The change of US administration in 2021 offers more room for EU–US cooperation on China. In their confirmation hearings, Secretary of State Antony Blinken and Trade Representative Katherine Tai spoke of the US relationship with China as having adversarial, competitive and cooperative aspects – similar to the EU’s assessment of its own relationship with China. The Biden administration has also been vocal about its wish to work with allies on China and other global challenges, in contrast to the Trump administration. At the same time, an assertive US approach to China retains bipartisan support.
The primacy of the strategic autonomy agenda and its implications for how the EU sees its position in the world complicates transatlantic cooperation on China because for the most part it has been formulated in response to the US. European leaders have largely welcomed the pledges by the Biden administration to work together with allies, as with Biden saying that he will not remove the tariffs on imports from China until he has conferred with them. However, when the European Commission put forward a plan for a ‘new transatlantic agenda for global change’ in December 2020, it did not speak of anything like a confrontational approach to China. Instead it reiterated that China is a partner, economic competitor and systemic rival of the EU and pointed to the EU–US Strategic Dialogue agreed between High Representative for Foreign Affairs and Security Policy Josep Borrell and the Trump administration, which the current administration is set to continue.
This is not to say that there are not areas for transatlantic cooperation in the economic sphere, as the European Commission set out in its agenda and in the context of the recent increase in tensions between China and the EU. In recognition of the stronger compatibility and deep integration of their technology sectors, the EU has proposed significant cooperation with the US as ‘tech allies’ and the EU and US confirmed a willingness to work together in this area during their summit in June 2021. Behind this is the fear that future technology standards will be set by China, with its very different vision for the openness of the internet. Even here, significant barriers to successful cooperation remain, not least EU frustration with the dominance of the US tech sector and its plans for policies such as digital taxes aimed at large US tech firms. Early in 2021, the EU and the US separately announced plans for significant investment in semiconductor production capacity, partly in response to the domination of this sector by Taiwan and China’s plans to increase its own capacity.
There is limited room for EU–US cooperation in regard to China in trade and investment policy.
There is limited room for EU–US cooperation in regard to China in trade and investment policy. The aggressive measures employed by the Trump administration, including the tariff policy that has not been repudiated by the Biden administration, will not find any support in Europe. In June 2021, the EU–US Trade and Technology Council (TTC) agreed to coordinate in a number of policy areas, including growing the bilateral trade and investment relationship, coordination on internal standards development and seeking common ground and strengthening global cooperation on technology, digital issues and supply chains. However, it remains to be seen whether this will lead to concrete action beyond the significant number of coordination instruments set out in these plans. At the same time the two parties reiterated their willingness to work together at the global level to reform the WTO. This could be used to counter unwanted Chinese trading practices, in part because it is a largely costless option for the EU. However, due to US concerns about the WTO and the need to engage its largest members in any reform efforts, among other things, the outlook on this front is not positive. A final option would be for the EU and US to form a trading bloc and thereby export their standards to the rest of the world. But as their failure to conclude the Transatlantic Trade and Investment Partnership (which would have helped them set global trading standards) showed, their differences remain a hindrance to effective cooperation at this level. Meanwhile, other parts of the world are pushing forward with this strategy through large-scale trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which the UK is now looking to join. There is more potential for transatlantic standard-setting in the technology sphere, as evidenced by the suggestions in this direction from the European Commission, but even here significant hurdles remain.
Effective transatlantic cooperation on China in trade and investment is therefore likely to continue to be hindered by the fundamentally different world views and policy preferences of the EU and the US. Furthermore, divergences among EU members will create additional complications as some would prefer a continuation of the mercantilist approach, some continue to value the traditional transatlantic relationship, and others prefer to pursue full strategic autonomy. There is room, and an offer from the EU, for cooperation in limited areas though, but this is unlikely to have the assertiveness that increasingly characterizes US China policy. The remaining question is whether this modest offer from the EU will be enough for the US and whether the US and China will allow the EU to continue along its current path.
