Download publication

Working Paper

EU trade policy amid the China-US clash: caught in the crossfire?

What risks face the EU with regard to China’s strategic aims in trade policy and how can the EU respond? The US effort to isolate China poses particular risks for Europe. How can the EU counter such efforts with the aim of forging its own distinct trade policy? How should the EU move forward with reform of the World Trade Organization (WTO) in light of differing demands and aims of trading blocs like China and the US?

By: and Date: September 17, 2019 Topic: Global Economics & Governance

The authors prepared the text of this Working Paper in their personal capacities as a study under a contract with the Greens/EFA Group in the European Parliament.

China’s rapid rise and unique economic system, and the United States’ increasingly disruptive trade policy, threaten the global rules-based trade and economic system. The European Union has so far been comparatively spared from the US-China trade war, but must nevertheless safeguard its critical interests by adopting an independent, proactive stance. The EU does not currently have to make a general choice between China or the US, and like many other jurisdictions around the world it should aim to defend its continuing ability to not make such a general choice, even as this stance will generate tensions with both. The April 2019 China-EU summit illustrated the credibility of this approach, and the objectives stated in the summit conclusions should be delivered.

The EU, even more than the US or China, has a strategic interest in preserving the global rules-based order embodied by the World Trade Organisation. It must steer WTO reform, working closely with aligned third countries such as Japan. The EU should expand its outreach beyond its immediate negotiating counterparts in both the US and China, and work in particular to ensure its (EU- and member-state level) leading officials better understand China. While strengthening its instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the EU must also resist the temptations of protectionism and economic nationalism.

In support of these objectives, the EU should prepare for difficult decisions, which might involve revising some of its red lines in international trade negotiations. Conversely, the EU should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies.

Read article Download PDF More on this topic
 

External Publication

Diversification and the world trading system

Diversification is important because it is associated with economic growth and reduced volatility.

By: Uri Dadush, Niclas Poitiers, Abdelaaziz Ait Ali, Mohammed Al Doghan, Muhammad Bhatti, Carlos Braga and Anabel González Topic: Global Economics & Governance Date: September 16, 2020
Read article More on this topic More by this author
 

Opinion

Non-summit shows EU-China ties at new low

There was nothing concrete to justify calling this video conference an EU-China Summit.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 16, 2020
Read article More on this topic More by this author
 

Opinion

China's 'dual circulation' plan is bad news for others' exports

This opinion piece was originally published in Nikkei’s Asian Review. Minds in Beijing are focusing increasingly on the upcoming meeting of the Chinese Communist Party Central Committee next month. High on the body’s agenda will be sketching out a new official five-year plan for Asia’s largest economy. A freshly coined buzzword looks set to play […]

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 15, 2020
Read article More on this topic More by this author
 

Blog Post

全球為數不多 台灣今年經濟有望正成長

台灣的貨幣政策和大多數國家相比仍屬相對緊縮,台幣升幅也是相對有限。總的來說,台灣第二季的GDP與其他國家相較算是非常優異,主因是行動管制少,所以衝擊也小得多。

By: Alicia García-Herrero Topic: Global Economics & Governance Date: August 28, 2020
Read article More on this topic More by this author
 

Opinion

Relocating production from China to Central Europe? Not so fast!

Western European imports from central Europe have fallen dramatically, while imports from China fell much less, and had already recovered to pre-COVID level by April 2020. Central European governments should instigate new measures to foster the transition towards knowledge-intensive economic activities.

By: Zsolt Darvas Topic: Global Economics & Governance Date: August 20, 2020
Read article More on this topic More by this author
 

Opinion

Coronavirus recovery: invest rainy day savings to boost Hong Kong’s economy

The Hong Kong government might want to consider diversifying its economy by using part of the savings earmarked for rainy days. Beyond cushioning the negative impact of Covid-19 on SMEs and households, it is one more reason to spend.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: August 6, 2020
Read article More on this topic
 

Opinion

China Has an Unfair Advantage in the EU Market. What Can Be Done to Level the Playing Field?

This article has originally been published in Brink News. The dominance of Chinese state-owned enterprises in China’s domestic market is giving them unfair advantages in the European Union single market as well. The EU Commission recently released a series of recommendations for leveling the playing field regarding foreign subsidies. Unfortunately, while useful, these ideas are unlikely to […]

By: Alicia García-Herrero and Guntram B. Wolff Topic: Global Economics & Governance Date: July 28, 2020
Read article More on this topic
 

Blog Post

China's targeted corporate shopping spree to continue, especially in Europe

Expect small, below the radar deals to continue to flourish and, by the same token, Europe to lose part of its edge in industrial technology and other strategic sectors.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: July 17, 2020
Read article More on this topic
 

Blog Post

Debt relief for Sub-Saharan Africa: what now?

When G20 finance heads meet on 18 July, Europe will again need to lead on the group’s flagship COVID-19 initiative to postpone low-income countries’ debt service payments. For the first time, China has agreed to participate as an official creditor alongside members of the Paris Club. However, continuing lack of clarity on which Chinese creditors will participate, coupled with resistance from private sector creditors to voluntary participation, suggest that actual relief will be much less than originally planned.

By: Suman Bery, Sybrand Brekelmans and Alicia García-Herrero Topic: Global Economics & Governance Date: July 14, 2020
Read article More on this topic
 

Blog Post

Ukraine: trade reorientation from Russia to the EU

Over the past five years conflict has led to a deterioration of Russo-Ukrainian economic relations while ties with the EU have been deepened. This shift is evident in trade flows: the European Union has become Ukraine’s biggest trading partner, while China is poised to overtake Russia as its second. Natural gas imports from Russia, Ukraine’s prior Achilles heel, have been partially replaced by reverse deliveries from the EU and reduced as result of reform of the gas sector.

By: Marek Dabrowski, Marta Domínguez-Jiménez and Georg Zachmann Topic: European Macroeconomics & Governance Date: July 13, 2020
Read article More on this topic
 

Blog Post

Europe’s China problem: investment screening and state aid

China’s state capitalist economy poses a challenge to EU openness to foreign investment. In response, the European Commission 17 June published a White Paper on “levelling the playing field with regard to state aid”, contemplating sensible and balanced policies to protect the integrity of the European single market from subsidised foreign acquisitions. However, against the backdrop of collapsing global capital flows and limited existing FDI from China, there is little risk of excessive exposure, indeed a deepening of bilateral investment flows would be beneficial for both economies.

By: Marta Domínguez-Jiménez and Niclas Poitiers Topic: Global Economics & Governance Date: July 2, 2020
Read article More on this topic More by this author
 

Podcast

Podcast

Redefining Europe’s role after the Covid-19 Pandemic

How will the Covid 19 crisis change the role of the EU in Europe and the world?

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: June 25, 2020
Load more posts