What I’ve been working on (on the side)

The Atlantic Gulf: The U.S. and E.U. Policy Differences As China Rises
By Alex Fogleman

China’s dramatic rise over the past decade has highlighted the importance of the nature of relations between developed world powers and the industrializing China. The United States has granted China most favored nation status. in its own trade sphere and the E.U. has worked on developing in-depth strategic relations with China. At a glance, these two world powers have compatible goals concerning China and it would behoove the U.S. and E.U. to work together to accomplish greater partnerships with China, but beneath the veneer of compatible goals, there are several important differences in how the two powers approach the issue of China on the world stage.

This proposal paper will seek to highlight the differences and similarities between the two governments, focusing on the areas of arms control and military spending, trade and economics, and human rights. Specific concerns include the U.S. and E.U. mutual arms embargo on China and the limitations and loopholes within the embargo, as well as cooperating with Chinese policy goals to gain victories on the human rights front, furthering ties with Chinese markets and free trade, and anti-dumping/import/export issues.

Initial concerns from both the European and American political theaters place high priority on military and security issues. China is seeking to expand its military power, through mostly Russian sources, as the U.S. has a comprehensive arms embargo on China, and the E.U. has a lest restrictive embargo, but does not export any equipment with a specifically military purpose. There are some important differences between the E.U. and U.S. concerning the arms embargo. The U.S. has a liberal interpretation of its embargo, preventing the export of any goods, machinery, technology, or services that can have military applications. The E.U. has a stricter interpretation, preventing the export of only products that have strictly military applications and allowing for the export of dual-purpose materials, such as diesel engines, satellite guidance equipment, and technical expertise . Issues such as these highlight the cross-straight issues between the U.S., China, and Taiwan, and raise other concerns relating to the expansion of Chinese military interests in the Southeast Asian theater. To provide some brief background, both the U.S. and the E.U. initiated the arms embargos in response to China’s Tiananmen Square crackdown. The U.S. had previously committed to arms sales with the PRC, but suspended, and eventually canceled those after Tiananmen . Recent developments suggest a shift away from the embargo though, as the E.U. has been considering, on and off, lifting the arms embargo, although there are no current intentions to do so, despite the continued lobbying of France and the Germany. The U.S., under the Obama administration, has highlighted military to military cooperation, intending on the advancement and improvement of both militaries, as well as high-level coordination amongst senior military officers .

These shifts in policy signal a willingness to re-think the way the Western powers are doing business with China. It does not necessarily indicate a readiness to see China emerge as a global military power, in fact, quite the contrary, both the U.S. and the E.U. have provided statements of concern on China’s growing influence in Southeast Asia. China’s passage of the ‘Anti-Secession’ law is considered to be a primary factor in regards to the U.S. and E.U.’s concerns over renewing arms trades with China. Western powers do not want to see China become a strategic player in ways that can hinder U.S. and E.U. interests abroad.

While the U.S. and the E.U. may agree that any deals for military equipment with China need to be carefully considered indefinitely, a major policy difference concerns the nature of the arms embargos that are in place. As stated earlier, the U.S. has a strict export and sanction policy on equipment with military applications while the E.U. allows for dual-purpose equipment to be exported. The U.S. and the E.U. have engaged in talks over these differences, but neither side has compromised towards a unified policy yet.

Shifting perspective, economics provides an extensive area for collusion between the U.S. and the E.U., both of which have stated extensive interest in deepening ties with China. An E.U. White Paper and U.S. dossiers on China focus on increasing strategic relationships. An Ogilivy Public Relations Worldwide report stated that the U.S. and China are working on a strategic economic dialogue and that U.S. firms are exploring Chinese markets as well as Chinese firms finding bargains in U.S. markets . Meanwhile, China is Europe’s fastest growing trade partner, with Europe running a surplus on services exported to China and a deficit on goods imported . The White Paper published by the E.U. states that increasing trade will be accomplished through openness and cooperation. The E.U. expects stiff competition from Chinese firms and wants China to ensure that the competition it is exporting is fair . As punctuation to this point, the E.U. has a number of anti-dumping regulations in place against China, in an effort to promote fairer market practices in E.U.-Chinese trading.

Another concern of the E.U. and the U.S. is that China is propping up pariah states such as Iran in order to secure resources . China often offers incentives only rich states can offer, building roads and other infrastructure, offering military aid, and offering support in the United Nations, voting often against the wishes of the U.S. and the E.U. . China does this in order to secure reliable sources of energy for itself, one of the main concerns of Chinese leadership, along side promoting social stability. Since China is growing so quickly, it consumes prodigious amounts of resources, something the Americans and Europeans are eyeing closely, attempting to gauge the ability of the Chinese to expand domestic production and growth capabilities, two factors which are turning China into a world economic power.

As China fills this expanding role, the U.S. is in a unique position to meet it. As stated by Jacques DeLisle “participants in Chinese foreign policy processes and policy intellectuals were more supportive of the out-of-power party’s candidate than in any U.S. presidential election in at least two decades. ” He goes on to state that the two governments have plenty of policy goals, which are compatible. The Chinese support for Obama’s election signals a willingness to work closely with the new U.S. administration, even though Obama has declared intentions to continue George W Bush’s Asia policies, which were widely considered successful. Obama for his part, is seeking to engage the Chinese on a myriad of issues ranging from environmental controls to terrorism to humanitarian issues. The Obama administration will also play down issues such as currency valuations in order to gain concessions and maintain good terms with Beijing.

China and the U.S. held their first Economic & Strategic Dialogue on July 27 and 28, developing a closer working relationship in order to deal with existing and emerging problems. During this dialogue, President Obama noted that the U.S. and China would be working to resolve current economic problems by enacting more transparency and regulatory reform, as well as free and fair trade

The U.S. would like to see China place more of an emphasis on domestic demand in accounting for future growth, as well as providing more access in Chinese markets for U.S. companies , goals that the E.U. shares as well. While these may be top priorities for U.S. lawmakers, the Chinese may not be so eager to fall in line. China has tens of millions of low-income workers in export-oriented industries, and China, placing a high priority of maintaining jobs in order to preserve social stability, sees no benefit in moving away from an export-oriented economy in the short term. Other issues include a U.S. desire to see Intellectual Property Rights protections strengthened in China, as well product safety concerns. As deLisle says, the U.S. would be best suited to move cautiously in coming to agreement on these issues, working to avoid any policy moves that might be decried as a double standard of treatment for the Chinese.

Europe shares many of policy goals but faces its own unique challenges. Since the European Union is not a cohesive, unified state, but rather a collective of states moving tentatively forward, it first needs to focus on creating a cohesive unit to deal with China, as noted by The European Council on Foreign Relations . Once the E.U. can do this, then it can engage China on the economic issues it wants to: anti-dumping, intellectual property, and the increasing trade of services out of Europe and goods into Europe.

Anti-dumping is of particular concern to both the E.U. and China. China feels it is being unfairly targeted by E.U. policies, and is pressuring for restraint in the new spat of anti-dumping policies Chinese observers are worried that in the most recent period of economic downturns, the E.U. is moving towards a protectionist stance, an unhealthy position for both players considering that they are each other’s most important trade partners. The E.U. on the other hand, considers China’s reticent behavior concerning currency valuation and human rights reform, to be unfair competition when its products are sold in E.U. markets at far cheaper prices than E.U. manufacturers can match. The E.U. also takes issue with China’s slow progress on opening its markets to foreign investment, claiming that it has opened its markets to Chinese goods and China should reciprocate the move.

Human rights is a policy issue where both the U.S. and the E.U. favor interchangeable policies. Both would like to see further increases in the human rights situation in China, from the freeing of prisoners still held in relation to the Tiananmen Square incident, to the granting of a meaningful level of autonomy to Tibet. The E.U. established the Human Rights Dialogue (HRD) in 1995 with the intention of channeling human rights issues from across the E.U. into a forum from which China can respond. During the most recent HRD, the E.U. and China discussed the repression of human rights defenders, as well as the limited protections of political speech and the prison terms of advocates for Tibetan autonomy . Both parties made a commitment to produce concrete results on these issues.

The U.S. Bureau of Democracy, Human Rights, and Labor issued a grave report on the human rights situation in China, indicating dozens of serious breaches of human rights including arbitrary arrests, repression of religious groups, arrests of political dissenters, and preventing any organization from reporting independently on the human rights situation . The U.S. would like to see these issues addressed, but quick movement is not likely as Secretary Clinton stated that the primary concern was fixing the economic crises, and human rights must take a back seat to those goals .

Overall, the U.S. and the E.U. are largely compatible in their policy goals towards China. Both powers are of western heritage and have enjoyed long political and economic relationships with each other. They both are wary of China’s military expansion, but intent on collaborating with China as it expands its military. The E.U. seeks a strategic relationship, and the U.S. seeks to guide military development in a way which preserves the balance of forces between the U.S. and China. Economically, both the U.S. and the E.U. are seeking to work closer with China to not only expand trade, but to increase competition among firms, create transparent trade and regulatory practices, and curtail violations from China in the areas of intellectual property and product safety. The E.U. has a higher regard for human rights issues than the U.S. does, though both would like to see China make progress on expanding its protections of human rights. The compatible nature of these goals, despite some contentious differences, does not indicate a high level split between the U.S. and the E.U. on policy issues, and most likely, the U.S. and the E.U. will continue to work together and work with China on a bi-lateral and multi-lateral level in order to further their policy goals.

This paper has given a brief overview into some of the issues where the U.S. and the E.U. are compatible in policy, as well as areas where the policies of the two powers diverge. A follow-up research paper will explore the issues in depth and offer more analysis on these similarities and splits and policy options that result.

Source Materials

Archick, Kristin et al. European Arms Embargo on China: Implications and Options for U.S. Policy CRS Report for Congress. April 15, 2005. http://fpc.state.gov/documents/organization/45458.pdf

Benita Ferrero-Waldner, European Commissioner for External Relations and European Neighbourhood Policy. The E.U.-China Human Rights Dialogue European Parliament Strasbourg, 12 December 2007 http://E.U.ropa.E.U./rapid/pressReleasesAction.do?reference=SPEECH/07/817&format=HTML&aged=0&language=EN&guiLanguage=en

China (Includes Hong Kong and Macau): Country Reports of Human Rights Practices. Bureau of Democracy, Human Rights, and Labor. March 4, 2002. http://www.state.gov/g/drl/rls/hrrpt/2001/eap/8289.htm

Clinton: Chinese Human Rights Can’t Interfere with Other Crises. CNN Politics. Feb. 22, 2009. http://www.cnn.com/2009/POLITICS/02/21/clinton.china.asia/index.html

Commission working document accompanying COM(2006) 631 final: Closer Partners, Growing Responsibilities A policy paper on E.U.-China trade and investment: Competition and Partnership {COM(2006) 631 final} http://E.U.r-lex.E.U.ropa.E.U./LexUriServ/LexUriServ.do?uri=CELEX:52006DC0632:EN:NOT
deLisle Jacques . Foreign Policy Research Institute. China Policy Under Obama. Feb. 2009 http://www.fpri.org/enotes/200902.delisle.chinapolicyobama.html

Europa: Press Release E.U.-China Trade in Facts and Figures. Sept. 4 2009. http://E.U.ropa.E.U./rapid/pressReleasesAction.do?reference=MEMO/09/375&format=HTML&aged=0&language=EN&guiLanguage=en

Grant, Charles with Barysch, Katinka. Can Europe and China Shape a New World Order? Centre for European Reform. http://www.cer.org.uk/pdf/p_837.pdf

Kronick Scott and Moeller Jamie. Expert Views: The Obama Administration and China: What Does the Future Hold?. Ogilivy Public Relations Worldwide. Jan. 16th, 2009. http://www.ogilvypr.com/en/expert-view/obama-administration-china-what-does-future-hold

Mu Xuequan. Chinese Ambassador to E.U. Urges Restraint of Anti-Dumping China View. Sept. 2, 2009 http://news.xinhuanet.com/english/2009-09/02/content_11981052.htm

Obama at U.S.-China Strategic and Economic Dialogue. The White House Office of the Press Secretary. July 27, 2009 http://www.U.S.policy.be/Article.asp?ID=C275D8C1-A1A5-4AF1-A610-24041403A7C8

Pan, Esther. The U.S.-China Relationship: Policy Goals. Council on Foreign Relations. Nov. 11, 2005. http://www.cfr.org/publication/9205/U.S.china_relationship.html

Reuters. China Policy Has Failed, E.U. Think Tank Concludes. TaiPei Times. April 18, 2009. http://www.taipeitimes.com/News/world/archives/2009/04/18/2003441358

The White House, Office of the Press Secretary. “Statement on Bi-lateral Meeting with President Hu of China. April 1, 2009 http://www.whitehoU.S.e.gov/the_press_office/Statement-On-Bilateral-Meeting-With-President-Hu-Of-China/

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