AI will likely revolutionize a host of sectors in the coming years, including healthcare, transportation, manufacturing, and add trillions to global GDP, but is also an arena of geopolitical competition. The recent AI Summit in Paris dealing with international standards for AI regulation underscore the growing geopolitical importance of artificial intelligence (AI) and its role in structuring future economies. Over 60 nations, including China and EU member states, signed a declaration formulated at the Summit calling for “inclusive and sustainable” AI development. The U.S. and U.K., however, were notable exceptions.
The Trump Whitehouse will be pushing for a less regulation-heavy, more innovation-focused approach. U.S. Vice President JD Vance, in his first major international speech, warned Europeans at the summit that “excessive regulation” could “kill a transformative industry just as it’s taking off,” arguing that burdensome legislation like the EU’s AI Act could stifle innovation and allow competitors such as China to gain an advantage and begin to corner the market. Of course, whatever model is adopted, AI presents us with the dangers of massive job market disruption, surveillance overreach, and uneven distribution of the new technology’s benefits.
The EU’s AI ACT, adopted in 2024, aims to regulate AI systems based on risk levels, promoting safety and ethics, but it could hinder the EU’s ability to develop its own AI industry. High-risk systems involved in critical infrastructure are subject to stringent protocols, including conformity assessments and proper governance over data, representing significant compliance costs on SMEs and start-ups.
Vance is likely right that this regulatory burden could lead to a stifling innovation, with companies prioritizing conformity to regulatory demands over R&D. This is especially true of the AI Act’s focus on risk management and prohibitions on real-time biometric identification or similar uses. The latter in particular poses a limit on the kind of data that can be gathered for training models. And yet, it is likely that Europe is already far enough behind the U.S. and China that, were the EU Act less cumbersome, it would nonetheless fail to compete effectively.
China, for its part, does indeed seem to be pursuing state-backed AI development with global ambitions, promoting open-source AI (like the DeepSeek chatbot) globally while maintaining tight control domestically. The fact that China did sign the declaration, together with EU countries, seems to be a notch in its bid to displace the U.S. from key high value added sectors, representing another area in which Europe is to be situated in the eastern sphere of influence of this emerging hegemon.
