European Union

Based on her prize-winning article in JCER on the Sino-European Solar Panel Dispute, Astrid Pepermans examines how the European Union (EU) risks losing a trade war which China and the US initiated. She argues that the EU must respond by remaining united and sticking to its values of quality and rule-based trade. 

Container ship in the port of Rotterdam, Holland © rob3rt82 / Adobe Stock

Lately, free traders all over the world must be having a hard time when opening their newspapers. Donald Trump is unleashing a trade war with Xi Jinping. Meanwhile, the EU is also increasingly agitated about its imbalanced trade relationship with China. And, while having similar worries about China’s mercantilist economic strategy, the US and the EU find themselves dragged into a tit-for-tat trade conflict which is not so different from the Trans-Pacific trade quarrels.

Nothing new under the sun, you may think. Trade conflicts have existed since the birth of human economic interaction. However, this is the first time that the ‘strategic triangle’ of China, the EU and the US has been so close to reaching deadlock. The EU may well get squeezed between the two superpowers, which know exactly how to play on the EU’s internal divisions. The EU risks losing a trade war which China and the US initiated.

One could argue – and some experts do – for a Sino-European alliance against President Trump’s foolhardy catalogue of requirements for every country with whom the US has a trade deficit. However, as my recent article on the Sino-European solar panel dispute illustrates, existing worries about Chinese overcapacities, dumping practices, mercantilist policies and technological transfers are far from ill-founded.

In fact, these unfair trade practices have been, and are, harmful to the EU. While the European Commission has some trade defence instruments to tackle them, the same case demonstrates how China can bypass the Union with ease by playing member states against each other. In short, while fighting the eagle by joining the panda sounds like a good idea, history has shown that the latter has claws too and that it will use them whenever it feels its interests are endangered.

Others argue for the opposite: a western front forcing China to deliver on all the promises it made when it entered the WTO in 2001. These promises include opening up the Chinese market to foreign goods and investment; transforming the economy from state-directed to market-orientated; making consumption rather than investment the main driver of Chinese growth; and liberalising its monetary system etc. Nevertheless, it is clear that Trump is planning on playing cavalier seul on this one. Even if the US and the EU worked together to press for Chinese concessions, it is highly unlikely (and equally unconducive) that all the EU member states would join the US’s extremely hard stance in the debate.

Whether by means of hard protectionism or offensive mercantilism, both the US and China are laying claim to the top spot of the global economy. The only way for the EU to cope with its position between the hammer and the anvil is to remain united and to set its own course. Such a course does not include closing off its market, nor does it mean that it should make an enemy of China or the US.

It means sticking to what is at the core of the Union: rule-based trade. Trump is wrong on many points, but not on his argument that China should follow trade rules. The prospect of tapping into the huge Chinese consumer market has blinded the 28 EU member states to China’s economic nationalism, which has stood in the way of a level economic playing field since China’s entry into the WTO.

Having arrived at a point where Chinese strategic investments have made clear the enormous competitive pressure unleashed by the ‘opening up’ of the Chinese economy, it is only now dawning on countries like France and Germany that their position in global trade is being challenged. However, their efforts to establish a decent screening mechanism at European level to scrutinise Chinese investments in sensitive industries have been hampered by the desire among many other member states to attract Chinese capital.

Creating a European policy and tackling the challenge mean that the member states must refrain from short-term thinking, which implies not giving in on every financial carrot China dangles before them. As a unified whole, the EU28 still carries serious economic weight and the member states should be less afraid of using it to press for fair competition. In the same vein, quality should remain Europe’s central yardstick. Competition is important for innovation and economic progress, but not when it causes international price wars and a global race to the bottom. Whether for European, Chinese or American goods, quality standards should be agreed upon and upheld.

Fair international competition and a consistent focus on quality will in turn create room for manoeuvre for Europe to increase its productivity and prosper economically. The threefold approach of regaining Europe’s economic competitiveness, sticking to European values such as quality and rule-based trade, and conveying them in a forceful and unanimous way is the only option for Europe to tackle both the China and Trump challenges.

This article is based on the author’s article in the Journal of Contemporary European Studies (JCER) Vol 13 No 4, which won the 2018 Luke Foster Prize for Best JCER Article. 

Please note that this article represents the views of the author(s) and not those of the UACES Graduate Forum, JCER or UACES.

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Astrid Pepermans 
Free University of Brussels / Vrije Universiteit Brussel

Astrid Pepermans obtained a Masters degree in Political Sciences and started working as a teaching assistant at the Free University of Brussels in 2015. She is currently preparing a PhD thesis on the Sino-European political/economic relationship.

 

The post Unless the EU Gets Its Act Together, It Will Lose a Trade War Against Both China and the US appeared first on Ideas on Europe.

On Tuesday 19 June (16:00-18:30), the Committees on Budget (BUDG), Budgetary Control (CONT), Foreign Affairs (AFET) and Development (DEVE) are jointly organising a public hearing entitled 'Assessing the flow of external EU migration funding'.
The aim of the hearing is to assess the flow of current expenditure on the migration-related projects and the EU Trusts Funds and to analyse to what extent they bring added value to the EU budget. Speakers include Mr Hassoumi Massoudou (Minister of Finance of Niger), as well as representatives of the EEAS (Deputy Secretary General Christian Leffler), Member States' agencies, think tanks and civil society. The meeting will take place in Brussels, room Paul Henri Spaak 3C050 and will be live webstreamed.
Further information
Draft Programme for joint hearing 19 June
Webstreaming
Events page
Source : © European Union, 2018 - EP

On Tuesday 19 June 2018, the Committees on Budget (BUDG), Budgetary Control (CONT), Foreign Affairs (AFET) and Development (DEVE) are jointly organising a public hearing entitled ‘Assessing the flow of external EU migration funding’.
The aim of the hearing is to assess the flow of current expenditure on the migration-related projects and the EU Trusts Funds and to analyse to what extent they bring added value to the EU budget. Speakers include Mr Hassoumi Massoudou (Minister of Finance of Niger), as well as representatives of the EEAS (Deputy Secretary General Christian Leffler), Member States' agencies, think tanks and civil society. The meeting will take place in Brussels, room Paul Henri Spaak 3C050 and will be live webstreamed.
Further information
Meeting documents
Webstreaming
Draft Programme
Source : © European Union, 2018 - EP

AMENDMENTS 201 - 387 - Draft report State of EU-US relations
Committee on Foreign Affairs

Source : © European Union, 2018 - EP

DRAFT REPORT on the 2018 Commission Report on Serbia
Committee on Foreign Affairs
David McAllister

Source : © European Union, 2018 - EP

DRAFT REPORT on the 2018 Commission Report on Kosovo
Committee on Foreign Affairs
Igor Šoltes

Source : © European Union, 2018 - EP

Source : © European Union, 2018 - EP

The further development of the Common Position 2008/944/CFSP on arms exports control

Tuesday 19/06/2018 - 9:30-10:30
Paul-Henri Spaak building - room P5B001 - Brussels

The Common position 2008/944/CFSP on arms exports dates back to the pre-Lisbon setup of the EU institutional system.
Since then, developments in the EU's geopolitical environment and geostrategic context have taken place. Technological developments in the military sphere also impact the future of warfare.
In this context, and at the dawn of broader and deeper EU-level defence cooperation, an overhaul of the Common position could be necessary.
The aim of the workshop is to present a forward-looking and stimulating reflection on what could be the evolution of the EU arms export control system, in the context of the current and upcoming developments.

Contacts and registration: poldep-expo@europarl.europa.eu
Further information
Programme workshop
Source : © European Union, 2018 - EP

With Europe facing the risk of cyber attacks on civilian and military targets, MEPs are calling for more cooperation on cyber defence. We talked to Urmas Paet, the MEP in charge.
Further information
Interview MEP Urmas Paet
Source : © European Union, 2018 - EP

Plenary - Strasbourg

Source : © European Union, 2018 - EP

Source : © European Union, 2018 - EP

Source : © European Union, 2018 - EP

Scotch Whisky Association
Agriculture and fisheries
In order to decide whether there is an ‘evocation’ prohibited by EU law, the national court must determine whether a consumer thinks directly of the protected geographical indication ‘Scotch Whisky’ when he sees a comparable product bearing the designation ‘Glen’

Louboutin and Christian Louboutin
Intellectual and industrial property
A mark consisting of a colour applied to the sole of a shoe is not covered by the prohibition of the registration of shapes

The leaders of the G7 gathered in Charlevoix, Canada, agreed the summit communique.

President Donald Tusk presented his expectations ahead of a challenging G7 summit in Canada, and highlighted how crucial G7 unity is for Europe and for the whole world.

The Council adopted conclusions on the third progress report on the implementation of common proposals endorsed by EU and NATO Councils on 6 December 2016 and 5 December 2017.

The Council agreed its general approach on a draft Cybersecurity Act.

The Council adopted a revised mandate for EULEX Kosovo that will run until 14 June 2020. It also allocated a budget of EUR 169.8 million to the mission.

Weekly schedule of President Donald Tusk 7-17 June 2018