SPEAKING
FREELY The EU-China relationship: Looking
ahead By Julio Arias
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
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BEIJING - During the
Cold War, relations between Europe and mainland
China were either nonexistent, or subordinated to
the wider framework of US-Soviet relations.
Sixteen years after the fall of the Berlin Wall,
however, ties between Brussels and Beijing are
blossoming. Indeed, analysts such as David
Shambaugh are touting the emergence of a
"strategic triangle" between the EU, China and the
US.
This budding relationship is
significant - as well as unusual - not only
because the EU and China are emerging powers to be
reckoned with, but also
because both have embarked on a path of
institutional and economic transformation without
historic precedent, partly in order to cope more
effectively with the challenge of globalization.
Already, both have changed beyond recognition
since they came into being more than 50 years ago:
China, from the wreckage created by years of war
and civil strife; Europe, from a budding
six-member coal and steel community in a continent
struggling to find its place in a postwar,
post-colonial world.
At the
strategic-military level, many doubt the EU's
ability to act as a single agent, particularly in
the aftermath of the "no" referenda over the
proposed EU Constitutional Treaty. They also doubt
China's ability to flex its muscles beyond its
immediate vicinity. Neither entity is anywhere
near challenging the US' level of "hard"
(military) power. Yet power is not merely defined
by military strength: it is also exercised in the
economic and "transnational" - that is, at the
non-governmental - levels, the second and third
dimensions in a "three-dimensional chessboard", as
Harvard Professor Joseph Nye puts it. It is in
these two areas that both the EU and China are
most visibly rising.
China's rise is
driven in large part by the rapid growth of its
economy and its greater self-confidence in
international affairs. The EU's emergence is a
result of the greater coherence in its economic -
and foreign - policy and institutional structures,
as well as the quiet, but effective flexing of its
"soft power". At the same time, however, the rise
of the EU and China is hampered by internal
shortcomings: the EU's common and foreign security
policy (CFSP) is still in many ways a paper tiger,
encumbered by complicated voting procedures; China
is held back by the nature of its political system
and its relative lack of experience in
international affairs. Unable to match their
economic might in the strategic and military
realms, both the EU and China are "limping
giants". Perhaps this explains why, unlike the US,
the EU and China share a worldview that emphasizes
the necessity to regulate globalization through
international rules and institutions.
Powerful trade dynamics Today,
after years of estrangement and mutual ignorance,
China and Europe are eager to catch up and develop
bilateral ties. Nowhere is this trend more evident
than in the field of trade.
Trade between
the EU and China has grown more than 30-fold since
the beginning of China's open-door policy in 1978.
In 2004, bilateral trade reached the 175 billion
euro (US$218 billion) mark. China is now the EU's
second largest trade partner after the US, and the
EU is, according to Chinese statistics, China's
largest trading partner.
Trade relations
between the world's largest and third largest
trading powers are at the heart of a blooming
partnership between Brussels and Beijing. China
offers EU companies a low-cost manufacturing base
and a rapidly growing domestic market. For its
part, the EU offers access to its lucrative single
market, in addition to advanced technology and
foreign direct investment. This is the lifeblood
of bilateral trade, which is, generally speaking,
complementary.
The flip side, however, is
that China's rapid integration into the world
economy has created dislocations in the EU - as
well among its close partners, such as Turkey,
Tunisia and Morocco. Even if the final balance is
positive, European industries - particularly
manufacturers - need to manage the change and
adjust to it. The recent imbroglio over the
imposition of textile quotas is a painful reminder
that protectionism is no alternative to serious
restructuring. Yet on the whole - and in spite of
protectionist pressure from trade lobbies and
populist politicians - the EU's response to
China's challenge has been more measured than that
of the US.
Bilaterally, removing remaining
trade barriers to ensure the widest possible
access to each other's markets and ensuring that
potential trade frictions are resolved through
dialogue and negotiation have become the main
priorities in the trade policy agenda. Today,
institutionalized policy dialogues establish a
direct line between Brussels and Beijing, covering
a variety of sectors (civil aviation, textiles,
metallurgy and automotive industry) and
"horizontal issues" (regulatory policy,
competition policy, IPR). These dialogues enable
both parties to build trust and deepen their
understanding of each other's systems.
Additionally, they provide a mechanism to deal
with potentially contentious issues in a timely
manner.
At the multilateral level, the EU
is committed to supporting China's full
integration into the WTO. Beyond scrutinizing the
implementation of its accession commitments, the
EU is also keen to ensure that China becomes a
more proactive participant in the multilateral
system. Both sides, for instance, now share an
interest in ensuring that the current round of WTO
negotiations (the "Doha" round) is successfully
completed.
The benefits of bringing China
in line with the multilateral trading system,
however, go beyond boosting trade and improving
market access opportunities. Most importantly,
membership of the WTO has allowed Chinese
reformists to tie in the domestic reform process
to an international rules-based institution, whose
members have the right to scrutinize the
implementation of China's accession commitments.
China's yearning to become a WTO member is
reminiscent of the strong pull that Brussels had
on the former socialist states of Central and
Eastern Europe. Like China, they aspired to become
members of a powerful external organization,
partly in order to neutralize criticism from
domestic interest groups and partly to justify an
extensive, and often painful, reform program.
The EU has been steadily helping China
meet these challenges by building capacity on the
ground. The latest China Country Strategy Paper,
covering the period from 2002 to 2006, has
earmarked 250 million euros for
"capacity-building" projects focused on supporting
three key areas: the social and economic reform
process, environmental protection and sustainable
development, good governance and the rule of law.
Beyond providing financial resources, the EU also
has a lot of useful advice to offer, particularly
given Brussels' track record in supporting former
socialist states as they make the transition to a
market-based economic system.
Improving
China's governance, moreover, is consistent with
the EU's wider goal of encouraging the development
of an open society based on the rule of law. This
objective stems from the premise that engaging
China through dialogue and participation in
international institutions is the best way to
ensure that its rise does not create disruption in
the international system. It also reflects the
realization that, as China's role in the world
increases, it needs to take up new
responsibilities, and indeed start to show
"leadership".
Quietly, but effectively,
therefore, the EU has deployed its soft power and
financial resources into engaging China. After
all, spreading European standards and providing
technical assistance is arguably the EU's forte
when it comes to external action, after trade.
This is helping the EU attract China into its
sphere of influence. China's participation in the
European Galileo Satellite navigation program -
with 200 million euros pledged toward it - is a
fitting example. In the area of technical
standards, which is becoming an increasingly
important aspect of international trade, the EU's
regulatory approach to standards is more appealing
to China, with its strong statist tradition, than
the US' market-driven approach. Witness China's
preference for Europe's GSM standard over the
American CDMA standard.
What's in it
for China? Besides the obvious benefits of
trading with the EU - China's trade surplus with
Europe last year reached around 78.5 billion
euros, and is growing - and being the beneficiary
of numerous substantial cooperation projects,
China finds in the EU a potential counterbalance
to the US. The EU does not have any territorial
disputes or - unlike America - competition over
spheres of influence with China. This allows for
greater scope for cooperation on a variety of
issues of global significance without treading on
each other's toes.
This is particularly
evident in China and the EU's stated commitment to
strengthening multilateral institutions as a way
to deal more effectively with global challenges -
such as international terrorism and nuclear
proliferation. Particularly in the aftermath of
September 11, China finds the EU and its member
states' "soft" liberal internationalism less
threatening than the Bush administration's more
unilateralist impulses (although the EU and China
do not necessarily share the latter's unswerving
adherence to the doctrine of non-interference in
other states' internal affairs). This means that
China is more ready to engage the EU in
international institutions. Bilaterally, China
also finds in some quarters of the EU resonance to
its predominantly "realist" view of the world: one
where US power is balanced through the creation of
a "multipolar" world, with Europe and China as two
of the poles.
Challenges
ahead Stronger links between the EU and
China on a number of key issues, however, pose a
number of questions.
First, as Brussels
begins to forge closer links with Beijing,
independently from its relations with Washington,
the scope for clashes with the US will widen. To
be sure, the EU and the US share a basic interest
in "socializing" China into the international
established order. But a difference in focus
exists: US perceptions of China often dwell on its
strategic and military dimension; Europe tends to
treat China as a "giant" in transition.
Inevitably, as the relationship between the EU and
China becomes more complex and multifaceted -
including not just trade but other areas such as
security - transatlantic divergences on policy
toward China will arise.
Transatlantic
disputes over China may be avoided by greater
efforts to coordinate EU-US positions on China at
senior levels, particularly on sensitive issues.
Taiwan may not arouse passions in Europe, yet it
matters a great deal to America. Moreover, greater
coordination on China issues is clearly in the
EU's interest. After all, the US remains the main
provider of the public goods that underpin trade
and investment links between China and the EU.
Both clearly benefit from the existing security
architecture in East Asia.
Second, and
most importantly, the policies of EU member states
toward China need to be more coherent. Currently
some countries define their China policies in the
light of their own national interests. Lack of
coordination, however, will not only undermine
China's confidence in the EU as a partner, but
also dilute the policy objectives of individual
member states, as short-term goals get mixed up
with long-term ones.
The infelicitous
manner in which the putative lifting of the arms
embargo has been handled underscores the need for
a more harmonized approach. Yet this problem is
difficult to resolve, as cooperation in the EU's
CFSP is an intergovernmental arrangement and in
most cases decisions must be taken unanimously.
Third, even in the field of trade, all
that glitters is not gold. Although mechanisms to
resolve trade disputes through negotiation exist,
China's growing trade surplus with the EU is
likely to inflame more protectionist sentiments in
Europe. How the EU and its member states deal with
protectionist pressures will be a test of Europe's
commitment to free and open trade.
The
recent handling of the textiles dispute does not
bode well. For weak or unpopular European leaders
dare not advocate the benefits of China's
integration into the world economy. Using China as
a scapegoat, rather than facing the real causes of
popular discontent, may be all too tempting. Yet
such political escapism may eventually backfire
and derail the development of EU-China relations.
China as a catalyst for the
EU? The relationship between the EU and
China underscores the need to engage China
strategically in order to promote geopolitical
stability, as well as the benefits of dealing with
China with a single voice. China is no longer a
passive player in the international system. Over
the last five years, we have seen China deploy its
power more confidently and handle its diplomacy
more deftly. The EU, therefore, increasingly needs
to engage China because, as a significant player
in world politics, it has a say in issues that
touch upon European economic and political
interests.
Whether the relationship will
deepen in the future will depend on internal
developments in the EU and China. To be a more
influential player in China, the EU will need to
create a common strategy toward it, following the
example of Russia, the Ukraine and the
Mediterranean. China, for its part, will need to
show concrete results in contentious areas, such
as IPR or human rights, to show that political
dialogues are paying off.
As the European
integration process loses momentum, the rise of
China may prove to be the spark that gets Europe
working together again. This historic phenomenon
poses challenges and opportunities that can only
be met by working closely, if not by pooling
decision-making powers, at least by coordinating
policies between EU institutions and the member
states.
Julio Arias is a trade
policy consultant with the EU-China Trade Project,
a policy support unit facilitating China's
integration into the world trading system based in
Beijing. He has written on China for Foreign
Policy Edicion Espanola and Foreign Affairs en
Espanol.
(Copyright (c) 2005 Julio
Arias)
Speaking Freely is an Asia
Times Online feature that allows guest writers to
have their say. Please click hereif you are interested in
contributing.
