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Biden’s European vacation is really all about China

While there is considerable common ground, the Trump years, the possibility he/they might return and the different relationship key EU member countries, particularly Germany, have with China means they won’t simply fall into line with the policies the US is now pushing.

The administration’s support for a minimum global tax and, critically, the American about-face on climate change have, however, removed two of the more fractious issues and increased the base of common ground.

The Europeans are well aware that Biden is seeking to enlist them in its competition with China, and to a lesser degree its relationship with Russia.

The Europeans are well aware that Biden is seeking to enlist them in its competition with China, and to a lesser degree its relationship with Russia.Credit:AP

As Jana Puglierin, Berlin director of the European Council on Foreign Relations so colourfully depicted the new relationship between Europe and the US in comments to The New York Times: “This is not unconditional love, but friends with benefits.”

Biden’s trip starts with a meeting with UK Prime Minister Boris Johnson ahead of a G7 meeting (to which non-members Australia, India and South Korea , but not China, have been invited) in Cornwall ahead of meeting with NATO allies, the EU and, finally, Russia next week.

Biden will be trying to build support for America’s increasingly aggressive efforts to contain China and sanction it for human rights abuses and its treatment of Hong Kong while repairing and updating the NATO alliance that Trump despised and trying to deal with the festering issues within the trade relationship with the EU.

The trade conflict is perhaps the most straightforward, albeit that there are domestic political implications involved for both sides.

One of the earliest of the Trump trade actions was to slap tariffs, on risible “national security grounds,” on European exports of steel and aluminium to the US. There’s also a longer-running dispute – and tariffs from both parties – over state subsidies for Airbus and Boeing.

As Jana Puglierin, Berlin director of the European Council on Foreign Relations so colourfully depicted the new relationship between Europe and the US in comments to The New York Times: “This is not unconditional love, but friends with benefits.”

Biden and Brussels had agreed temporary truces to avoid escalation of those disputes. The tariffs need to be removed as the first step in improving relationships and restoring the trans-Atlantic alliance but that will probably only occur as part of a much broader agreement on trade and investment.

There has been discussion, for instance, of a trade and technology council to avoid new impediments to trade while also providing a framework for co-operation on digital issues and, in particular, the determination of both the US and Europe to boost domestic production of semiconductors.

Also on trade, the US – now a recommitted supporter of multi-lateral institutions – wants to help reform, rather than neuter, the World Trade Organisation.

The EU is on board with the ambition of updating WTO rules to provide more effective sanctions against unfair competition – industrial subsidies, uncommercial behaviour of state-owned entities and other trade-distorting behaviours – and “economic coercion.”

The proposed changes to the WTO and its rules are clearly targeted at China, with its centrally –planned economies, large-scale subsidies for strategic sectors and, as Australia can testify, its willingness to use trade sanctions to punish and intimidate critics of its behaviour.

There are other issues – Europe’s proposed carbon border tax, its digital services tax, regulation of artificial intelligence, whether COVID vaccine patents should (the US stance) or should not (the EU’s) be waived, data protection and flow among them – but the trade issues, particularly the China-centric issues – are Biden’s immediate priorities.

Both Biden and the Europeans have happily sung the “America is Back” refrain that characterises the dramatic shift from Trumpism to a more conventional alliance-driven suite of US foreign policies and a restoration, albeit partial and still-fragile and developing, of the traditional trans-Atlantic alliance.

Europe remains worried about the possible return of Donald Trump when the 2024 election rolls around.

Europe remains worried about the possible return of Donald Trump when the 2024 election rolls around.Credit:AP

They’d all be conscious, however, that Biden’s America – heavily focused on the domestic economy and riddled by political and social conflicts – is not the one that pre-dated Trump and Europe, post-Trump, is also different and less willing to concede to any material dependency on the US.

That also makes it less likely to be as in tune with US policies towards China as some other US allies.

Its now-frozen trade and investment pact with China, signed hastily last December despite the pleas of the incoming Biden administration, was a declaration of independence. (The agreement is in limbo, but not yet abandoned, after China responded to EU sanctions over its treatment of the Uighurs in Xinjiang province with sanctions of its own).

While the EU prefers less confrontational, multilateral approaches than the aggressively competitive one the Americans have adopted, individual European governments have their own concerns about China’s trade practices – the state subsidies, forced technology transfers, intellectual property theft and its use of policies like its “Belt and Road” initiative to extend its geopolitical influence by creating financial dependence.

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There’s enough common ground there for Biden to, if not recreate the traditional alliance between the US and Europe, at least attract European support for G-7+ policies that would rewrite the rules, and remake the international institutions, for international trade and the development of the new technologies that will dominate – and decide which economy dominates – the rest of this century.

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