Sun, Jan 03, 2021 page6

• CAI presents obstacle for Biden

  • By Andrew Hammond
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  A common frustration of commuters across the world is a lengthy wait only to find that two trains or buses arrive at once.

  This is a predicament that the EU can relate to, with a brace of key trade and investment deals finally agreed to at the end of last month, after years of difficult negotiations. It is the politics, rather than the economics, of the agreements that is more fascinating.

  The Christmas Eve UK-EU trade deal was, of course, widely anticipated and ultimately secured once British Prime Minister Boris Johnson decided that it was too risky — even for his high-wire style of politics — not to agree to a post-Brexit deal with the EU in the midst of a once-in-a-century pandemic.

  Much more of a surprise was the timing of the agreement, subject to ratification by the European Parliament, of the EU-China Comprehensive Agreement on Investment (CAI) on Wednesday which would see European and Chinese firms receive better access to each other’s market.

  That deal, discussed since 2014, suddenly developed new momentum around Christmas, despite the wider chill in bilateral relations, post-COVID-19 pandemic, which saw the EU only a few weeks earlier urge a joint initiative with the US to “address the strategic challenge from China’s growing international assertiveness.”

  Late December is a peculiar point in the diplomatic calendar for such an unscheduled breakthrough, with no negotiating deadline to force the issue as there was with Brexit. Much of the sudden urgency to move the EU-China deal forward reflects Beijing’s desire to get it over the line before the inauguration of US president-elect Joe Biden.

  China’s calculus here is at least two-fold. First, China is acutely aware that the incoming Biden administration has concerns about the CAI. One of Biden’s worries is that some Chinese companies might gain a stronger foothold in Europe by using forced Uighur labor for their products.

  The EU is conscious of these US concerns, and Poland suggested delaying action on the deal with China until after consulting the Biden team late this month.

  However, most EU states instead choose to take advantage of the political window of opportunity that has, unexpectedly, opened up with Beijing.

  A second reason for China to press the CAI is that Europe is becoming an increasingly important foreign policy theater for Beijing. The rising power generally enjoys growing influence across much of the continent from eastern and central Europe, where it regularly holds “17 plus 1” summits, to key western European states like Italy, which in 2019 became the first G7 country to endorse China’s Belt and Road Initiative.

  The EU-China breakthrough raises the question of whether there might this year be a significant warming in ties after the chilliness of the past few months.

  While the CAI will likely do much to improve the atmosphere in diplomacy between Brussels and Beijing, it is significantly less likely to promote a fundamental (positive) reset in relations in the coming months for at least three reasons.

  First, there are multiple issues clouding the bilateral agenda, at least in the short term. These include the opaque way that Beijing is perceived by Europe to have handled the initial outbreak of COVID-19, the new National Security Law that China imposed on Hong Kong, Uighur human rights abuses and growing pressure on European leaders not to allow Huawei Technology Co to participate in their 5G networks.

  Second, the Biden team will likely double down with the EU to try to agree to a more aligned transatlantic approach toward China.

  For instance, on Tuesday last week, incoming US national security adviser Jake Sullivan wrote on Twitter that the Biden administration “would welcome early consultations with our European partners on our common concerns about China’s economic practices.”

  Third, some Brussels policymakers remain concerned, despite the CAI, about whether China’s external interventions in Europe represent a divide-and-rule strategy to undermine the continent’s collective interests.

  EU High Representative for Foreign Affairs and Security Policy Josep Borrell last year even asserted that Beijing is a “systemic rival that seeks to promote an alternative model of governance” to that of Europe.

  Rather than seeing a fundamental reset in relations, the CAI is most likely to see the EU continue a constructive engagement approach with China. This will potentially be much more aligned with the US under Biden’s presidency than has been the case under US President Donald Trump.

  This EU strategy will likely see differences, diplomatically, called out, while emphasizing areas of perceived common interest, from tackling climate change to promoting an open financial and multilateral trading order.

  Brussels asserts that the CAI would help move toward that latter goal of an increasingly transparent economic system.

  So, despite post-pandemic tensions, Brussels and Beijing recognize that they potentially still have much to gain from their partnership.

  The EU sees the deal with China as part of this long-term approach, and the decision to push forward with it largely reflects China’s calculus that the window for sealing the deal might not remain open indefinitely, especially given the impending Biden presidency which might do much to rejuvenate the transatlantic alliance post-Trump.

  Andrew Hammond is an associate at the London School of Economics and Political Sciences’ LSE IDEAS.

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