Steel and Silicon: The Future of U.S.-EU Innovation
On October 8, 2026, the Center for European Policy Analysis (CEPA) hosted “Steel and Silicon: Allied Innovation for the Next Century” at the Embassy of Sweden in Washington, DC. The event focused on U.S.–Sweden trade relations, technological advancement, AI policy, and cooperation between the European Union and the United States. With Sweden ranking as the ninth-largest foreign investor in the U.S., the conversation centered on strengthening the two countries’ trade and commercial ties.
Congressional AI Priorities
The first panel brought together U.S. representatives to discuss technological advancement, particularly in AI. Speakers stressed the urgency of AI development, noting that China is only about six months behind the United States. They described this as a bipartisan concern, pointing to China and Russia as shared challenges. While they viewed AI advancement as essential, they also emphasized safety and security. They highlighted the proposed “Kill Switch Act,” describing it as a “seatbelt,” an emergency brake that would let innovation continue while ensuring safety. One representative also proposed an independent verification model. Currently, AI labs hire their own auditors, which may raise questions about reliability. The representative suggested the government increase funding for AI development, including funding for independent auditors.
U.S. Global Power
On global competition, one representative pointed to China’s five-year plan, which outlines its ambitions for AI. He called for concrete steps, such as forming a select committee and opening dialogue with China. He also suggested the U.S. use its technological and trade advantages, including restricting chip sales, as leverage in negotiations. Speakers raised concerns that China uses third parties to copy or obtain U.S. innovations. They noted that allies contribute talent, infrastructure, and land for data centers, and that this collaboration helps reinforce U.S. global standing.
Shared Prosperity: The U.S. and Europe Together
The second panel focused on the EU and its technology industry. Panelists discussed why Europe has struggled to lead in the global market. Its innovation is decentralized and shaped by individual regions and countries, so Europe has not produced companies on the scale of OpenAI. Differences in geopolitics, national politics, and levels of innovation, along with fragmented structures, make it harder for the EU to compete globally.
Although Europe lags in software and cloud innovation, its automobile industry is thriving, and it can provide infrastructure to support U.S. development. EU representatives, however, raised concerns that cheap products can compromise national security. Panelists agreed that mutual prosperity depends on both governments: the U.S. relies on European structures, and the EU offers strong talent and infrastructure.
Speakers argued that the EU and U.S. should build trust rather than seek control over each other. They encouraged a pan-European trade environment and called for overcoming a “culture of barriers” that restricts cooperation.
Transatlantic Biotech Partnership
Dr. Kiana Aran called for a transatlantic biotech partnership to meet the challenge posed by China. She proposed universal standards for the EU and the U.S., along with joint work on next-generation drug-testing tools whose data could be analyzed by AI.
The Shadow War
Speakers described an ongoing “shadow war” marked by increasingly frequent drone incursions, cyberattacks, sabotage, espionage, and technological warfare. Gabrielius Landsbergis, Minister of Foreign Affairs of the Republic of Lithuania, expressed concern about the U.S. scaling back its support. He compared the U.S. to a “bodyguard” protecting Eastern European countries from Russia, noting that the region depends on American support. He explained that the European model emphasizes high social spending and low defense spending, which makes European publics hesitant about military budgets. He concluded that Russia’s interest lies in dividing the West.
The Rapid Pace of Defense Technology
Panelists noted that defense innovation and adoption are moving quickly and changing the nature of warfare. Rather than every country doing everything, they argued, each should focus on its strengths and coordinate for collective benefit. In their view, failure occurs when partners do not deliver within these cooperative models.
The EU is spending money on weapons and infrastructure in the U.S. while also seeking to build its own defense capabilities. Europe wants U.S. products but faces barriers to accessing American innovation, and speakers urged companies to offer their best to EU allies. They suggested it would make economic sense for the U.S. to help build technological capacity in Europe, as it has done with Australia.
My Takeaways:
I believe that U.S. and European collaboration would be mutually beneficial, as the exchange of talent, infrastructure, and innovation could contribute to shared prosperity. However, my concern lies in one specific area, which is the unhealthy competition between the United States and China in the AI race. Its efforts to accelerate innovation amid this strategic rivalry may have significant long-term implications, particularly for systemic inequalities
While I agree with the recommendations put forward by U.S. representatives, I believe they should be accompanied by clear ethical guardrails for AI development and implementation. Without them, AI technologies risk reinforcing existing social injustices and deepening structural inequalities. Moreover, addressing potential harms at the early stages of development can prevent more costly consequences later, ultimately saving time and resources. Although introducing ethical standards may create certain constraints in the short term, these measures can help ensure that AI innovation remains inclusive, equitable, and socially responsible in the long run.