With Up to $6.6 Billion in Proposed CHIPS Direct Funding, TSMC Announces 2 Nanometer Technology at Second Fab and a New Third Fab to Produce 2 Nanometer or More Advanced Chips. Proposed CHIPS Investment in Arizona Would Support AI, High-Performance Computing, 5G/6G Communications, and More Applications.
On April 8th, the Biden-Harris Administration announced that the U.S. Department of Commerce and TSMC Arizona Corporation (TSMC Arizona), a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $6.6 billion in direct funding under the CHIPS and Science Act. This proposed funding would support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors.
Through this proposed investment in TSMC Arizona, the Biden-Harris Administration would take a significant step in strengthening U.S. economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing. After initially announcing two fabs in the U.S., TSMC Arizona is committing to build an additional third fab before the end of the decade. With this proposed funding, TSMC Arizona would be ensuring the formation of a scaled leading-edge cluster in Arizona, creating approximately 6,000 direct manufacturing jobs, more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect jobs in this decade and bringing the most advanced process technology to the United States.
“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems. America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities. I was determined to turn that around, and thanks to my CHIPS and Science Act – a key part of my Investing in America agenda – semiconductor manufacturing and jobs are making a comeback,” said President Joe Biden. “TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”
“One of the key goals of President Biden’s CHIPS and Science Act was to bring the most advanced chip manufacturing in the world to the U.S., and with this announcement and TSMC’s increased investment in their Arizona campus, we are working to achieve that goal,” said U.S. Secretary of Commerce Gina Raimondo. “The leading-edge semiconductors that will be made here in Arizona are foundational to the technology that will define global economic and national security in the 21st century, including AI and high-performance computing. Thanks to President Biden’s leadership and TSMC’s continued investments in U.S. semiconductor manufacturing, this proposed funding would help make our supply chains more secure and create thousands of good-quality construction and manufacturing jobs for Arizonans.”
“America’s ability to maintain our competitive edge in advanced technologies like artificial intelligence is essential to igniting the next generation of research, innovation, development, and production,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio. “Our proposed support for TSMC Arizona represents an inflection point for America’s innovative capacity that would restore our nation’s leadership in an industry that is foundational to the U.S. and global digital economy.”
“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC Chairman Dr. Mark Liu. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”
“We are honored to support our customers who have been pioneers in mobile, artificial intelligence and high-performance computing, whether in chip design, hardware systems or software, algorithms, and large language models,” said TSMC CEO Dr. C.C. Wei. “They are the innovators driving demand for the most advanced silicon that TSMC can provide. As their foundry partner, we will help them unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona. We are thrilled by the progress of our Arizona site to date and are committed to its long-term success.”
TSMC is widely recognized as a global leader in semiconductor manufacturing, having pioneered the pure-play foundry business model in 1987, and now manufactures over 90% of the world’s leading-edge logic chips. In Arizona, TSMC’s three fabs are expected to bring a suite of the most advanced process node technologies to the United States: the first fab  will produce 4nm FinFET process technologies; today, TSMC Arizona announced that the second fab will produce the world’s most advanced 2nm nanosheet process technology, in addition to previously announced plans to produce 3nm process technologies; and TSMC Arizona’s third fab will produce 2nm or more advanced process technologies depending on customer demand. At full capacity, TSMC Arizona’s three fabs would manufacture tens of millions of leading-edge chips that will power products like 5G/6G smartphones, autonomous vehicles, and AI datacenter servers. TSMC Arizona expects to begin high-volume production in their first fab in the U.S. by the first half of 2025.
Thanks to investments like those at TSMC Arizona, the United States is now on track to produce roughly 20% of the world’s leading-edge chips by 2030. With total capital expenditures of more than $65 billion, TSMC Arizona’s investment is the largest foreign direct investment in a greenfield project in U.S. history. TSMC Arizona’s investment in the United States is catalyzing meaningful investment across the supply chain, including from 14 direct suppliers that plan to construct or expand plants in Arizona or other parts of the U.S., further strengthening U.S. domestic supply chain resilience.
TSMC’s advanced chips are the backbone of core processing units (“CPUs”) for servers in large-scale datacenters and of specialized graphic processing units (“GPUs”) used for machine learning. Through the proposed funding for TSMC Arizona, the United States would onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques. This would help strengthen America’s competitive edge in science and technology innovation. Furthermore, through its Arizona fabs, TSMC will be able to better support its key customers, including U.S. companies AMD, Apple, Nvidia, and Qualcomm, among others, by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era. With the proposed incentives, TSMC Arizona has also committed to support the development of advanced packaging capabilities – the next frontier of technology innovation for chip manufacturing – through its partners in the U.S., creating the opportunity for TSMC Arizona’s customers to be able to purchase advanced chips that are made entirely on U.S. soil.
The PMT also proposes $50 million in dedicated funding to develop the company’s semiconductor and construction workforce. To build the long-term construction workforce needed to support these projects, TSMC Arizona recently signed an agreement with the Arizona Building and Construction Trades Council. The company also plans to utilize registered apprenticeship programs to meet a 15 percent apprenticeship utilization rate on the Phoenix construction site.
As part of its commitment to developing local talent, TSMC Arizona established one of the first state-supported Registered Apprenticeship programs for semiconductor technicians, with support from the City of Phoenix. TSMC’s U.S.-based recruiting team is also actively collaborating with university engineering programs around the country, including Arizona State University, University of Arizona, and Purdue University, and is partnering with Maricopa Community Colleges and career technical education programs on initiatives to develop the skills for a career in the semiconductor industry. Site employees have access to discounts, reimbursements, and priority enrollment through partnerships for local area early education and childcare centers.
In addition to the proposed direct funding of up to $6.6 billion, the CHIPS Program Office would make approximately $5 billion of proposed loans – which is part of the $75 billion in loan authority provided by the CHIPS and Science Act – available to TSMC Arizona under the PMT. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.
As explained in its first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of a long-form term sheet and award documents and are conditional on the achievement of certain milestones. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in the long-form term sheet and the final award documents may differ from the terms of the PMT being announced today.
 
To learn more about CHIPS for America, visit www.chips.gov.
 
Compliments of the U.S. Department of Commerce.
 The post Biden-Harris Administration Announces Preliminary Terms with TSMC, Expanded Investment from Company to Bring World’s Most Advanced Leading-Edge Technology to the U.S. first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The sixth ministerial meeting of the Trade and Technology Council (“TTC”) took place in Leuven, Belgium, on 4 and 5 April 2024. It was co-chaired by European Commission Executive Vice President Margrethe Vestager, European Commission Executive Vice President Valdis Dombrovskis, United States Secretary of State Antony Blinken, United States Secretary of Commerce Gina Raimondo, and United States Trade Representative Katherine Tai, joined by European Commissioner Thierry Breton, and hosted by the Belgian Presidency of the Council of the European Union.
The meeting took place against the backdrop of significant geopolitical developments and challenges, including Russia’s unprovoked and unjustified war of aggression against Ukraine and the escalation of violence in the Middle East, that have shaken the international rules-based order to which we are jointly committed. The European Union and the United States remain unwavering in our long-term political, financial, humanitarian, and military support to Ukraine.
There has been a buildup of global economic pressure through extensive non-market policies and practices. This accentuates excessive and possibly high-risk dependencies of strategic supplies, tilts the level playing field, and poses a threat to our economic security, our prosperity, and the well-being of our firms, workers, and citizens.
The acceleration of the digital transformation creates unprecedented opportunities for growth and innovation but also raises numerous risks and challenges that call for accelerating our efforts to establish joint leadership and continue robust coordination on our approaches for creating rules of the road for emerging technologies, such as artificial intelligence (AI), quantum technologies, and 6G wireless communication systems. We aim to foster interoperability and support our common democratic values and the protection of human rights, while also promoting innovation. We are also dedicated to continuing to equip our workforce with the skills necessary to meet the needs created by rapidly changing technology, including AI.
The cooperation between the European Union and the United States continues to be the bedrock for dealing with such global challenges, and the TTC has played a vital role in shaping a forward-looking dialogue and facilitating unprecedented coordination and quick responses to key trade and technology related issues and developments, not least in the context of Russia’s continued aggression against Ukraine. We therefore reaffirm the importance of the TTC and will continue to refine and adapt this forum to advance our shared objectives.
We have used the TTC to address global trade challenges, strengthen our economic and trade ties, accelerate the transition to climate-neutral economies, and boost our economic security. With the Transatlantic Initiative on Sustainable Trade (TIST), the TTC is contributing to the creation of a stronger, more sustainable, and more resilient transatlantic marketplace and facilitating environmentally responsible trade in goods and technologies. We have increased cooperation on interoperability of digital trade tools as well as standardisation of critical and emerging technologies to reduce the costs of trading across the Atlantic. To boost our economic security, we continue to cooperate through the TTC to diversify strategic supply chains, including solar panels, semiconductors, and critical raw materials, and to reduce vulnerabilities, including those caused by other countries’ non-market policies and practices. We have also deepened our dialogue and cooperation on export controls and investment screening.
Working with stakeholders, we continue to use the TTC to advance the governance of critical and emerging technologies, such as AI, quantum technologies, semiconductors, biotechnology, and online platforms, including by supporting the development of rights-respecting international technical standards, codes of conduct, principles, and guidance. In particular, we call upon online platforms to ensure their services contribute to an environment that protects, empowers, and respects their users and the general public. We are working together to advance public interest research on online platforms, including to address particular societal risks, such as technology-facilitated gender-based violence. We will continue to combat foreign information manipulation and interference and to protect human rights defenders online, including in the context of elections.
We intend to continue our trade and technology cooperation as set out below.
Key Outcomes of the Sixth TTC Ministerial Meeting

Advancing Transatlantic Leadership on Critical and Emerging Technologies

Artificial Intelligence
The European Union and the United States reaffirm our commitment to a risk-based approach to artificial intelligence (AI) and to advancing safe, secure, and trustworthy AI technologies. The dedicated coordination under the TTC continues to be instrumental to implementing our respective policy approaches which aim to reap the potential benefits of AI while protecting individuals and society against its potential risks and upholding human rights.
Our exchanges confirm our joint understanding that transparency and risk mitigation are key elements to ensure the safe, secure, and trustworthy development and use of AI, and we will continue to coordinate our contributions to multilateral initiatives such as the G7, OECD, G20, Council of Europe, and UN processes to advance the responsible stewardship of AI. We encourage advanced AI developers in the United States and Europe to further the application of the Hiroshima Process International Code of Conduct for Organisations Developing Advanced AI Systems which complements our respective governance and regulatory systems.
With a view to ensuring continued and impactful cooperation on AI, leaders from the European AI Office and the United States AI Safety Institute have briefed one another on their respective approaches and mandates. These institutions today committed to establishing a Dialogue to deepen their collaboration, particularly to foster scientific information exchange among their respective scientific entities and affiliates on topics such as benchmarks, potential risks, and future technological trends.
This cooperation will contribute to making progress with the implementation of the Joint Roadmap on Evaluation and Measurement Tools for Trustworthy AI and Risk Management, which is essential to minimise divergence as appropriate in our respective emerging AI governance and regulatory systems, and to cooperate on interoperable and international standards. Following stakeholder consultations, we have further developed a list of key AI terms with mutually accepted joint definitions and published an updated version.
We are also united in our belief of the potential of AI to address some of the world’s greatest challenges. We applaud the United Nations General Assembly Plenary Resolution “Seizing the Opportunities of Safe, Secure and Trustworthy Artificial Intelligence Systems for Sustainable Development,” that has solidified a global consensus around the need to manage the risks of AI while harnessing its benefits for sustainable development and the protection and promotion of human rights.
We are advancing on the promise of AI for sustainable development in our bilateral relationship through joint research cooperation as part of the Administrative Arrangement on Artificial Intelligence and computing to address global challenges for the public good. Working groups jointly staffed by United States science agencies and European Commission departments and agencies have achieved substantial progress by defining critical milestones for deliverables in the areas of extreme weather, energy, emergency response, and reconstruction. We are also making constructive progress in health and agriculture.
We will continue to explore opportunities with our partners in the United Kingdom, Canada, and Germany in the AI for Development Donor Partnership to accelerate and align our foreign assistance in Africa to support educators, entrepreneurs, and ordinary citizens to harness the promise of AI.
Quantum
The European Union and the United States established a Quantum Task Force to address open questions on science and technology cooperation between the European Union and the United States on quantum technologies. Its primary objective is to bridge gaps in research and development (R&D) between the European Union and the United States, thereby harmonising efforts in quantum technology advancements. This includes the establishment of a shared understanding and approach to technology readiness levels, development of unified benchmarks, identification of critical components in quantum technology, and advancement of international standards.
The Task Force continues work to address key questions that are necessary to reach an agreement on launching joint actions for science and technology cooperation in quantum, such as reciprocity in openness of quantum research programs and in intellectual property rights regimes.
Post-Quantum Cryptography Coordination
The European Union and the United States affirm the importance of the rapid mobilisation to secure our digital communication networks against the threats posed by the potential for a future cryptanalytically-relevant quantum computer. Our joint work in Post Quantum Cryptography (PQC), feeding into the EU-US Cyber Dialogue, enables European Union and United States. partners to share information to understand activities in PQC standardisation and in the transition to PQC.
The Road to 6G
The European Union and the United States share the belief that advanced connectivity can  facilitate a more inclusive, sustainable, and secure global economy. We concur on shared principles for the research and development of 6G wireless communication systems, and we recognise that by working together we can support the development of technologies and global technical standards for tomorrow’s critical digital infrastructure that reflect shared principles and values. We support open, global, market-driven, and inclusive multi-stakeholder approaches for the development of technical standards for secure and interoperable telecommunications equipment and services. On the road to 6G, in a geopolitical environment increasingly marked by tension and conflict, the growing requirement for security and resilience of key enabling communications technologies and critical infrastructure highlights the need to rely on trusted suppliers, to prevent vulnerabilities and dependencies, with potential downstream effects on the entire industrial ecosystem.
We delivered a 6G outlook in May 2023. In addition, the two main industry associations on each side of the Atlantic jointly developed a 6G Industry Roadmap in December 2023. The roadmap affirmed the commitment of the stakeholders to collaborate on the development of 6G networks and proposed a comprehensive set of critical strategic reflections and recommendations from academia and industry. On 26 February 2024, ten countries, including some European Union Member States concluded a joint statement on 6G.
These milestones have contributed to shaping the joint “6G vision” that we are adopting today. This vision focuses on technology challenges and research collaboration including on microelectronics; AI and cloud solutions for 6G; security and resilience; affordability and inclusiveness, sustainability and energy efficiency; openness and interoperability; efficient radio spectrum usage; and the standardisation process.
Having decided on this 6G vision, the European Union and the United States will strengthen cooperation between their research and innovation funding agencies, notably through an Administrative Arrangement signed between the United States National Science Foundation (NSF) and the Directorate‑General for Communications Networks, Content and Technology (DG Connect) of the European Commission covering collaboration in the field of 6G and Next Generation Internet technologies.
Considering the importance of developing a common vision to 6G and cooperating in the global standardisation process through standardisation organisations such as ETSI/3GPP, we also intend to develop an outreach plan with likeminded partners to support and advance the development of 6G networks.
Semiconductors
The coordination on our respective efforts to build resilient semiconductor supply chains remains crucial to the secure supply of semiconductors, which are indispensable inputs to an ever-growing range of key industry sectors, and to ensure leadership in cutting-edge technologies.
We have been cooperating fruitfully under two administrative arrangements:

A joint early warning mechanism aimed at identifying (potential) supply chain disruptions and enabling early action to address their impacts, which has already proven useful in monitoring developments in the gallium and germanium markets; and
A transparency mechanism for reciprocal sharing of information about public support provided to the semiconductor sector.

We intend to extend the two administrative arrangements for a period of three years to enable further coordination and to establish synergies between our support for investments in the semiconductor sector taking place under the European Union Chips Act and the United States CHIPS Act.
The European Union and the United States share concerns about non-market economic policies and practices that may lead to distortionary effects or excessive dependencies for mature node (“legacy”) semiconductors. On the side of the fifth TTC ministerial meeting, which took place on 30 January 2024 in Washington, D.C., we held a joint roundtable with high-level industry representatives dedicated to legacy semiconductor supply chains. Both the European Union and the United States are committed to continuing to engage closely with industry on the issue. We plan to convene further government-to-government discussions with likeminded countries on this topic in the near future. In January 2024, the United States launched an industry survey to assess the use of legacy chips in supply chains that directly or indirectly support United States national security and critical infrastructure. The European Union is also gathering information on this issue. We intend to, as appropriate, continue to collect and share non-confidential information and market intelligence about non-market policies and practices, commit to consult each other on planned actions, and may develop joint or cooperative measures to address distortionary effects on the global supply chain for legacy semiconductors.
We plan to continue working to identify research cooperation opportunities on alternatives to the use of per- and polyfluorinated substances (PFAS) in chips. For example, we plan to explore the use of AI capacities and digital twins to accelerate the discovery of suitable materials to replace PFAS in semiconductor manufacturing.
Biotechnology Cooperation to Promote the Bioeconomy and Address Global Challenges
The bioeconomy is supported by the use of foundational and widely-applicable tools and technologies (including emerging biotechnologies), which have the potential to drive innovation to address global challenges. These tools and technologies also represent an opportunity to begin developing a common international understanding of the bioeconomy and future efforts to evaluate, measure, and grow the global bioeconomy as a whole. A crucial component of this effort is establishing a shared understanding of some of the risks and vulnerabilities associated with the bioeconomy, including economic and security considerations, alongside a simultaneous commitment to enabling the safe, secure, sustainable, and responsible use of tools and technologies for bioeconomic development.
We look forward to cooperating on shared research, development, and innovation priorities through the EU-US Joint Consultative Group that will push bioeconomic development forward in ways that address the most pressing global challenges we all face.
We acknowledge the significant promise and risks associated with the integration of advanced biotechnology with other technological disciplines such as AI, information technology, nanotechnology, neurotechnology, chemistry, and medicine, which will drive innovation and have significant implications for academia, industry, and economic security. To address the potential risks associated with the convergence of these technologies, we are committed to working towards mechanisms to safeguard dual-use advanced biotechnology items and equipment.
Transatlantic Cooperation on Standards for Critical and Emerging Technologies and Clean Energy Transition
The European Union and the United States share an interest in recognising mutually compatible technical standards as a way to expand transatlantic approaches for the deployment of critical and emerging technologies that reflect our shared values.
We plan to continue to exchange information on international standardisation activities for critical and emerging technologies via the “Strategic Standardisation Information (SSI)” mechanism, as established at the second TTC ministerial meeting. Our deepened cooperation enables us to cooperate on global standards. In order to strengthen collaboration with the private sector, we organised a joint stakeholder workshop in Washington, D.C., on 17 November 2023, which identified relevant areas for transatlantic collaboration.
Together with standards development organisations and stakeholders, we have endeavoured to work towards mutually compatible standards and best practices in areas of strategic interest with the objective of avoiding unnecessarily burdensome technical trade barriers, without prejudice to the specificities and needs of our respective legal systems.
Over the last two years, our cooperation has led to tangible outcomes. We have facilitated commonly recognised international standards for the rollout of megawatt charging systems for heavy-duty vehicle charging points, and joint work of European and United States standardisation bodies on plastics recycling and additive manufacturing since the start of the TTC. Our work continues to facilitate the development of mutually recognised and compatible standards to enhance new opportunities for cooperation within our respective standardisation systems.
Following a successful round of government-to-government technical exchanges, the European Commission and United States government released a Digital Identity Mapping Exercise Report Digital Identity Mapping Exercise Report which provides the results of an initial mapping centred on the definitions, assurance levels, and references to international standards included across Revision 3 of the NIST Digital Identity Guidelines (Special Publication 800-63, Revision 3) and European Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market. The next phase of this project will focus on identifying potential use cases for transatlantic interoperability and cooperation with a view toward enabling the cross-border use of digital identities and wallets.
The European Union and the United States intend to continue to identify emerging technology standards that are enablers of the clean energy transition for transatlantic collaboration.

Promoting Sustainability and New Opportunities for Trade and Investment 

Transatlantic Initiative on Sustainable Trade 
The Transatlantic Initiative on Sustainable Trade (TIST) work programme, which we launched at the fourth TTC ministerial meeting in May 2023, has advanced our cooperation on actions to accelerate the transition to climate-neutral economies in the European Union and the United States in a mutually beneficial way. The European Union and the United States have been making progress on the different work strands under the TIST work programme and will continue to advance this work.
Building a Transatlantic Green Marketplace
Building on our strong economic links to accelerate the green transition while creating new business opportunities for our firms and good employment opportunities for our citizens is a key objective of the TIST.
On 30-31 January 2024, the European Union and the United States jointly organised the “Crafting the Transatlantic Green Marketplace” event in Washington, D.C. The event brought together representatives from the European Union and the United States business, civil society, and labour communities to engage in a series of thematic stakeholder-led discussions that focused on identifying opportunities for transatlantic collaboration to promote the transition to a more sustainable and climate-neutral economy on both sides of the Atlantic. The European Union and the United States thank the participants for their time and input. We are currently analysing the various proposals for cooperation received from the stakeholders to assess their potential to be taken forward.
In addition, the European Union and the United States will continue various efforts under the TIST umbrella, including exploring potential avenues of cooperation on conformity assessment.
Green Public Procurement
The European Union and the United States underscore that, by achieving a common understanding on green public procurement practices, we can accelerate the uptake of more sustainable and greener solutions to achieve our common environmental and climate goals.
To this end, we have issued a Joint EU-US Catalogue of Best Practices on Green Public Procurement. It will contribute to advancing sustainability objectives by identifying and promoting policy tools for accelerating the deployment of publicly financed sustainability projects in the European Union and the United States.
The Joint Catalogue presents a collection of policies, practices, and actions used across all stages of the procurement process, from the strategic planning to pre-procurement, procurement, and post-contract award stage, and addresses all types of environmental and climate challenges, such as reduction of greenhouse gas emissions, energy efficiency or promoting circular economy approaches. It can serve as an inspiration for policymakers and suppliers, as well as provide ideas for the uptake of green solutions in public procurement globally.
The European Union and the United States will continue to work together on how to use the Joint Catalogue and maximise its impact.
Secure and Sustainable Supply Chains for the Clean Energy Transition
The European Union and the United States reaffirm that secure and sustainable transatlantic supply chains are key for a solid and steadfast transition towards a net-zero economy and will help reduce excessive dependencies in strategic economic activities. We intend to continue to cooperate on strategic supply chains, such as solar, to help us increase secure supply of clean energy. The European Union and the United States share common challenges in the solar sector and reaffirm the importance of a dedicated workstream that explores ways to jointly support our photovoltaic manufacturing capacity (including equipment) and to diversify and de-risk this supply chain.
The European Union and the United States also continue efforts to promote transparency and traceability to improve social standards and environmental protections across supply chains that support the green transition. In this context, we are planning a workshop with stakeholders to present ongoing initiatives to promote innovative solutions in the management of sustainable supply chains, including a focused session on solar.
EU-US Clean Energy Incentives Dialogue
The European Union and the United States share a strong commitment to tackling the climate crisis. We want to further the growth of the global clean energy economy while establishing resilient, secure, and diverse clean energy supply chains. By strengthening and expanding clean energy industries and investing in future-oriented sectors, we generate jobs, ignite a positive cycle of innovation, and decrease costs for clean energy technologies.
Through the EU-US Clean Energy Incentives Dialogue, we continue to work in a transparent and mutually reinforcing manner, to avoid zero-sum competition, subsidy races and distortions in transatlantic trade and investment flows that could arise from our respective policies and incentives. In this way, we strive to maximise clean energy technology deployment that creates jobs and does not lead to windfalls for private interests. To further enhance transparency, we intend to share specific information about our respective public incentive programs starting with one sector as a pilot with the possibility to extend this to further sectors in the future and will explore putting in place a reciprocal mechanism for consultations.
We share concerns about a range of third-country non-market policies and practices. We have discussed those used by certain third countries to attain a dominant global position in clean energy sectors, and recognise the value of continuing to exchange information on such non-market policies and practices. We will continue to explore policy tools and possible coordinated action to address harm caused by these policies and practices, including by fostering supply chain diversification, reducing dependencies, and building resilience to economic coercion.
Critical Minerals
The European Union and the United States affirm their close collaboration on diversifying global critical minerals supply chains. We welcome the launch of the Mineral Security Partnership (MSP) Forum, which we will co-chair. The MSP Forum will formalise and expand its existing engagements with minerals producing countries, with a particular focus on advancing and accelerating individual projects with high environmental protections and social governance and labour standards and promoting discussion of policies that contribute to diverse and resilient supply chains.
Continuing our well-established cooperation on critical raw materials, a workshop on “Developing the permanent magnets value chain” resulted in valuable exchanges focussing on rare earth magnets. We plan to continue these exchanges in the future.
To promote a green transition, enhance economic security, and strengthen environmental protections and labour rights in international critical minerals supply chains, the European Union and the United States are advancing negotiations toward a Critical Minerals Agreement.
Transatlantic E-Mobility Cooperation
We welcome the successful completion of the Electro-mobility and Interoperability with Smart Grids workstream with the publication of the EU-US joint technical recommendations for “Future Public Demonstrations of Vehicle-Grid Integration (VGI) Pilots.” Devised in consultation with industry experts and stakeholders, the recommendations propose the development of best practices to prepare for large-scale VGI demonstrations, educate potential customers, and incorporate requisite customer-related factors in demonstration programme designs, and aim at supporting communication and coordination between the European Union and the United States.
The recommendations complement the “Transatlantic Technical Recommendations for Government Funded Implementation of Electric Vehicle Charging Infrastructure,” which were presented at the fourth TTC ministerial meeting in May 2023 in Luleå, Sweden.
Together, the two sets of recommendations can benefit companies and end users, and transatlantic trade and investment, by supporting the expansion of e-mobility as well as the realisation of European Union and United States clean energy and decarbonisation commitments.
Enhancing eInvoicing Interoperability between the European Union and the United States
As part of our efforts to increase the use of digital tools that enhance trade, electronic invoicing (eInvoicing) has emerged as a transformative tool in modern business, offering efficiency gains, cost savings, and trade benefits. The continued cooperation and efforts towards compatible eInvoicing between the European Union and the United States offer a spectrum of advantages, with the potential to significantly reshape cross-market transactions and the dynamics of transatlantic trade. Even though most of the eInvoicing technical specifications and profiles are highly aligned, there are differences between our respective eInvoicing systems. We intend to continue to cooperate and coordinate for greater compatibility, particularly in terms of business and technical interoperability, as outlined in the declaration annexed to this Joint Statement.
Trade and Labour in the Green Transition
Today, the European Union and the United States held their third session of the tripartite Transatlantic Trade and Labour Dialogue (TALD). This session brought together TTC principals and senior representatives from labour, business, and government from both sides of the Atlantic and continued the joint transatlantic work with social partners on the promotion of sustainable and responsible supply chains with strong protections for labour rights. Building on the discussions during the workshop on the “Promotion of Good Quality Jobs for a Successful, Just and Inclusive Green Transition” on 30 January 2024, the TALD meeting provided the opportunity to dive deeper and hear views from labour and business stakeholders on the topic of the green transition, with specific focus on the green transition and other challenges, and the future of the TALD.
In addition, the European Union and the United States reaffirmed their commitment to cooperate to eliminate forced labour from global supply chains, as called upon in the labour and business stakeholders’ May 2023 joint recommendations, and they expressed the intention to continue technical dialogue to exchange information, as well as share best practices regarding the implementation of their forced labour policies, including with regard to research and risk assessment.

Trade, Security, and Economic Prosperity

Trade for Economic Security
Strengthening our economic security is a fundamental pillar of the transatlantic partnership. The TTC has helped provide a better understanding of our respective approaches to economic security. We intend to continue cooperation under the TTC to address common challenges using relevant trade and technology tools, bilaterally and in relevant fora, including the G7 and the World Trade Organisation. We reaffirm shared concerns about the challenges posed to our economic security by, among other issues, economic coercion, the weaponisation of economic dependencies, and the use of non-market policies and practices by third countries. We share the objective of continuing efforts to de-risk and diversify our trade and investment relations, including by reducing critical and excessive dependencies and strengthening the resilience of strategic supply chains.
Cooperation on Export Controls and Sanction-Related Export Restrictions
We continue to recognise the important role played by the TTC in supporting the European Union, the United States, and other international partners in their unprecedented cooperation on measures against Russia and Belarus. Such cooperation has helped bring about a continuous alignment of our regulations and a consistent application of export restrictions targeting Russia and Belarus through, for example, regular exchanges of information about authorisation and denial decisions. It has also supported coordination to counter the circumvention of our measures, such as through the creation and update of a common list of high-priority items (CHP) and our outreach to industry.
We will continue to work to further align European Union and United States priorities on Russian export restrictions and coordinated international messaging on those priorities to combat circumvention and improve efficiency and effectiveness of domestic controls. As regards the implementation of export restrictions against Russia, both sides welcome the setting up of the platform for the exchange of licensing information and plan to continue to exchange information on outreach activities, including to third countries and industry.
Both sides have also decided to continue work on facilitating secure high-technology trade and reducing administrative burdens in areas covered by export controls by developing a common understanding of respective rules and mapping out measures that would help streamline this trade, while maintaining a well-functioning and effective export control regime. For example, the United States has expanded licencing exceptions to European Union Member States.
We welcome the impulse the TTC has given to coordinated action by the European Union and the United States in reaching out to other countries and supporting them in strengthening their export controls, for example, through the provision of secure software for the processing of licenses.
Investment Screening
We reiterate the importance of having effective foreign direct investment (FDI) screening mechanisms in place aimed at addressing national security risks in the United States and addressing threats to security and public order in the European Union. We welcome the progress in this regard and will continue to support the development and implementation of these mechanisms, while promoting an open and attractive investment environment.
We 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. We will soon launch a joint repository that will provide additional resources to EU Member State and United States investment screening professionals. We have deepened our cooperation on investment screening through hosting a public stakeholder event and conducting outreach to likeminded partners in the Western Balkans to support their development of effective FDI screening mechanisms and intend to continue such outreach in 2024.
We will continue our cooperation on investment screening through technical exchanges, including on investment trends impacting security risks related to specific sensitive technologies to provide a better understanding of similarities and differences in approach.
Outbound Investment Security
We recognise the importance of investment, innovation, and open economies. At the same time, we are also attentive to concerns regarding potential security threats and risks to international peace and security that may arise from certain outbound investments in a narrow set of critical technologies. Against this background, the European Union and the United States 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.
Addressing Non-Market Policies and Practices
The European Union and the United States remain concerned about the persistent use of other countries’ non-market policies and practices and the challenge they pose both to our workers and businesses and to other third-country markets. We continue to exchange on the risks that non-market policies and practices, including non-market excess capacity, pose in certain sectors and to engage with partners where appropriate.
We engaged with other countries who share our concerns about China’s non-market policies and practices in the medical devices sector, and conveyed these concerns directly to China. The European Union and the United States will continue to monitor developments in the medical devices sector.

Defending Human Rights and Values in a Changing Geopolitical Digital Environment

Protecting Information Integrity in a Pivotal Year for Democratic Resilience
The European Union and the United States reiterate our unwavering commitment to support democracies across the world. We are determined to defend human rights and will continue to call out authoritarianism. In a year marked by democratic elections around the world, we call upon all actors including governments, industry, journalists, human rights defenders, and civil society to protect and defend information integrity both online and offline.
We express our strong support for the role of free, pluralistic, and independent media in protecting information integrity. Independent media should serve as a public watchdog and a key pillar of democracy, as well as an important and dynamic part of our economy. We recognise its indispensable role for informing public opinion, fact-checking, and holding those in power accountable.
We are witnessing rapid technological advancements which provide opportunities to enhance information integrity but also create new risks. The European Union and the United States share the concern that malign use of AI applications, such as the creation of harmful “deepfakes,” poses new risks, including to further the spread and targeting of foreign information manipulation and interference (FIMI). We call upon technology companies and online platforms to uphold information integrity, including in the run-up to elections across the world.
In the European Union, the Digital Services Act (DSA) requires designated very large online platforms and search engines to assess and mitigate societal risks emanating from their services, including negative effects on civic discourse and electoral processes, and recommends specific measures, including on generative AI content.
Cooperation on Online Platforms
The European Union and the United States reaffirm their view that online platforms should exercise greater responsibility in ensuring that their services contribute to an online environment that protects, empowers, and respects their users. We reiterate that online platforms should take appropriate actions to address the impact of their services on the mental health and development of children and youth.
The European Union and the United States also reaffirm that urgent action is needed to address technology-facilitated gender-based violence, which disproportionately impacts women and girls, who often experience multiple and intersecting discriminations and oppressions. We developed a set of joint principles on combatting gender-based violence on online platforms that complement further the joint high-level principles on the protection and empowerment of children and youth and facilitation of data access from online platforms for independent research, which were released at the fourth TTC ministerial meeting.
In addition to releasing these principles, we are also publishing a status report on mechanisms for researcher access to online platform data, which builds upon efforts undertaken by the academic and research community. The aim of this work is to disseminate information about the new and improved possibilities now available to study and understand systemic risks related to online platforms. We call on online platforms to expand and improve access for researchers, particularly on societal risks.
To deepen this work, in the margins of this ministerial meeting, we organised a joint workshop on access to platform data and using this data to combat technology-facilitated gender-based violence. We invited, and continue to encourage, the research community to analyse these data access mechanisms, and to explore how they can contribute to a better understanding of the functioning of – and the potential risks emanating from online platforms with regard to areas such as the mental health and development of children and youth, and technology-facilitated gender-based violence.
We share the commitment to the highest appropriate standards of protection in these areas for users in both the European Union and the United States.
Protecting Human Rights Defenders Online
The European Union and the United States recognise the key role human rights defenders (HRDs) play in defending human rights and fundamental freedoms, and we are committed to the protection of HRDs online and offline. We are working together to address human rights risks stemming from the misuse of digital technologies, including combatting internet shutdowns, unlawful surveillance, and the targeting of HRDs online. Elevating the critical role of HRDs and supporting and protecting them in doing their work safely is not only a shared foreign policy priority for the European Union and the United States, but an imperative for advancing human rights for all.
Following the commitment made at the fourth TTC ministerial meeting, we have published joint Recommended Actions for Online Platforms on Protecting Human Rights Defenders Online. This document sets out ten recommendations that online platforms can take globally to prevent, mitigate, and provide remedy for attacks against HRDs online.
These recommendations reflect commitments we made with global partners through the Declaration of the Future of the Internet and reflect key principles of European Union and United States legislation, initiatives, and policies to safeguard human rights online. They were informed by extensive stakeholder consultations organised by the European Union and the United States from January 2023 to February 2024. The European Union and the United States intend to take further actions to address the needs of HRDs around the world. We will engage with all relevant stakeholders to promote the recommended actions and facilitate their implementation. We will also facilitate further exchanges and cooperation between the European Union- and United States-based emergency mechanisms on support strategies which seek to prevent, curb, mitigate, and eliminate online attacks, including the use of arbitrary and unlawful surveillance targeting HRDs.
Foreign Information Manipulation and Interference in Third Countries
The European Union and the United States consider foreign information manipulation and interference (FIMI) to be geopolitical and security challenges. We share the aim of addressing this threat and enhancing the resilience of democracies. Against this background, we have taken a number of actions to increase transatlantic cooperation to proactively address FIMI, including disinformation, while upholding human rights and fundamental freedoms. We will continue to work together to address FIMI through the TTC and other multi- and bilateral contexts.
We will continue to jointly use and further advance the common analytical methodology to identify, analyse and detect FIMI decided at the fourth TTC ministerial meeting. We are engaging with other international partners on a quarterly basis to familiarise them with this methodology. Expanding the network of partners familiar with this methodology will enhance our common understanding of the threat and allow us to jointly identify, analyse, and counter FIMI globally.
The European Union, the United States, and the Western Balkan partners share the same vision for an open, reliable, and secure Internet, as evidenced by their joint endorsement of the Declaration for the Future of the Internet. We will coordinate our efforts in order to support the Western Balkan partners by launching a coordination mechanism to address FIMI threats more effectively in the region. This is in line with the European Union’s and likeminded partners’ initiatives to increase their capabilities to further identify, assess, and counter FIMI. Our support will reduce third countries’, and in particular Russia’s and other actors’, including China’s, ability to effectively employ FIMI campaigns in the region. We will help our partners in the Western Balkans to develop capacity in five key action areas: the development of national strategies and policies, the creation of dedicated governance structures and institutions, increasing human and technical capabilities, protecting and supporting the role of independent media, academia, and civil society, and multilateral engagement.
Secure and Trusted Digital Infrastructure and Connectivity in Third Countries
The European Union and the United States reiterate the importance of and support for secure, trusted, and resilient digital connectivity and information and communication technology and services (ICTS) supply chains in third countries, provided by trusted suppliers.
We commend the decisions taken by partner countries towards trusted ICT ecosystems by ensuring high cybersecurity and resilience standards for connectivity solutions and networks, including by restricting or excluding high-risk suppliers from their national networks and using trusted vendors and services providers for maintenance and repair.
We will continue to reach out to partners across the world to understand the needs and challenges around securing digital infrastructure and explore how we can best collaborate to support the digitalisation goals of emerging economies. We continue to engage emerging economies through technical discussions and high-level roundtables to increase interest in secure digital connectivity. We also remain committed to continued exchanges with relevant industry actors such as mobile network operators and trusted equipment suppliers.
We are delivering on our commitments to support secure and resilient connectivity projects in Costa Rica, Jamaica, Kenya, and the Philippines, including through mechanisms like the Global Gateway, the Partnership for Global Infrastructure and Investment, and technical exchanges, including third countries sharing experiences to accelerate secure connectivity in other parts of the region.
The European Union and the United States are supporting Tunisia’s goal of establishing secure digital connectivity and infrastructure by relying on trusted vendors through collaborative advocacy, technical assistance and by exploring financing, coordination, and policy alignment. This includes providing training programmes to targeted Tunisian government agencies, IT professionals, and businesses, and promoting the development of cybersecurity standards and frameworks, in particular for 5G. The European Union and United States are advancing discussions with relevant financial institutions for the mobilisation of support for secure digital connectivity infrastructure projects with trusted vendors.
We aim to continue our actions to support secure and resilient digital connectivity in third countries. Following the earlier signing of a memorandum of understanding between the European Investment Bank (EIB) and the United States International Development Finance Corporation (DFC), the European Union and the United States intend to augment their actions by furthering cooperation between European Union Member State and United States financing agencies. In 2023, the Export-Import Bank of the United States (EXIM) signed co-financing memorandums of understanding with the Swedish EKN and Finnish Finnvera respectively to facilitate joint support for export projects, and has enabled direct support to trusted suppliers from both sides.
We are committed to exploring options to act strategically, cooperatively, and efficiently to provide attractive incentives to partner countries to choose trusted suppliers for the development of their connectivity networks.
Secure and Resilient International Connectivity
The United States and the European Union recall the economic and geostrategic importance of cooperating on trust and security in the entirety of ICT infrastructure, including maintenance and repair. To this end, we continue to seek ways to advance cooperation on international connectivity with trustworthy, secure, and resilient networks. This could include trans-oceanic routes, including through the Arctic and Pacific regions.
Building the Transatlantic Partnership Together with Stakeholders
We remain committed to high levels of transparency and the close involvement of the transatlantic stakeholder community at large in the work of the TTC, including businesses, labour organisations, non-profit organisations, environmental constituencies, and academics.
We have therefore extensively reached out to stakeholders and given them the possibility to be involved and to provide input and receive feedback through the organisation of events, roundtables, workshops and the establishment of dedicated websites like Futurium. With the support of the EU-financed Trade and Technology Dialogue, several high-level events have taken place and stakeholders have been consulted on topics such as sustainable trade, standardisation, AI, connectivity, and semiconductors.
In addition to these activities, we have also engaged with relevant stakeholders in more structured formats such as the Transatlantic Trade and Labour Dialogue, the Talent for Growth Task Force, and with small and medium-sized enterprises (SMEs) in a series of webinars on the topic of SME access to and use of digital tools.
Talent for Growth
The Talent for Growth Task Force, launched in April 2023 with a one-year mandate, has served both as a platform for best practices and a catalyst for innovative skills approaches that promote economic growth and create opportunities for workers in the technology sector. The Task Force brought together leaders from government, business, labour unions, and organisations that support training from the European Union and the United States. The Task Force identified, mapped, and disseminated implementable models and ideas in four critical areas: training workers to meet business needs, including women and underrepresented groups in technical jobs, moving to a skills-first culture, and micro-credentials. The Task Force endorsed a statement featuring key messages stemming from these discussions. The discussions in this group have confirmed the critical role talent plays for the sustainable growth of our economies and the well-being of our societies in an age of rapidly changing technology. It examined the acceleration of change brought about by AI. The Task Force has established bilateral relations between Task Force members which have catalysed private-sector initiatives and will last beyond the timeframe of the Task Force. The European and the United States remain dedicated to continuing to equip our workforces with the skills necessary to meet the needs created by rapidly changing technology, including AI.
Small and Medium-Sized Enterprises (SMEs)
The European Union and the United States recognise the use of digital tools as a key enabler for SMEs to innovate, grow, and compete and are continuing their work to promote the uptake of digital technologies by SMEs.
Several webinars and outreach activities, where SMEs shared their needs and experience, were held during the last two years. After an analysis of these stakeholder exchanges, we have developed a common set of recommendations for European Union and United States policymakers to implement measures to help SMEs to accelerate access to these technologies.
The recommendations focus on the topics of digital-related trainings; transatlantic exchange programmes; information-sharing on cyber-security, intellectual property, and standards; and access to finance. To continue the work, we intend to develop an implementation process for these recommendations, including measures such as a webinar on access to finance and the publishing of cross-referenced European Union and United States websites with practical information for SMEs.
Conclusion and Next Steps
Since its inaugural meeting on 29 September 2021, the TTC has realised substantial progress and achievements across all workstreams. These results have enabled the European Union and the United States: to explore how to create new trade and investment opportunities, notably to contribute to the green transition; to advance our shared leadership in emerging technologies, such as 6G, quantum, and biotechnology so that democracies can remain at the vanguard of these developments; to provide a robust joint response to Russia’s war of aggression against Ukraine; to cooperate on economic security measures to reduce economic dependencies; to continue to develop a shared understanding of the non-market policies and practices and the risks they pose or our workers, businesses and markets globally; to jointly enhance supply chain resilience while promoting transparency and cooperation on our industrial policy approaches in key sectors, including semiconductors and clean energy; to exchange information on best practices in eliminating forced labour from our global supply chains; to advance and reinforce interoperability between AI governance frameworks based on our shared democratic values to achieve our common vision for safe, secure, and trustworthy AI globally; to advance the resilience and security of our ICT infrastructures; and to finance and promote secure connectivity with trusted suppliers around the world.
These achievements 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. As the European Union and the United States enter their respective electoral processes, the work we do under the TTC will remain relevant, strategic, and timely, while allowing for the necessary flexibility to adapt to changing circumstances.
Building on the lessons learnt from our cooperation so far, we intend to use the remainder of 2024 to engage with European Union and United States stakeholders to learn their views on the future of the TTC.

 
 
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The United States has been ranked as the top destination for foreign direct investment for the 12th consecutive year according to Kearney’s Global Business Policy Council’s 2024 Foreign Direct Investment (FDI) Confidence Index. 
The annual survey of global senior executives and investors found that the United States maintains its lead ranking for over a decade due to the growing strength of the U.S. economy and rebounding consumer sentiment.
Foreign investors were encouraged by higher-than-anticipated GDP growth in 2023, which was attributed to strong consumer and government expenditure, and robust export levels. The ranking is also testament to the United States’ lead in technological innovation, a top priority for investors and the Biden-Harris Administration’s economic agenda.
“For the 12th year in a row, the United States was once again the number one destination for foreign direct investment in 2023, reflecting the Department of Commerce’s commitment to constantly increasing our economic competitiveness,” said U.S. Secretary of Commerce Gina Raimondo. “Through our efforts to secure FDI across the United States, we are delivering on the Biden-Harris Administration’s promise to create good-paying jobs for working families and increase economic development in all communities across the country.”
The United States’ ranking in the FDI Confidence Index is underpinned by the work of the U.S. Department of Commerce’s SelectUSA program that facilitates job-creating business investment into the United States and raises awareness of the critical role that economic development plays in the U.S. economy. Since its inception, SelectUSA has facilitated more than $200 billion in client-verified FDI, supporting more than 200,000 jobs throughout the United States and its territories.
As part of the Biden-Harris Administration’s effort to attract foreign direct investment, Secretary of Commerce Gina Raimondo will host the 2024 SelectUSA Investment Summit from June 23-26 at the Gaylord National Resort and Convention Center in National Harbor, Maryland. The Investment Summit is the premier event in the United States dedicated to promoting foreign direct investment and provides prospects for investors from global markets and economic development organizations across the nation to interact and create investment opportunities.
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About SelectUSA
Housed within the International Trade Administration, SelectUSA promotes and facilitates business investment into the United States by coordinating related federal government agencies to serve as a single point of contact for investors and raises awareness of the critical role that economic development plays in the U.S. economy. SelectUSA assists U.S. economic development organizations to compete globally for investment by providing information, a platform for international marketing, and high-level advocacy for the United States as an investment destination. SelectUSA also helps foreign companies find the information they need to make decisions, connect to the right people at the local level, navigate the federal regulatory system, and find solutions to issues related to the federal government. For more information, visit www.trade.gov/selectusa. For more information about the 2024 SelectUSA Investment Summit, visit www.selectusasummit.us.
About the International Trade Administration
The International Trade Administration (ITA) at the U.S. Department of Commerce is the premier resource for American companies competing in the global marketplace. Operating in more than 100 U.S. locations and 80 markets worldwide, ITA promotes trade and investment, assists U.S. businesses and workers to export and expand globally, and ensures fair trade and compliance by enforcing U.S. trade laws and agreements. For more information on ITA, visit www.trade.gov.
 
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U.S. Secretary of Commerce Gina Raimondo and Assistant Secretary Alan Davidson gave remarks at a roundtable with leading AI developers, civil society organizations, and academics on the benefits, risks, and policy options regarding open AI models, in relation to the National Telecommunications and Information Administration’s (NTIA) Request for Comment on the topic.
Secretary Raimondo moderated the discussion, which addressed the marginal benefits and risks of open AI models, systems of accountability and risk mitigation, the national security and societal impacts of open AI models, and existing and emerging approaches to AI evaluation.
The Secretary commented on the Department of Commerce’s focus on the understanding the full spectrum of benefits and risks associated with development of open AI models, and the Department’s ongoing efforts to develop policy that manages security and societal risks without forgoing benefits to innovation, safety research, competition and more.
Attendees included representation from Anthropic, the Center for Democracy & Technology, Demos, Google DeepMind, Greylock, Meta, MLCommons, OpenAI, RAND, Scale AI, the Stanford Center for Research on Foundation Models, and Upturn. Comments on NTIA’s RFC on Dual Use Foundation Models with Widely Available Model Weights are due within 30 days of publication of the Request for Comment in the Federal Register, or March 27, 2024.

Related Bureaus and Offices: National Telecommunications and Information Administration

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​IMO has agreed on an illustration of a possible draft outline of an “IMO net-zero framework” for cutting greenhouse gas emissions (GHG) from international shipping.
This marks a step forward in the legal process towards adopting global regulations, referred to as “mid-term GHG reduction measures”, that will help achieve the targets contained in the 2023 IMO Strategy on the Reduction of GHG Emissions from Ships.
At the conclusion of the eighty-first session of the Maritime Environment Protection Committee (MEPC 81), held in London from 18 to 22 March 2024, IMO Secretary-General Mr. Arsenio Dominguez said: “Your Committee is indeed a forum to consider issues of critical relevance for all parts of the marine environment, and this week you made very important progress.”
The draft outline illustration of a possible IMO net-zero framework lists regulations under the International Convention for the Prevention of Pollution from Ships (MARPOL), which will be adopted or amended to allow for a new global fuel standard and a new global pricing mechanism for maritime GHG emissions.
These may include a proposed new Chapter 5 of MARPOL Annex VI containing regulations on the IMO net-zero framework, to include:

a goal-based marine fuel standard regulating the phased reduction of the marine fuel’s GHG intensity; and
an economic mechanism(s) to incentivize the transition to net-zero.

The goal-based marine fuel standard and pricing mechanism are mid-term GHG reduction measures specified in the revised IMO Strategy on the Reduction of GHG Emissions from Ships, adopted in July 2023. Several different proposals of what these measures should entail are currently being considered.
The possible draft outline for the IMO net-zero framework will be used as a starting point to consolidate the different proposals into a possible common structure, to support further discussions with the understanding that this outline would not prejudge any possible future changes to it as deliberations progress.
Next steps on GHG emissions 
In addition to progress on the legal framework, MEPC agreed on the following next steps, ahead of its next meeting (MEPC 82), scheduled for 30 September to 4 October 2024:

Comprehensive impact assessment on the impact of the proposed mid-term measures on Member States to be finalized and submitted to MEPC 82;
A two-day expert workshop (Fifth GHG Expert Workshop – GHG-EW 5) to be held to discuss the preliminary findings of the comprehensive impact assessment, covering all aspects, including the modelling of revenue disbursement. The outcome will be reported to MEPC 82;
The Seventeenth Intersessional Working Group on Greenhouse Gas Emissions (ISWG-GHG 17) to meet to consider the outcomes of the comprehensive impact assessment, the GHG-EW5, and other submitted documents for further discussions around the development of mid-term measures, and report to MEPC 82;
ISWG-GHG 17 to develop draft terms of reference for a Fifth IMO GHG Study;
Establishment of a GESAMP Working Group on the Life Cycle GHG Intensity of Marine Fuels. GESAMP is the Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection. The GESAMP-LCA WG will be tasked to provide best possible scientific and technical assessment of issues related to the implementation of the LCA Guidelines. These guidelines allow for the calculation of GHG emissions over the full production cycle and end-use of marine fuels, known as “well-to-wake”;
Two correspondence group have been established which will report to MEPC 83: the first group is tasked to develop a work plan on the development of a regulatory framework for the use of onboard carbon capture systems and to look into Tank-to Wake methane and nitrous oxide emissions;  the second group will look into social and economic sustainability themes and aspects of marine fuels for possible inclusion in the LCA Guidelines.

Revised greenhouse gas life cycle guidelines adopted  
MEPC adopted revised Guidelines on life cycle GHG intensity of marine fuels (LCA Guidelines). The updated guidelines include revised calculations for default emission factors; updated appendix 4 on template for well-to-tank default emission factor submission; and new appendix 5 template for Tank-to-Wake (TtW) emission factors.
 
 
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Blog post by Federico Maria Ferrara, Tom Hudepohl, Pamina Karl, Tobias Linzert, Benoit Nguyen, Lia Vaz Cruz[1] |  The Eurosystem is shrinking its balance sheet, which makes more government bonds available for purchase. The ECB Blog looks at how markets are adjusting to this new situation with regard to bond price volatility, liquidity and the impact on repo markets.

Since mid-2022 the Eurosystem’s balance sheet declined by around €2,000 billion, or more than 22 per cent. The largest part of this decline is due to banks having repaid a substantial share of the loans taken from the Eurosystem via the targeted long-term refinancing operations. This has released many assets previously used as collateral back to the market, including government bonds. Moreover, the Eurosystem owns smaller amounts of bonds since it no longer reinvests maturing bonds under its asset purchase programme.
The reduction of the Eurosystem’s balance sheet and the fact that governments across the euro area have issued record amounts of debt have substantially increased the availability of bonds to the market. This has helped to bring the Eurosystem’s footprint in government bond markets closer to pre-pandemic levels (Chart 1).
But how have markets adjusted, and which other investors are stepping in to absorb the increasing amount of government bonds available to the market?

Chart 1
Size of euro area government bond market and the Eurosystem market footprint (EUR billions and %)

Sources: Eurosystem, CSDB.
Notes: The chart shows the evolution of the size of the euro area government bond market and splits it into the Eurosystem holdings (yellow) and mobilised collateral (green), and what is not held or mobilised as collateral with the Eurosystem (blue). The Eurosystem market footprint is a relative measure, computed as the share of the Eurosystem’s euro area government bond (EGB) holdings compared to nominal amount outstanding. Outright holdings are EGBs held by the Eurosystem via purchase programmes, adjusted with EGBs lent back via the securities lending against cash collateral facilities; mobilised collateral includes EGBs mobilised as collateral for open market operations. Last observation: 29 February 2024.
How to read the figures: In 2020 the euro area government bond market had a capitalisation of almost €8 trillion. At that time Eurosystem holdings and collateral had a value of more than €3.5 trillion, which accounted for 31.5 percent of the market.

Who stepped into the government bond market?
Chart 2 shows that various types of investors have stepped in and compensated for the Eurosystem’s reduced presence. While the Eurosystem has not actively sold bonds, it only partially replaced maturing bonds in its monetary policy portfolios[2]. Two sectors have clearly contributed the most to absorbing the new debt since the Eurosystem began to reduce its balance sheet: households and foreign investors.

Chart 2
Sectoral absorption of government securities in 2023 (%)

Sources: ECB, SHS.
Notes: The chart shows the flows into euro area government debt securities in 2023, split between a range of euro area investors (banks, households, etc.) and foreign investors. As an example, the last column for the euro area shows that foreign investors, followed by euro area households, had the largest inflows into euro area government securities in 2023, while the Eurosystem had the largest outflow (as it reduced its reinvestment amounts overall). The bars in each column add up to 100%. Last observation: 31 December 2023.

Historically, foreign investors were the largest holders of euro area government securities, accounting for 40% of holdings prior to the start of the Eurosystem’s asset purchase programme (Chart 3). When the Eurosystem expanded its balance sheet, however, they halved their share of euro area government bonds. As the Eurosystem ended reinvestments under the APP, they returned and absorbed a considerable amount of the net issuance of government bonds (Chart 2). Nevertheless, their share is still far smaller than it was a decade ago (Chart 3).
This return of foreign investors may not be surprising. The sector includes foreign investment funds and hedge funds, which traditionally show a high sensitivity to changes in yields, especially those of bonds issued by higher-rated euro area governments.

Chart 3
Selected holders of euro area government securities (%)

Sources: SHS, ECB.
Note: Last observation: 31 December 2023.

In contrast, the speed and intensity of purchases by the household sector is noteworthy. The share of government securities owned by households has returned to nearly 3.5%, close to the level prevailing before the Eurosystem launched its public sector purchase programme (PSPP) in 2015.
Several factors have made purchasing government bonds attractive for private households. Higher yields, together with governments offering dedicated retail-focused products, attracted investment from households, especially as many commercial banks were slow to pass-through higher policy rates to deposit rates. In addition, increased savings during the pandemic meant households had more money available to invest in bonds and bills.
Why did government bond markets react so smoothly?
The Eurosystem started to reduce its monetary policy bond portfolio in an environment of high government bond issuance and heightened market volatility as central banks around the world increased their policy rates to fight elevated inflation. In these conditions, the Eurosystem’s balance sheet reduction went very smoothly, with net issuance of bonds being absorbed by domestic and foreign investors.
The ability to buy or sell bonds has remained stable or even improved in recent months. This is visible from the relationship between volatility and liquidity in euro area government bond markets shown in Chart 4. Higher volatility is likely to decrease market liquidity as it increases risks to trade in the market. A clear sign of market dysfunction would be to see a deterioration of market liquidity that goes beyond what could be explained by an increase in market volatility. This is what happened in March 2020 at the beginning of the pandemic, when euro area bond markets faced severe disruptions as liquidity deteriorated dramatically and became disconnected from volatility (yellow dots). In contrast to that stress situation, recent data points (red dots) are in line with the usual relationship between bond market volatility and liquidity since 2015. This evidence is one indication that government bond markets have been functioning well during the recent period of balance sheet normalisation.

Chart 4
Relationship between liquidity and volatility in euro area government bond market

Source: ECB calculations.
Notes: Liquidity conditions proxied by a euro area weighted average composite indicator of liquidity in 10-year government bond markets and implied volatility based on euro-denominated 3-month Swaptions. Higher values of the composite liquidity indicator correspond to worse liquidity conditions. Blue dots indicate observations starting in January 2015. Yellow dots indicate observations from March 2020. Red dots indicate observations from March 2023 to February 2024. The light blue regression line is estimated based on all observations except those from March 2020. The yellow regression is estimated based on March 2020 observations. Last observation: 5 February 2024.

Several factors have supported the smooth functioning of financial markets.
First, the timely communication of the eventual reduction in the Eurosystem’s balance sheet made it easier for market actors, such as banks, insurers, and hedge funds, to plan and adapt. Decreasing the balance sheet in a predictable and gradual manner has supported orderly market conditions.
Second, suppliers of bonds have strategically adjusted their behaviour. Bond issuers – both governments and private companies – reacted to the new environment by initially shortening the maturities of their bonds, and some issued dedicated investment products for retail investors.
Finally, dealer banks have a critical role for secondary markets to remain liquid and efficient. Since the start of the Eurosystem’s balance sheet reduction, they mobilized sufficient space on their balance sheet that smoothly facilitated the buying and selling of bonds between investors in the secondary market.
Did more availability of governments bonds help in repo markets?
The increased availability of euro area government bonds had a positive effect on another crucial market segment: the repo market, where banks lend and borrow from each other against collateral. In 2022, repo market functioning was partly impaired due to the scarcity of high-quality securities that are used as collateral in secured money market trades. This had driven a wedge between repo rates and the ECB’s main policy rate, which contributed to delaying the transmission of monetary policy in the early stages of the tightening cycle.
The improved availability of collateral helped to significantly alleviate such shortages of assets and helped bring repo rates closer in line with our main policy rate. While at the end of 2022 almost 50% of all repo volumes were conducted more than 30 bps below the deposit facility rate (DFR), this share shrank drastically during 2023. Currently more than 50% of all repo volumes are within 10 bps of the DFR (Chart 5).
The overall improvement in repo market functioning has been conducive to the transmission of monetary policy to euro area money markets, as repo market rates have adjusted without delay to policy rate hikes in the later part of the hiking cycle.[3]

Chart 5
Share of euro area repo market trading below the DFR and Eurosystem market footprint (%)

Sources: MMSR, ECB, 20-day averages are displayed.
Notes: The Eurosystem’s footprint in the EGB market is measured as the share of the Eurosystem’s holdings of EGBs compared to the total nominal amount of EGBs outstanding (see chart 1). Specialness of repo market is displayed as share of volumes per rate bucket below the deposit facility rate (DFR). Last observation: 29 February 2024. How to read the figures: At the end of 2022, almost 50% of all repo volumes traded at a spread of more than 30 bps below the DFR. Since then, this scarcity premium has reduced drastically with more than 50% of repo volumes currently trading less than 10 bps below DFR.

Conclusion
The reduction of the Eurosystem balance sheet has taken place in a context of high government bond issuance, requiring private investors to step up their demand in bond markets. Supported by the predictable and gradual reduction of the Eurosystem’s footprint, investors, issuers and intermediaries adapted well to the new conditions, ensuring the smooth functioning of bond markets. Importantly, the increased availability of bonds contributed to improving market functioning in the repo market by alleviating collateral shortages. While the conditions for a continued smooth absorption are in place, market functioning must be monitored closely going forward.
 
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
For more information, please Check out The ECB Blog.

 
Footnotes:

We are grateful to Rita Besugo, Mihail Medvedi and Raúl Novelle Araujo for their contribution to this blog post.
For the asset purchase programme the Eurosystem started to reduce its holdings in March 2023, first by only partly reinvesting redemptions, and as of July 2023 by not reinvesting any redemptions. For the pandemic emergency purchase programme redemptions were fully reinvested in 2023 and until the end of the first half of 2024. The Governing Council announced its intention to reduce the reinvestments in the second half of 2024.
Accordingly, the need to provide bonds back to the market via the Eurosystem’s securities lending facility (especially against cash) has also declined.

 
 
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On March 25th the Commission published a Flash Eurobarometer conducted at the regional level, showing that EU citizens look positively at the economic situation and the quality of life in their region.
Over eight out of ten Europeans (82%) say that the quality of life in their region is good. At the same time, 65% of Europeans say that the current situation of the economy of their region is good.
Europeans tend to think that the most important issues facing their region at the moment are the cost of living (31%), the economic situation and unemployment (26%), and health (26%). These are followed by housing (20%), the environment and climate change (19%), and the educational system (18%).
At the same time, they identify economy, social justice and jobs (29%) as one of the most important dimensions for the future of Europe, followed by climate change and the environment (24%), education, culture, youth and sport (24%), democracy, values and rights and rule of law (21%), health (21%), EU security and defence (20%) and migration (19%).
Trust in regional and local authorities remains high, as does trust in the EU. 58% of respondents tend to trust regional and local authorities and 38% tend not to trust them. The same proportions are observed when it comes to trust in the EU.
A majority of Europeans continue to show optimism. 66% of them are optimistic regarding the future of their region while 32% are pessimistic. At the same time, 55% are optimistic regarding the future of the EU while 42% are pessimistic.
The survey also shows that a majority of Europeans (47%) continue to have a positive image of the EU. while 21% have a negative image and 30% have a neutral image.
 
Background
The Flash Eurobarometer “Public Opinion in the EU Regions” is conducted every three years at the regional level and gives a granular picture of the opinion of European citizens. This edition was conducted between the 11th of January and the 15th of February 2024. 62,091 interviews were conducted by telephone across 194 regions.
 
 
For more Information, please check out the Flash Eurobarometer 539
 
 
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Speech by Alfred Kammer, Director – European Department, IMF  |  Thank you, Dean Muštra, for your opening remarks and Governor Vujčić for the invitation to attend this year’s Regional Governors’ Meeting in Split.
Today’s gathering comes two years after Russia’s invasion of Ukraine, a subsequent energy-price roller coaster, and the advent of a more fragmented global economy.
Against this backdrop Europe has done well, because governments acted fast and decisively.
Unemployment rates have remained low, inflation has declined sharply, and the EU announced a new accession effort—stemming the tide of fragmentation.
I will focus today on what comes next for Europe and in particular the Central, Eastern and Southeastern European or, in short, CESEE region:

What can businesses and those of you who are getting ready to join the labor market expect in the short term; and…
…what economic policies are needed to move CESEE and Europe onto the path of a lasting recovery over the medium term.

Global environment
Let me start with an overview of the global setting for this and next year.
The good news is that the global economy is growing faster compared to the difficult pandemic period, when global output contracted and only slowly recovered thereafter.
But—and here is the bad news—the global economy still lacks dynamism.
At around 3 percent, global growth is well below the historical average of 3.8 percent, which was recorded during 2000 to 2019 and, hence, provides little positive spillovers to Europe.
We expect the US economy to slow as its post-pandemic recovery runs its course.
Similarly, activity in China is cooling as weaknesses in the property sector are expected to persist.

For Europe––after suffering an exceptionally large energy price shock in 2022––we project a gradual recovery.
Compared to dire predictions of a recession at that time, this outcome would be a remarkable accomplishment.
Specifically, we expect growth in the euro area overall to rise from below 1 percent this year to 1.7 percent in 2025.
And in the CESEE region we expect the economies to grow close to 3 percent this year and 3.5 percent next year.
For Croatia which joined the euro area a year ago, growth is robust..
This positive development is the result of strong policies but also helped by a resilient tourism sector.

Our forecast constitutes what has been called a “soft landing.”
By this we mean that the decline of inflation in 2024-25 to previous levels is accompanied by only a mild growth slowdown.
This is not a common outcome as I will explain.
As of last month, inflation rates have fallen to approximately one-third of their peaks at end-2022. (Figure LHS).
The fact that the economic costs of the energy price shock and higher interest rates—which have been raised to slow down price increases—have so far been mild is quite remarkable.
As we have documented in a recent study, the drops in economic activity have typically been much larger during previous episodes of disinflation, as the red bar indicates.
But there are some reasons for concern.
Let me start by noting that the prospects of a soft landing are not equally strong across Europe.
The disinflation process has been uneven.
Core inflation, a measure of underlying price dynamics which excludes volatile food and energy price  components, is higher in emerging European economies than in advanced European economies.
In both country groupings, core inflation is coming down only slowly.
And even within CESEE, we are seeing differences.
For example, the decline of the inflation rate is progressing more slowly in Romania, Moldova, Montenegro, Hungary, and Serbia than elsewhere in the CESEE region.[1]
But the more general point here is that the forecast for a soft landing rests on strong assumptions.

One important factor especially in emerging European economies is that labor markets need to cool at just the right pace.

Labor markets cannot remain too strong as they may keep wage growth above long-term productivity growth and steady state inflation rates–thereby leading to protracted inflation and a loss of competitiveness.
But labor markets should also not cool so much that labor income would no longer be able to support robust private consumption.

Where are we in this respect?
As of end 2023, wages in the CESEE region were growing at above 10 percent year over year.
On the one hand, robust wage growth will help restore some of the purchasing power that households lost due to inflation.
By the end of last year, average household wages in real terms recovered enough to bring real wages back to at least their 2019 levels.
On the other hand, if wages are growing too fast, this might backfire and re-ignite inflation.
Our analysis shows that wage growth in the CESEE region at around 4-6 percent this year would balance the need to restore purchasing power and return inflation back to target levels.

Overall, given current levels of inflation and price and wage dynamics, our forecast suggests that achieving price stability targets will take one year longer in the CESEE region compared to advanced European economies.
In general, the underlying inflationary pressures in the region remain stronger than in advanced economies. Many central banks in the region should therefore maintain a tight monetary stance for longer than for example the ECB.
This does not necessarily mean that policy rates cannot fall. In countries where inflation expectations are dropping fast, nominal rates can be lowered without necessarily changing real rates and the policy stance.
The cost of erring on the side of too-loose monetary policy is significant when inflation is persistent. So, central banks should weigh negative news on inflation more when considering their next policy steps compared to positive news.
This bias is to avoid that upside inflation surprises materialize which could feed into expectations of sustained high inflation—a costly outcome for businesses, households and the economy as a whole.
Bringing inflation towards target also needs the support of fiscal policy.
The planned fiscal consolidations in 2024 and 2025 which roll back extraordinary support extended to households and corporations during the pandemic and the energy crisis are appropriate and will help fight inflation by containing demand.

Achieving a soft landing will not be easy, but it is critical, also because it will help policymakers getting ready for what will be an even more difficult task ahead: raising CESEE’s growth prospects in a durable manner.
Already prior to COVID, the speed of convergence of emerging European economies’ towards advanced European economies’ output-per-capita levels has slowed.
To put the lack of dynamism in perspective:

The growth slowdown in the CESEE region between the early and late 2010s implies that—at that reduced growth rate—CESEE countries would converge to average living standards in the EU (excluding CESEE member) by half a century later, by around 2100.

Four structural developments affecting convergence need attention. They are:

Demographic changes. Population aging is already reducing the labor force. In the CESEE region, pension and health care spending needs are estimated to grow by 5 percentage points of GDP by 2050.
High energy costs. Addressing this issue is intertwined with tackling the next challenge:
Climate change. Adaptation requires investment in infrastructure and clean technologies; the Next Generation EU (NGEU) funds are an important and substantial funding source. Implementation and uptake have been slow in the CESEE region and require attention.
Geoeconomic fragmentation is raising the costs of international trade and limits access to critical commodities. Trade restrictions have already increased sharply, by three-fold in 2022 compared to the pre-pandemic period (chart rhs) raising trade costs and dampening export earnings.

Addressing these challenges requires economic resources, and, to generate them, countries need to grow at a healthy clip.
Here, the CESEE region has its work cut out.

Growth prospects in advanced and emerging European economies have dimmed.
The latest 5-year forecast for Europe’s per-capita growth from last October (2023) is substantially below forecasts made just before the global financial crisis some 15 years ago.
These slower growth prospects are pervasive and apply to all parts of Europe: the euro area, central Europe, south-eastern Europe, the Baltics, and the CESEE region.
But Europe’s growth prospects have not only slowed relative to its own past, Europe has also fallen further behind other advanced economies.
When compared to the US, output per capita is in Europe about 30 percent lower on average after correcting for price and exchange rate changes that do not reflect changes in living standards.
The difference is even bigger for countries in the CESEE region at 45 percent
A decomposition of the gap in per-capita income into contributions from labor, capital, and productivity shows that that the main reason for Europe’s lower per capita GDP—accounting for about two-thirds—is substantially lower productivity.
Thus, the main goal for European policymakers should be to create conditions for faster productivity growth.

Here investment comes into play.
The level of productivity in a country is closely linked to the size of its capital stock.
And new machinery and upgrades in IT equipment and software are some examples how new technologies—embodied in capital goods—enter economic processes and increase productivity.
In the CESEE region, the per-capita level of capital is substantially below levels observed elsewhere in Europe (chart LHS).
What can policymakers do to facilitate more investment?
A recent survey of businesses by the European Investment Bank (RHS) identified several barriers to investment. Specifically:

First, firms are concerned about the availability of skilled labor. Continued support of education and universities remains key. But countries also need to improve active labor market policies—such as reskilling and vocational training for job searchers—to help fill skill gaps. At the EU level, common professional certifications would facilitate labor mobility.
Second, despite the fact that prices have come down considerably, firms remain concerned about high energy costs. Reforms of energy networks regulations but also investments are needed to improve the efficiency of energy production and distribution together with a shift to more renewable energy.
Finally, businesses are concerned about uncertainty about the future.

Policymakers can respond to this uncertainty through credible institutions and responsible policymaking.  By delivering sound macro-fundamentals–– low inflation, sustainable public debt— through trustworthy institutions, policymakers can reduce uncertainty about the economic conditions for businesses and households alike.

Credible policies and strong governance are the bedrock for a strong economy.
Several studies have shown that trust in economic institutions plays a critical role in reassuring savers and investors alike of the stability of their economic well being.
During 2021-2023, we could see an erosion of trust in the CESEE region.
A large-scale survey of CESEE countries by the Austrian National Bank shows that the belief in the stability and trustworthiness of local currencies was shaken post-COVID (chart).
Here we have a word of warning.
Several central banks in the region have been under strain from political interference.
Let me be clear, central banks need to be able to fulfill their mandates on inflation.
For this, independence is essential. Interference erodes trust and makes policymaking more costly.
Weak institutions also open the door to poor governance and corruption.
There is resounding evidence that robust governance via resilient anti-corruption frameworks is a precondition for attracting investment into a country.[2]
The good news is that in 2023 trust indicators have improved across all surveyed countries.
By assuring a soft landing, central banks and government can regain this hard-earned trust which is an indispensable underpinning of a healthy business environment.

Another area that deserves the attention of policymakers is the promise of growth from technological progress.
The advances of artificial intelligence are captivating the world. Its applications could jumpstart productivity, boost global growth, and raise incomes around the world.
Yet, AI could also replace jobs and deepen inequality.
It will take some time before we know the impact.
And at this stage, it is difficult to foresee the economic effects, as AI will ripple through economies in complex ways.
Nonetheless we can and should start assessing which types of occupations AI will likely affect; which activities it will complement, and which ones it may replace.
Recent work by the IMF shows that close to 60 percent of all workers in the EU will likely be affected by AI in one way or another (chart). For the CESEE region, the share is close to 50 percent.
Among those affected, for about half of them AI will complement their work and raise their productivity. For the other half, AI will be less complementary and replace some tasks or activities.
In most scenarios, AI will likely worsen overall inequality.
It will be more advantageous to the higher-skilled and reduce the need for medium and low-skilled workers alike. This is a troubling prospect that policymakers should assess and respond to as needed.
The availability of social safety nets and retraining programs mentioned earlier are of even more importance from this perspective. They will help make the AI transition more inclusive and curb inequality.
To conclude.
If there is one key message to leave with you, it is that policies matter.
With the right policy mix, the CESEE economies can secure low inflation and increase the long-term growth trajectory.
At the macroeconomic level this means monetary policy should maintain a tightening bias and carefully assess the timing and speed of easing.
Planned fiscal consolidation is appropriate and should help with disinflation.
Achieving a soft landing is critical to prepare countries for an urgent but critical task, raising CESEE’s growth prospects in a durable manner.
Crosswinds from an aging population, uncertainty about energy costs, and geoeconomic fragmentation call for forceful growth-enhancing reforms.
A prime task is getting the business climate right to help boost investment and productivity.
New investments––and their embodied technology––will also support the energy and green transition.
Here, by strengthening governance and anti-corruption frameworks countries can durably improve conditions to attract investment domestically and from abroad.
Governments need to also facilitate the transition to a more efficient economy by ensuring that education systems equip students with the skills to harness new technologies including AI.
But they also need to develop re-training and upskilling programs as technological progress and AI will affect work more broadly.
Success in the region will require forward looking reforms now that will pay off later.
This is an investment worth making—and one that we at the IMF stand ready to support.
Thank you.

[1] CESEE countries which have either had the smallest decline in core inflation by January 2024 relative to the post-2022 peak core inflation rate or had core inflation rates at or above 8 percent y-y by January 2023.

[2] How Reform Can Aid Growth and Green Transition in Developing Economies. New approaches to governance, business regulation, and trade can boost output by 4 percent in two years and help countries curb emissions Christian Ebeke, Florence Jaumotte September 25, 2023
 

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At a time of increased geopolitical tensions, the EU has continued to successfully tackle the issues that concern Europeans most in 2023, whilst remaining on track to deliver on the political priorities. That is according to the new edition of the EU General Report, which was published today.
The report looks at how we have responded to emerging and existing global challenges, with our ongoing, steadfast support for Ukraine being the highlight. We have provided over €88 billion in financial, humanitarian and military assistance, offered protection to over 4 million people fleeing from Ukraine to the EU and are ready to open accession negotiations.
It also looks to the Middle East and how we have responded to the drastic deterioration in the humanitarian situation of Palestinians, quadrupling humanitarian aid to over €100 million in the last year.
At home, the report emphasises the work done in staying the course on key EU priorities

continuing our economic recovery from the pandemic
boosting competitiveness and manufacturing capacity for the technologies and products required to meet our ambitious climate targets
putting in place the legal framework to cut emissions by 55 % by 2030 (a key milestone on the path to climate neutrality)
making progress in ending the EU’s reliance on Russian fossil fuels, thanks to the REPowerEU Plan, and in reforming the design of the EU’s electricity market, to protect consumers against price shocks
working on a first comprehensive law on Artificial Intelligence as part of Europe’s digital transition
strengthening social dialogue and progressing on new rules to improve working conditions of people working through digital market platforms
reaching an important milestone in overhauling our migration system.

The report is available in all official languages of the EU as a fully illustrated book and an online version which is available below.
Find more information
The EU in 2023: General Report on the Activities of the European Union
The story of the von der Leyen Commission
 
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