The US Inflation Reduction Act leads to an imbalance in the level playing field between the US and Europe. According to Korteweg, Europeans are disappointed in Joe Biden, but Americans are also disappointed in us. The United States because Europe doesn’t want a clean break with China, Europe because it thought Biden was more European than he seems now. “What Biden is doing is what we have been accusing Trump of doing for a long time. The United States doesn’t care much about the WTO, while we in Europe believe we can maintain the multilateral trading system.’
Disappointment on both sides
According to Korteweg, Europe not only expected more from Biden, but was also surprised by the IRA. And this while Europe has always worn out the Biden administration for all the European mentality. This explains the anger. The American president is only there for the Americans, while we thought: he is one of us.’ Conversely, Americans are also disappointed in Europe; for the past two years, Americans have expected European measures that would make the continent less dependent on China. “Americans expect Europe to follow the United States in economic and security matters.”
Exit the WTO, enter TTIP 2.0
Korteweg supports the renewal of transatlantic trade agreements, as we almost did in 2015 with the TTIP agreement. This is to prevent Europe from being crushed by the devastating effects that an Infation Reduction Act can have on the one hand, and on the other because the WTO World Trade Organization is bankrupt. At least in American and Chinese eyes.
Korteweg then wonders why the EU and the US cannot agree on frameworks for a number of sectors such as semiconductors, green technology or, more generally, for subsidies to their own industries. ‘The WTO is paralysed, those cadres no longer work internationally. Let’s do it bilaterally. This brings us back to a transatlantic trade deal. The WTO has failed and we have problems with this crazy US state aid, with the risk of our own technology leaking into the US. So shouldn’t we make trade deals with the Americans?’
Take your cake and eat it
Europe’s very ambition to occupy a middle position in the global bipolar playing field is playing tricks on the Europeans. ‘We invest a lot in the United States, but also in China. We don’t want to choose. as the USA wants, for a clean break in relations with China. We also want the Chinese market, that Chinese market to be incredibly innovative. There is a common denominator in Europe: we do not want to indulge the decoupling anger that is rampant in the United States.’
According to Korteweg, Europe can continue to trade with China, ‘without removing the geopolitical fringes of strategic dependencies’. Europe could reduce these unattractive dependencies on commodities, for example, by investing more in countries such as Japan, South Korea, Singapore and Taiwan. And thus replacing the crucial Chinese link in the supply chain.
Beijing divides and rules
Naturally, this will not go unnoticed and China will respond. But in reality he already does so in his attitude towards Europe. That China is well aware that things are not going well in Europe is evident from the fact that Beijing invites individual European leaders, but not the European Commission. “China is an expert in the game of divide and conquer. China is very good at pointing out that Europe consists of a collection of 27 member states rather than a bloc. By this you mean that China is the largest party.’ According to Korteweg, this is not only an important political signal for EU member states, but also creates confusion in the EU.
According to Korteweg, German Chancellor Scholz’s attitude is exemplary of the eagerly desired intermediate position that Europe wants to occupy. ‘Scholz sharply distances himself from the image that we are heading towards a Cold War. According to Scholz, we must create a multipolar world in which Europe has an independent voice in dealings with both China and the United States.’
Spare cabbage and goat
Scholz is looking for a way for Germany and Europe to work together with autocratic countries and at the same time play a bridging function between the United States and China and work equally well with all these parties. “But China and the United States also have a say in this.” The United States wants Europe to show its colors and America’s patience is running out. “If we don’t enter into far-reaching trade agreements with the Americans, for example on state aid or subsidies, then the law of the strongest and largest wallet will apply. In this we will get lost.’
Listen to the full conversation with Rem Korteweg here