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Foreign Policy

How the U.S. and EU Plan to ‘Deal with China’

Mar 11, 2021

While some analysts believed Europe might set out an independent foreign policy path after the Trump administration, European leadership signaled that they are eager to work with President Biden on reviving a transatlantic agenda. The policy pivot would include pandemic recovery, combating climate change, adopting innovative and safe technologies, and preserving democratic values. Europe’s calls for cooperation match Biden’s commitment to recruit a coalition of nations to pressure Beijing to accept the rules of the American-led global order.

A recent Wilson Center Transatlantic Report suggests that the U.S. and the EU should work to identify common ground to thaw out trade tensions and cooperate on a new transatlantic agenda by identifying how China can be a potential partner, competitor, or rival for both the U.S. and EU.

The ‘China issue’ still looms large on the transatlantic agenda, and often, China is viewed as a partner in climate change and energy transformation, non-proliferation efforts, health, and peacekeeping. However, the EU has shown frustration with Beijing over cybertheft issues, government subsidies, market access, investment barriers, and China’s economic planning. These are all apparent disagreements that the EU shares with the U.S., but the Woodrow Wilson Center Report also encourages increased U.S.-EU dialogue in ‘engaging additional like-minded democracies, including the UK, Canada and partners in the Indo-Pacific.’ This suggestion for coalition building resembles President Biden’s deep-held foreign policy positions. The report encourages like-minded democracies to address tasks like highlighting China’s violations of WTO rules, challenging China alongside the EU in intellectual property accusations, extending U.S.–EU technology alliances to additional techno-democracies, and establishing multilateral export controls on critical technologies.

Although the European Union regularly publishes macro-agendas on topics ranging from China to climate change, it is unclear how such bold calls for action will receive endorsements from all of the European capitals, ranging from Berlin to Paris, and Budapest to Warsaw. One particular question that is directly relevant to the U.S.-China rivalry is just how a unified Europe will envision its new transatlantic relationship with the Biden administration.

Much of Europe warmed up to China for short-term commercial benefits, while allegedly threatening a unified transatlantic position with the U.S. However, most of the European countries turning to China struggle with high debt levels, (Italy and Portugal) and are unable to justify further austerity without risking the ability to provide social services to its citizens.

The Biden administration expects Europe to work with the U.S. on global 5G regulation, the revival of multilateralism, and human rights promotion, but how much of this is reciprocated by European governments, and how it will affect Beijing remains to be seen. Washington and Brussels will need to review and revise the Trump administration’s negotiations and identify new opportunities for multilateralism to counterbalance China. Also, the 5G issue, specifically Huawei’s role in telecommunications infrastructure, should be analyzed within the holistic context of overall technological competition. However, the potential areas for EU-U.S. progress are still pandemic recovery, climate change, and fighting their effects on financial systems.

Opportunities for cooperation

The post-COVID recovery era is an opportunity for transatlantic cooperation that goes beyond vaccines and health systems, but also addresses financial and economic imbalances. The EU has encouraged the U.S. to join its efforts to promote policies that protect lives and livelihoods, and re-open economies and societies.

While COVID is a short to middle-term issue, climate change is a long-term problem threatening biodiversity loss across the globe. The EU proposed to establish a transatlantic green agenda to coordinate positions and spearhead joint efforts for ambitious global agreements, starting with a joint commitment to net-zero emissions by 2050.

Although the U.S. and Europe can work on climate change, Beijing is already positioning as a global leader. By promoting climate change initiatives and the COVID-19 recovery, President Xi also diverted attention away from human rights abuses. This worked particularly well in Europe where many countries accepted aid from Beijing during the early months of the pandemic. The EU should identify its new geopolitical value as a climate change leader that challenges China’s efforts.

In developing a transatlantic coalition, which Biden promotes a central foreign policy view, Europe can also work with Washington to resolve trade disputes while formulating a new strategy on China. Europe has already expressed an interest in reforming the World Trade Organization, establishing an EU-U.S. Trade and Technology Council, and proposing to work with the U.S. on reforming Big Tech.

Democratic values as the foundation

President Biden touts democratic values as a foundation of transatlantic multilateralism, and international law and human rights will dictate Washington, and some of Europe’s policies to promote global stability, prosperity, and conflict resolution. However, it is uncertain if this will win over certain European states, or if it will have any impact on Beijing’s behavior.

While many professionals in finance and trade dismiss ideological warnings, Bruno Maçães , a senior fellow at the Hudson Institute, suggests that the more a person or institution prioritizes values, the less they believe an immoral nation can actually challenge the American-led global order. This logic explains why Trump was so tough on Beijing – he dismissed values and only focused on power and capabilities, which revealed that China is a serious strategic competitor, regardless of their human rights record. Idealists like Biden seem to believe that an immoral government, like the one of the former Soviet Union, will inevitably collapse because of backward and authoritarian governance.

Biden’s national security advisor, Jake Sullivan, and White House Indo-Pacific policy coordinator, Kurt Campbell, published an essay last year in which they encouraged ‘soft coercion’ through the global order to change Beijing’s behavior.

“If China hopes to enjoy equal access to this new economic community, its own economic and regulatory frameworks must meet the same standards. The combined gravitational pull of this community would present China with a choice: either curb its free-riding and start complying with trade rules, or accept less favorable terms from more than half of the global economy.”

Europe will play a central role in formulating the ‘half of the global economy’ that the Biden team envisions will coalesce and stand up to Beijing. However, as Maçães notes, Biden’s policy is flawed because it is transformational rather than transactional. Like children on the playground, a Biden administration plans to recruit his ‘friends’ and isolate China until it changes its behavior and begins to follow ‘the rules of the game.’ What if China recruits new friends to play with, or reinvents an entirely new game? Using human rights to shame Beijing into accepting liberal democracy is utterly unrealistic. Brussels and Washington have been unable to ‘shame’ Poland or Hungary into conforming to their morals and social norms, what makes them believe such a change in behavior would be possible for China?

Henry Kissinger suggested that Biden avoid human rights and focus on key issues where the U.S. and China can work together. Kissinger advised for a more transactional approach, much like the Trump administration put into practice. In sum, the U.S. and the EU should reframe their economic challenges within the context of COVID-19 recovery and sustainable job creation. Identifying ways to boost employment and ensure a sustainable future will attract other states to join suit. 

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