COPENHAGEN – A leading businessman recently told me that the word “reciprocity” has no literal translation in Chinese, hence the long-running mismatch of expectations between Western governments and Beijing. U.S. President Donald Trump has decided to move past translation and let crude actions do the talking by triggering a nearly trillion-dollar trade war with China. The European Union, conversely, continues to seek to discuss standards, WTO rules and shared benefits, but with little mettle to make itself understood.
The EU has opened its markets, allowing Chinese state-owned or state-backed enterprises to build a footprint in key European sectors while our own companies still struggle to access the Chinese market. This imbalance was manageable when China was a mass manufacturer. But now that it is aggressively moving up the technology chain, China is becoming a direct competitor in a global race Europe is starting with some delay.
It is against the EU’s nature to take the route of Trump’s protectionism, but Europe needs to adopt a more forceful strategy toward Asia to better manage the China factor.
Part of Europe’s torpor has been a consequence of its own divisions. First, the unapologetic free traders (myself included) feared any signals of European protectionism. Other countries at the sharp end of the eurozone crisis were happy to accept Chinese investments, risking a form of state capture best illustrated by Greece’s decision to veto an EU human rights rebuke to Beijing. And finally, there were the central and eastern European countries promised a glut of investment under the so-called 16+1 initiative. The glut never arrived, only Chinese influence.
Today, the EU has begun to wake up to this challenge. States have united around an EU proposal to monitor foreign investments in strategic sectors that may threaten our security interests. This is an important step forward, not to obstruct trade, but to make clear that trade and investment must be based on values and freedom, and not simply the interests of state-backed monopolies.
When it comes to the Chinese “Belt and Road” initiative” (BRI), the same approach should apply. More infrastructure and opportunities for trade and exchange should be welcome, but not at the price of creating new dependence or building a channel for undue influence. We made the same mistake with Russian gas, where we allowed the EU to become overly dependent on one company — leading to a rude awakening when that partner’s malign intentions became clear.
The EU has begun to put together an approach. This is a good start at trying to finally articulate a common position, but a study of the proposal shows clearly that the EU is bringing a rule book where China brings a cheque book.
If the EU is to move beyond this values-based approach to finally pursue its interests, it must form a stronger political and economic alliance with the leading Asian liberal economies.
In many respects, Europe has made a promising start — signing a trade deal with South Korea almost a decade ago, followed by a trade partnership and data flows deal signed with Japan this summer, the opening of talks with Australia and New Zealand, and negotiations with other southeast Asian nations ongoing.
But Europe is not alone in seeking to find a riposte to China’s growing influence: Asia-Pacific democracies are in the same boat as us. In recent years, the Pacific’s main democratic powers — India, Japan, Australia and the United States — have begun to advance a new concept: A free and open Indo-Pacific. The initiative represents a conceptual shift westward that seeks to connect like-minded countries from shores of East Africa to those of the Western Americas. Put simply, it is a project based on common values, rather than narrow interests.
EU foreign ministers have begun discussing their strategy for Asian connectivity. They can adopt a position that is values-based and laudable, but mostly platitudinous, or they can truly begin to defend European interests in Asia by fully endorsing — through words and deeds — the Indo-Pacific project.
The EU will need to better coordinate their initiatives and investment programs and harness the kind of firepower that will be needed for an initiative like this, but it offers a tangible way for Europe to corral its democratic partners across the region — and also to shore up its frayed trans-Atlantic ties by supporting a project of strategic importance to the U.S.
The EU is at a pivotal moment where it can exercise its true global power. It has recently asserted that it intends to assume the mantel of leading the rules-based world. Unlike the U.S., it cannot achieve this through raw hard power, but through aggregating the combined force of the world’s democratic nations and open economies. Otherwise Europe’s efforts to secure the free world will be more rhetoric than reality.
Anders Fogh Rasmussen was NATO secretary general from 2009 to 2014 and prime minister of Denmark from 2001 to 2009.
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