A fraught linkage: US-China trade, US-EU tech

By Claude Barfield

Over the past weeks, the Joe Biden administration has pursued two geographic bookends of US foreign economic and strategic policy — namely the first public statement of US trade and investment policy toward China and the convening of the US-EU Trade and Technology Council’s (TTC) first meeting. The substantive results were inconclusive in both cases, leaving major policy questions unanswered for both Asian and European allies.

First, as previously noted, US Trade Representative Katherine Tai’s widely anticipated unveiling of the Biden administration’s China policy failed to spell out a strategy for dealing with the fundamental trade and technology elements of China’s predatory state capitalism (e.g., huge subsidies for domestic industries, forced tech transfers, intellectual property theft, and closed tech sectors). Tai subsequently spoke with her Chinese counterpart, Vice Premier Liu He, but the meeting was merely an exchange of views in which Beijing refused to offer any changes to current industrial and trade policies. Tai has stated that the administration would take action if initial talks produced no concession from Beijing, but the open question remains under what circumstances the administration will “utilize the full range of tools” and fashion new strategies to counter Chinese economic aggression.

This lack of US policy clarity will directly affect the future of the TCC, which, as mentioned above, met for the first time in late September. The council has been tasked with a wide-ranging, ambitious agenda that includes working groups on semiconductors, artificial intelligence, supply chains, technical standards, and cybersecurity — among others.

Ultimately, though there are valid independent issues such as privacy and international tech standards, the US-EU alliance will be highly dependent on the development of a common front in response to predatory Chinese state capitalism. And within the EU, France will play a decisive role in Europe’s reaction to a nascent Biden China strategy — not least due to the vacuum left by nine months of the new administration dithering on China policy.

In addition, recent events (including France’s sense of betrayal over the newly minted US-UK-Australia submarine deal) will certainly add to French President Emmanuel Macron’s dissent on US-Asia and China policy. But the issues run deeper than personal pique and represent a stream of European thought — “strategic autonomy” — that is potentially at odds with US policy toward China.

Of particular importance is a little-noticed series of interviews given recently by French Finance Minister Bruno Le Maire while attending International Monetary Fund meetings in Washington, DC. Le Maire, who is close to Macron, told CNN that the larger reality Europe had to face was that in the future the US would place top priority on Asia, not Europe. On China, he told The New York Times, “The United States wants to confront China. The European Union wants to engage China.” In this circumstance, Le Maire continued, Europe’s “strategic priority” must be independence “to defend its own economic interest, to have access to key technologies and not be too dependent on American technologies.” With the TTC, one can already see this stance playing out on semiconductors and, likely in the future, on artificial intelligence.

Though TTC working groups are no doubt hard at work, the council itself won’t meet again until sometime next spring, giving ample time for Macon’s strategic independence plans to challenge TTC goals in parallel. This is not to underplay the role of the European Commission. But with German Chancellor Angela Merkel off the scene and an untested triparty coalition not likely to wield great power initially, France will occupy the pole position in determining Europe’s future trade and technology agenda, with or without the US.

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