Realigning the Transatlantic Relationship on China

LIZZA BOMASSI, PAUL HAENLE

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With a new administration in the White House, there is renewed hope for transatlantic cooperation on China policy despite the sometimes-erratic nature of this relationship. For one, in stark contrast to his predecessor, U.S. President Joe Biden believes that the United States is strongest when it works with its allies.1 Brussels, for its part, is drafting new proposals to meet the “strategic challenge” posed by China.2 There is a sense that a revived emphasis on multilateralism presents opportunities for the European Union (EU) and the United States to manage their differences and work with China to resolve fundamental issues in the trilateral relationship.

While Washington and Brussels share concerns over Beijing’s increasingly assertive and illiberal international agenda, the EU and the United States have been largely unable to cooperate in recent years. The most recent strategic frameworks put forth by Washington and Brussels call attention to China’s unfair trade practices, abrogation of human rights, and growing military ambitions.3 However, former U.S. president Donald Trump’s withdrawal from important international agreements and his characterization of Europe as a “foe” coupled to undermine any potential for EU-U.S. coordination.4 In the absence of transatlantic leadership, China has forged ahead with its own global initiatives and gained influence in traditional multilateral forums.5

Lizza Bomassi is the deputy director of Carnegie Europe, where she is responsible for harmonizing Carnegie Europe’s strategic and operational priorities and managing relations with Carnegie’s global centers and programs as well as partner organizations in Europe.

Going forward, the EU and the United States will have to leverage their combined strength to shape the international environment in which China rises. Long-term coordination on this front will not come without difficulty and misunderstanding. Regardless of the leaders in office, there will be constituencies on both sides of the Atlantic calling for deglobalization and retrenchment at home. Europe’s reluctant quest for strategic autonomy will catch its allies off guard, as would another U.S. pendulum swing back to unilateralism after Biden’s years in the White House. Ultimately though, Brussels and Washington will need to recognize where their interests align and where they need to build consensus, both internally and between themselves, to spearhead common solutions on a global scale. The challenge will also entail balancing competition with China while maintaining productive avenues for coordination on issues like climate change and nuclear proliferation.

MANAGING EXPECTATIONS IN AREAS OF CONVERGENCE

When it comes to China, although the EU and the United States see eye to eye on many fundamental issues, common policy responses have been slow and difficult to materialize. The recent episode of the EU forging ahead unilaterally with an EU-China investment agreement is just one example of this.6 To coordinate effectively, Brussels and Washington will need to reconcile expectations of what the transatlantic relationship can accomplish with the realities on the ground.

CLIMATE CHANGE

Climate change mitigation is one area where there are strong overlapping interests across the Atlantic—and, indeed, with China. In addition to leading the U.S. return to the 2016 Paris Agreement, completed last week, it is expected that Biden’s new climate czar, former U.S. secretary of state John Kerry, will introduce new multilateral climate mitigation protocols to deal with the shortcomings of previous initiatives.7 The Biden administration has floated the idea of securing Group of Twenty (G20) commitments to end export subsidies, for example for high-carbon energy and infrastructure projects.8 These proposals dovetail with plans already included in the European Commission’s European Green Deal, announced in late 2019.9

Though not without their challenges, these ambitions provide a renewed basis for strengthening transatlantic ties. For its part, China has made impressive promises about achieving carbon neutrality by 2060. While observers on both sides of the Atlantic have welcomed these commitments, it remains to be seen whether China will agree to scale back its carbon-intensive infrastructure developments overseas.

TRADE

Trade policy is, in theory, another area of alignment between Washington and Brussels. The EU and the United States share long-standing concerns over China’s policies of forced technology transfer, subsidies for state-owned enterprises, lack of reciprocal market access, and loose intellectual property protections. Bilateral efforts to address these structural issues, however, have failed to move the needle. Despite much fanfare, the January 2020 Phase One trade deal between the United States and China ended up primarily as a purchase agreement. And the jury is still out on whether Brussels’s freshly concluded, in principle bilateral investment negotiations with Beijing will lead to the significant concessions on market access hoped for on the European side.10 The agreement’s rushed conclusion, despite seven years of negotiations, and the relative opacity in the way it was reached certainly ruffled a few feathers on both sides of the Atlantic.

Regardless, the EU and the United States will have to build on joint proposals to address distortions in the global economy caused by China’s state-led economic model.11 Biden’s national security adviser, Jake Sullivan, has suggested that the United States work with partners across the Atlantic and elsewhere to draft new rules on issues that the World Trade Organization (WTO) “does not currently address, from state-owned enterprises to indigenous innovation policies.”12

Trade is also one of the areas with the most incongruity between political and economic objectives. German companies, for example, continue to invest heavily in China despite ever-growing political concern over continued untethered engagement.13 The challenge for the United States and the EU will be to move in lockstep on trade relations with China to ensure multilateral frameworks, like the WTO, cannot be instrumentalized purely to China’s advantage.

GLOBAL GOVERNANCE

On issues of global governance, there is convergence, too. Washington and Brussels have both denounced Beijing’s use of surveillance technology to censor public opinion, track the social credit of citizens, and carry out repression in Xinjiang and Hong Kong. Biden has written that he will work to “build a united front of U.S. allies and partners to confront China’s abusive behaviors and human rights violations.”14

Yet, the reputational damage done to the Western democratic model under the previous U.S. administration and certain populist parties in Europe should not be underestimated. Washington and Brussels face an emboldened Beijing that will use democratic backsliding in the West as fodder to bolster the credibility of its own governing model. China has already pushed an increasingly illiberal agenda in global governance institutions. In summer 2020, the overwhelming majority of the sitting members of the United Nations Human Rights Council endorsed Beijing’s national security law in Hong Kong.15 To regain legitimacy, the EU and the United States will need to recommit to promoting universal values and make sure their own houses are in order.

BUILDING CONSENSUS IN AREAS OF DIVERGENCE

While Washington and Brussels share fundamental views on the above concerns, coordination on other policy issues, like technology and defense policy, will require more thorough consensus building.

TECHNOLOGY

The United States and the EU share a diagnosis of the challenge—even the threat—that China poses on technology competition, but the two sides prescribe largely differing policy responses. Some of these differences result from the inherently complex nature of the technological challenge, which blurs issues of economic reciprocity, national security, and governance norms. Divergence also arises from inconsistent policymaking in and across the EU and the United States. On the issue of fifth-generation (5G) technology, for example, the White House and the European Commission share concerns about the risks that “untrusted vendors” pose to cybersecurity networks.16 But the absence of executive authority on technology acquisition in the EU means that individual members like France, Germany, and Spain can reject or delay top-level proposals.17

Likewise, there exist major differences between the EU’s view on data protection, typified by the General Data Protection Regulation, and the U.S. approach, which gives companies greater leeway to sell user data.18 These divergences will continue to present sticking points in the transatlantic relationship. In the meantime, China will move forward with its own agenda for global internet governance, calling for curbs on cross-border data flows and a larger role for the state in censoring and surveilling users online.19

DEFENSE

On defense policy, Washington and Brussels share concerns over Beijing’s increasing military assertiveness in the Indo-Pacific. Nevertheless, they have divergent assessments of how to handle China’s pursuit of territorial aggrandizement. The EU has historically regarded territorial issues in the Asia-Pacific as questions of international law, while the United States has long taken a hard-power stance in the region, conducting joint military exercises and engaging in freedom-of-navigation operations.20

There are, however, indications that European views are beginning to change. The French and German Indo-Pacific maritime strategies are seen as direct responses to China’s growing military ambitions in the region. And during the December 2019 North Atlantic Treaty Organization summit, alliance leaders recognized China for the first time as a potential strategic challenge.21 Still, in the context of larger European debates on strategic autonomy, transatlantic defense coordination vis-à-vis China will likely remain piecemeal and selective.22

GUIDING PRINCIPLES

The United States should avoid pressuring its partners in the EU and elsewhere into making binary choices on China. The global economy is too interconnected to revert to the Cold War system of bifurcation, and any attempt to decouple trade ties would risk exacerbating an already fraught trilateral relationship.

As such, EU-U.S. efforts to coordinate on China policy should have an eye toward solving problems rather than punishing China or excluding it from international dialogues.23 Efforts to isolate China would be counterproductive and undermine the potential for coordination on issues of common concern. The EU and the United States need to better work together to shape the international environment in which China rises. Efforts to revitalize multilateralism will need to balance alignment on principle with practical differences on policy. For its part, the EU needs to build greater alignment internally, especially in terms of its members’ relations with China.

Additionally, any attempt to shape China’s rise needs to be a part of a complete and coherent strategy in Asia that strengthens and diversifies partnerships with regional stakeholders. The EU and the United States can look to promote rules-based infrastructure development, for example through the Organization for Economic Cooperation and Development and the World Bank, so Beijing’s closed-door development initiatives are not the only game in town.24

At the same time, China will need to recognize its own agency in the trilateral relationship and take proactive steps to acknowledge and address Washington’s and Brussels’s concerns. If Beijing seeks to manage its relations with Washington and Brussels in a productive manner, it should do so because of the benefits it sees for itself and the international community. Unless Washington, Brussels, and Beijing resolve many of their fundamental disagreements, there is a risk that trilateral ties will only deteriorate further and undermine coordination on the most pressing global challenges.