[줌인] Biden’s’Alliance Diplomacy’ Tested by China-EU Trade Agreement

Input 2020.12.31 10:36 | Revision 2020.12.31 10:40

China, Asia and RCEP agreed on investment agreement with Europe
Being lukewarm for 7 years, positive attitude after Biden’s election
Biden tries to contain China by strengthening US-European alliance
Opposition voices are high even within the EU… Congress may not be ratified

On the 30th (local time), China agreed on an investment agreement with the European Union, which had been stalemate for 7 years. The EU cheered for increasing the degree of market opening in China, the largest trading partner, but experts analyzed that China was the largest beneficiary of the agreement. This is because China’s close contact with Europe, the US’s largest ally, could weaken the Joe Biden administration’s strategy to restore the alliance.

According to the British Financial Times (FT) and Bloomberg, President Xi Jinping of China, Chairman of the European Council, Charles Michel, and Chairman of the European Commission, Ursula von der Laien, released a statement stating that the two sides agreed to an investment agreement after the video call was completed. did.

With this agreement, the EU will be able to remove barriers such as the upper limit on foreign ownership and the requirement for joint ventures, which are applied when investing in Chinese automobile, personal healthcare, cloud computing, and air transport assistance services. Conditions for European banks to enter China are improving, and subsidies from the Chinese government to European competitors are limited.

The EU, which has been working since 2013 to open up the Chinese market, has given great significance to the agreement. “This agreement has major economic implications,” said Pon der Raien. “China has promised an unprecedented level of market access to EU investors, providing certainty and predictability to European companies’ operations.”

Prior to Biden’s inauguration, China signed an RCEP (Regional Comprehensive Economic Partnership Agreement) with South Korea, Japan, and Southeast Asian countries last month, followed by an unprecedented positive attitude toward trade agreements with the EU.

In the meantime, China has delayed the agreement as a diplomatic leverage, even though it knows that the EU strongly wants to open the market, led by Germany, a manufacturing export country. Then, in the middle of this month, Europe made a breakthrough in negotiations by agreeing to “comply with international standards” in relation to the labor force issue, which has been persistently demanding improvement.

The New York Times (NYT) and FT said the agreement is a diplomatic victory for China, which has been hit by its international status due to the corona pandemic, the crackdown in Hong Kong, and the crackdown on human rights in the Xinjiang Uyghur region. This is because, instead of partially opening their own markets to foreigners, diplomatic isolation in human rights issues has been avoided.

Europe is likely to face diplomatic friction with the Biden administration right now. Under U.S. law, the next administration cannot negotiate with foreign countries until the inauguration date, but Biden and other cabinet nominees continued to send messages to European and Asian allies, saying, “Do not cooperate with China in a hurry, but cooperate with the inauguration of the next administration.”

Biden said in an interview with NYT earlier this month that “we will fully review our trade relations with China and consult with our Asian and European allies to create a consistent strategy before changing US trade conditions.” “We have to work with the countries we work with.”

Jake Sullivan, appointed National Security Adviser for the Biden Administration, wrote on Twitter last week that “the next US administration will welcome prompt consultations with European partners on our common concerns regarding Chinese economic practices.”

A former Obama administration official told FT that “China’s belatedly signing an agreement with Europe is an intentional act to weaken cooperation between the United States and Europe to keep China in check.” “Jake’s tweet is very cautious, but the message It was clear,’don’t rush (the agreement)’, but the opposite happened.”

There are also observations that the agreement may not be ratified by the European Parliament. Reinhard Buticoffer, chairman of the European Parliament’s delegation of public relations, called the agreement a’strategic mistake’ and said, “It is ridiculous for the EU to try to wrap China’s commitment to labor rights as’success’. “It’s ridiculous. It should contain a strong provision on labor force enforcement.”

Despite these conditions, the reason Europe has pushed for an agreement with China is because the analysis that the immediate trade environment will not change significantly even if the Biden administration takes office. As the Trump administration pursued a diplomatic strategy that neglected its allies for four years, it was fueled by the assertion that European countries should not be subordinate to the US to protect their interests while hoping for cooperation with the US.