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
