Quick Take: Europe gets out in front of Team Biden

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European Council members and European leaders have mounted a full-court press these past couple of weeks articulating their views on how to handle China in response to President Biden’s campaign promise to engage allies to confront China. Working with allies is meant to be a stark contrast to the America First rhetoric of Trump. However, based on their messaging, getting EU leaders on board could be a more challenging road for Team Biden than anticipated.

Cooperation … Sometimes

European leaders are getting out in front of the Biden team, which is calling for “strategic patience” as they consider their China strategy. The overarching message from Europe, where China dethroned the U.S. as Europe’s top trade partner in 2020, is that EU—U.S. cooperation on China makes sense on some issues; climate, for example, is everyone’s favorite area of potential cooperation. But the Europeans have been careful to note that there is no going back to the pre-Trump days of the relationship. Instead, they are talking about strategic autonomy.

Last week, French President Emmanuel Macron addressed the Atlantic Council to put forth his three-pronged assessment of the China challenge: “China is altogether a partner, a competitor, and a systemic rival.” China is a partner on climate change, a competitor on trade, and a rival on geopolitical strategies and values and human rights issues. While he calls for EU cooperation with the U.S. on China, he carefully cautioned against banding together against China, commenting, “this is a scenario of the highest possible counterproductivity.”

WTO Comeback?

There are many platforms for multilateralism that have been floated around Washington, DC. Everything from a D-10 (10 leading democracies) to a T-12 (12 techno-democracies) to a P5 (nuclear powers/UN security council) being promoted by French President Emmanuel Macron. But Team Biden has not indicated what direction they will take beyond engaging allies.

Bloomberg reported last week that the EU has been engaging the new Administration about working together to reform the moribund World Trade Organization (WTO) as a means to address the China challenge and normalize trade relationships. For the EU, this approach is appealing as they would not need to confront China head-on. They can avoid the optics of “ganging up” on China by leveraging the international rules-based order.

The WTO has languished under criticism for not being effective and not keeping pace with shifting trade dynamics. In fact, the Obama and Trump Administrations both held up all nominations for WTO appellate judges meaning that literally no decisions could be upheld. In an effort to shake it up, the WTO appointed new leadership this week, Ngozi Okanji-Iweala, the first women and African to lead the organization. She is taking up the mantle, promising reform and support for COVID-19 relief.

CAI – Investment NOT Trade

Charles Michel, President of the European Council, also addressed the Atlantic Council last week with great optimism for cooperation with the U.S., particularly on climate change given the Biden commitment to rejoin the Paris Accord. On China, he was forward-leaning on working with the U.S. on China. He was firm about not “papering over” differences with China on issues such as human rights but was clearly saying that China must be a part of the global conversation, particularly in climate and pandemic relief, areas the Biden Administration would agree to. Michel also acknowledged that working together on trade and economic issues was key because the EU sees a serious imbalance and is concerned about ensuring a level playing field and reciprocity.

Also emerging from the various European presentations were questions about the EU-China Comprehensive Agreement on Investment (CAI) and the timing of those negotiations in the last days of December, right before Biden taking office. European leaders were careful to distinguish that this is an investment agreement and not a trade agreement as China has initially wanted.

Uneven Political Will

China’s Minister of Foreign Affairs, Wang Yi, has encouraged the EU to act “independently and autonomously.” And indeed, the political will to take on China varies throughout the bloc and will present its own set of challenges. For example, Germany has a trade surplus with China and accounts for 50% of EU trade with China. France and others will face significant domestic pressure to condemn human rights violations, particularly the forced labor issues with the Uyghurs in Xinjiang. Italy, the first EU member to join the Belt and Road Initiative, is looking to trade with China to help restimulate its economy.

China is using its economic might to try to win over friends. Central and Eastern European countries just wrapped up a delayed summit, known as the 17+1, with China last week and with mixed reviews. China promised vaccines and to double purchases of agricultural products but failed to get the show of support they wanted. Five countries opted to send their Ministers versus heads of state, sending a message of skepticism. Yet China announced plans to streamline customs reviews and other steps to try to strengthen ties.

Taken together, this out-in-front messaging is a mixed bag for the Biden team. There is a clear consensus on the issues where we can all cooperate, but a less clear picture on where we can confront China. It is still early days, so this will be a crucial test for the new Administration. Still, the challenge is significant given the fallout from the past four years – and the fact that the Europeans know full well that former President Trump still did get 74 million American votes.




February 16, 2021

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