that can be further expanded over time to cover additional areas and continue to improve market access and increase their trade and investment relationship.”

The announcement comes several weeks after the EU and U.S. unveiled the initial details of the deal, which included lower duties, European purchases of U.S. AI chips and energy, and more (see 2507280027).

In this week's joint statement, the EU said it plans to buy $40 billion worth of U.S. AI chips for its computing centers, which Trade Commissioner Maros Sefcovic said will give Europe a “steady supply” of advanced semiconductors and “enhance its AI capabilities.” But the joint statement suggested that the U.S. won’t export those chips until the EU improves its own set of technology security guardrails.

“The European Union further plans to work with the United States to adopt and maintain technology security requirements in line with those of the United States, in a concerted effort to avoid technology leakage to destinations of concern,” the statement said. “The United States will endeavor to facilitate such exports once such requirements are in place.”

Sefcovic, speaking during an Aug. 21 press conference, said U.S. officials told him that they want to make sure American AI chips are "in Europe, they will stay in Europe, that they will be used for the benefit of the European economy, that they will not be transshipped somewhere else." He added that many European companies buying those advanced chips are "absolutely ready" to have guardrails in place to prevent that transshipment.

"It's nothing new for us," he said. "We are, of course, ready to work together with our U.S. partners to make sure that we, of course, respect all the security requirements of both parties, EU and U.S., just to make sure that sensitive technology will not end up in the wrong hands."

The agreement comes several months after the EU criticized the Biden administration's AI Diffusion rule, which placed restrictions on certain European countries' ability to buy advanced American chips (see 2502200051). Some EU members were in Tier 1, the group of nations that was set to face the fewest export restrictions, while others were in the more restrictive Tier 2.

Sefcovic said that was "one of the first issues" he raised during trade talks with the U.S., which announced plans to revoke the rule earlier this year (see 2507270003).

"You can imagine that all member states which had been in the second group were not happy about it at all," he said of the rule. "I'm very glad that they took it on board. They understand the importance of the high-end AI chips for the European economy."

The two sides also agreed to “strengthen economic security alignment to enhance supply chain resilience and innovation” to address the “non-market policies of third parties.” That will include cooperating on export controls, along with inbound and outbound investment reviews, it said. The statement didn't include more details, only saying the "United States and the European Union will cooperate on further implementation measures.”

The EU has been studying whether to follow the U.S. in imposing outbound investment restrictions for sensitive technology industries, although it hasn't decided on a way forward (see 2501150061 and 2401240078). Sefcovic said the bloc is working to finalize an EU-wide "economic security doctrine" by the end of this year, which will touch on outbound investment restrictions and other economic security tools mentioned in its economic security strategy from 2023 (see 2306200052).

Sefcovic said he believes the "attitude of our member states is slightly changing" to be in favor of new outbound investment screening regulations. "I think there is increased understanding among them [that] we just simply need to do much more together."

The statement also said the EU will increase its purchases and procurement of American military and defense equipment to “deepen transatlantic defense industrial cooperation,” and it will eliminate tariffs on all U.S. industrial goods. It will also give American exporters “preferential market access for a wide range” of seafood and agricultural goods, including tree nuts, dairy products, fresh and processed fruits and vegetables, processed foods, planting seeds, soybean oil, and pork and bison meat.

In addition, the EU committed to addressing the concerns of American exporters and limiting any “undue” burdens stemming from its corporate sustainability due diligence rules -- which will introduce new reporting and other requirements designed to root out negative human rights and environmental issues in supply and value chains, including forced labor (see 2405240031) -- as well as its anti-deforestation regulation (see 2410040022) and Carbon Border Adjustment Mechanism (see 2506180053).

U.S. officials and lawmakers have criticized those regulations for their potential to hurt U.S. exporters, with some calling the anti-deforestation regulation “unworkable” for the American forest products industry (see 2503170052).

The EU said it will work to “provide additional flexibilities” for its carbon border tax and make sure its supply chain due diligence rules “do not pose undue restrictions on transatlantic trade,” including proposing changes to the EU’s “civil liability regime for due diligence failures and to climate-transition-related obligations.”

In a Q&A document, the EU said it has agreed to “exchange views” with the U.S. on those supply chain due diligence rules so they don’t “result in an unnecessary administrative burden, especially for small and medium size companies.” But the bloc said it won’t “grant US companies more favourable treatment under this Regulation or any EU Regulation.”

The U.S. and the EU also agreed to continue not imposing customs duties on e-commerce and said they will work to push the World Trade Organization to put in place a permanent ban on those duties (see 2403040053). The EU also plans to “consult” with the U.S. and American traders as the bloc works to reform its customs framework, which could create a new decentralized EU customs agency and a single EU-wide online customs platform (see 2506270013).