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Opinion - With China Deal, EU leaves the hard part to the US

In pursuit of profits, Europe is offloading vexing geopolitical issues to Joe Biden’s administration.

(By Dalibor Rohac – Politico – January 6, 2021)


Forget about Europe’s talk of “strategic autonomy” and its supposed ambition to act as a guarantor of multilateralism and a “rules-based order.”

The investment deal the EU bloc struck with China late December — just three weeks before Joe Biden is inaugurated as the new president of the United States — demonstrates that Europeans are keen to go back to what they do best: pursuing narrow, material self-interest under the U.S. security umbrella — though not without a heavy dose of moralizing.

The deal, known as the Comprehensive Agreement on Investment (CAI), has faced criticism from all sides, with the Financial Times’ Gideon Rachman calling the agreement “remarkably shortsighted” and “naive.” But that is not quite right. Few Europeans seriously expect the deal to have the transformational effect needed to truly “level the playing field” in China’s economy.

Rather, it is very likely that Chinese negotiators made significant last-minute concessions, providing very concrete upsides to European companies present in China — especially German carmakers, which account for a plurality of EU investment in the country — that made the agreement too good an opportunity to pass on.

Striking an investment deal with America’s most important adversary — after years of clamoring for a tighter transatlantic partnership including on China-related questions — only makes sense for the EU if it believes that it can compartmentalize various aspects of its relationship with countries like China.

This is familiar territory for the EU. It’s the type of thinking that allows the bloc to sanction Russian President Vladimir Putin’s regime for its violations of Ukraine’s sovereignty while also pursuing the construction of the Nord Stream 2 pipeline.

Similarly, the EU-pioneered Iran deal has not stopped Tehran from being the region’s leading sponsor of terrorism, but it surely opened avenues for “substantive re-engagement with Iran at different levels, including bilateral trade,” as the European Commission’s website puts it. China, meanwhile, can simultaneously be the EU’s negotiating partner, economic competitor and “systemic rival.”

Such a separation rarely works in practice. But if Biden’s presidency promises a return to a version of the benign, U.S.-run world from before 2016, then why should the EU not offload vexing geopolitical and strategic issues to Washington, while seeking to improve the conditions facing European investors in China?

The problem is not European naiveté, but rather the fundamental asymmetry between the EU and China. Chinese investment in Europe, which has seen growth in the sensitive areas of infrastructure and high tech, is done in the pursuit of Beijing’s geopolitical agenda, not profit.

This is what informs China’s approach to trade and investment negotiations. In contrast, European companies, say VW or Daimler, are in China to make money for their shareholders.

Setting aside lofty rhetoric on sustainable development, Paris climate goals or labor standards, the EU’s aim in trade and investment negotiations is clearly not to project European soft power around the world or to pursue a (non-existent) common strategic outlook. It is simply to get better treatment for European companies — the bigger and more important, the better.

U.S. President Donald Trump’s election in 2016 was hailed as the end of Europe’s 70-year holiday from history — a moment after which the EU would have to adopt a more clear-eyed and strategic view of the world and complement it with the toolbox needed for the pursuit of its broader interests, not just those of its private actors.

And yet, throughout the past four years, the sense of urgency rarely moved outside the realm of rhetoric.

Already, Europe’s noises about becoming more autonomous on the world stage and decoupling from Washington look less like a systemic break than as a one-off aberration of the transatlantic relationship.

If the EU-China investment deal is an indication, many in the EU are keen to resume their pre-2016 modus operandi: doing business with all regimes around the world, no matter how unsavory, pontificating about multilateral causes du jour but letting the U.S. deal with the day-to-day maintenance of the rules-based order and the work of addressing acute geopolitical crises.

Whether the Biden administration will acquiesce to such an arrangement remains an open question. Yet, betting that it will is not necessarily naive — just a bit craven.