Trapped between the United States and China, Europe seeks its direction

Former British Prime Minister Gordon Brown spoke out loudly about growing competition between the United States and China, an issue that has begun to worry European governments, at an event hosted by the World Trade Organization in September.

Regarding the scenario in which competition between China and the United States could lead to the formation of a world made up of two hostile powers, Brown said: “Europe does not want to be trapped between the United States and China, or be a colony of China. or an American colony.”

Brown, who took up senior United Nations roles on global issues after leaving his post as prime minister in England, said: “While Europe will always choose the United States, on which its security depends, it also knows that its soul is commerce, much more so than for the United States.

ONE OF THE MAIN TOPICS OF THE MARRAKECH MEETING

While the disintegration of the rules and links that bind the global economy, known as “geoeconomic fragmentation,” seemed impossible just a few years ago, it is now one of the main topics of the annual meeting of the International Monetary Fund (IMF) in Marrakesh , Morocco next week.

This situation challenges European countries, whose prosperity has always been based on trade, more than any other country.

THE EU REPRESENTS 16 PERCENT OF WORLD FOREIGN TRADE

The 27 member countries of the European Union (EU) constitute the world’s largest trading bloc, accounting for 16 percent of global imports and exports. This leaves EU members heavily dependent on goods from other countries, from critical raw materials to blood plasma.

But tariffs and other trade restrictions are rising as EU governments try to counter populist rivals who are capturing the votes of those hard-pressed by two decades of rapid globalization, including China’s entry into the trading system. global.

While the United States and the EU are hardening their stance against China, they are emphasizing that global trade rules must be applied fairly. However, it is noted that Washington is already testing to what extent these rules can be relaxed.

Trade expert Brad Setser, who advises the Biden administration, said in Brussels last month: “Europe’s attempt to adhere to the principles of the World Trade Organization in a world where the other two great powers are not very committed “With these principles it limits opportunities for cooperation with the United States.”

REACHING AN AGREEMENT WILL NOT BE EASY

When Joe Biden was elected president of the United States in 2020, most governments in Europe breathed a sigh of relief. But they now accept that the US free trade agreement no longer exists and that they must make adjustments before the 2024 US elections.

The document titled “Combating Europe’s economic insecurity,” presented to EU finance ministers last month, warned that “(European) companies must be prepared for scenarios in which the United States forces them to leave China.”

While such aggressive sanctions against China are not current US policy, the EU is “ill-prepared for a world of geopolitical rivalry and great power rivalry,” according to an EU document seen by Reuters.

Leaders of EU countries will meet in Spain this week to begin drafting an economic security plan that will address the region’s vulnerabilities and aim to reach a deal by the end of the year.

But reaching this agreement will not be easy.

BILLION EUROS, THE WRATH OF CHINA…

On the one hand, countries must agree on which technologies should be subject to stricter export controls and foreign investment screening, while in some cases security interests should outweigh domestic trade benefits.

On the other hand, EU governments may have to allocate billions of euros to help local industry develop strategic technologies that have not yet been approved, knowing that this could incur the wrath of China.

Wang Huiyao, president of the Beijing-based Center for China and Globalization think tank, said Europe should take into account its longstanding cultural ties and trade interests with China when determining its policy.

Wang said: “The EU should of course approach China differently than the United States” and suggested disagreements over human rights and ideology could be resolved.

But ultimately, realist politics can make Europe’s job more difficult.

An IMF analysis this year concluded that if the world economy were divided into two axes, centered on the United States and centered on China, Europe would do best by remaining open to both, but “such an approach would have serious consequences if it significantly increased the It was also noted that “you may face costs.”

Petra Sigmund, the German official who prepared Berlin’s China strategy, said Europe and Washington have not always had the same view on China, but that the Biden administration is “very willing to solve this problem.”

“We hope this continues after the US elections,” Sigmund said. (REUTERS)