U.S., Europe need common strategy in China trade, president of the Atlantic Council says

WNM | Mar 18, 2019 at 9:52 PM

Washington D.C. - Frederick Kempe, President and CEO of the Atlantic Council, considers a common position of the EU and the U.S. on China to be essential. But such a common position does not appear to exist at the moment, Kempe said in an interview with the World News Monitor (WNM).

Ahead of the visit of Chinese President Xi to Italy and France this week, a common position of the EU states and the US is not yet apparent. Even though the EU-Commission has urged EU member states to speak with one voice vis-à-vis China, a common approach for negotiations is not in place. Italy is about to become the first big EU member state to sign a bilateral agreement on cooperation with China within the framework of the "Belt and Road Initiative" (BRI). Kempe says it would be a mistake for EU member states to negotiate bilaterally with China. "There is no European, no American and certainly no transatlantic strategy currently in place," Kempe told the WNM. However, this would be necessary if the EU was to have a strong negotiating position. "Although is may sound a little utopian, a common transatlantic strategy in dealing with China would be in the best interest of both the US and the EU", Kempe said.

Kempe recently wrote in his weekly column: "Greater coordination inside Europe and across the Atlantic could bring considerably more leverage to the negotiating table. The combined EU-US GDP in 2017 of more than $36 trillion was nearly triple that of China, and even the EU GDP alone of more than $17.3 trillion eclipses the $12.2 trillion of Beijing. Instead, China comes to the table with the full weight of six times more GDP than that of Italy, which next week could become the first G-7 member state to endorse China’s Belt and Road Initiative."

However, the US administration itself is not coherent about the approach needed for the relationship with China: US-president Donald Trump represents a strongly transaction-oriented line. He wants to sell as many US goods as possible to China. Others in the administration, on the other hand, appear to aim to persuade China to adhere to the "international rules of the game", says Kempe.

Trump's transaction approach is not without risk for the EU. There are currently signs that China and the US could successfully strike a major trade deal. The deal could be at the expense of the EU, Wolfgang Eder, CEO of the voestalpine AG, Austria-based global steel and technology conglomerate, recently told reporters in Frankfurt am Main. "I am not sure whether politicians in Europe are aware of this problem," Eder said. In this regard, he cannot understand the enthusiasm about the BRI in Europe, which in his view is a clear "program for the sale of Chinese goods in Europe".

Kempe does not expect short-term transatlantic unity as regards the common China trade policy. The timing is also bad because of a shift in the Transatlantic relations. "We are dealing with two very different US presidencies with regard to Europe", Kempe says. Barack Obama had advocated the "stay behind" principle and was not particularly interested in Europe. Donald Trump, on the other hand, is pursuing a robust policy in which he sees the EU as a competitor in global markets.

Kempe does not believe that Trump would give up his position in order to strengthen the transatlantic unity in relation to China. Trump has identified the enormous potential of Chinese consumers as a global market, in which US-companies could prevail. A "big deal" with China will therefore more likely be a clear priority of the US president.than a softening of his stance towards Europe.