ECFR "China treats EU with diplomatic contempt"

European Council on Foreign Relations

April 17

China is exploiting the EU's divisions and treating the 27-state bloc with "diplomatic contempt" on issues ranging from trade to the Dalai Lama, according to a new policy report by the European Council on Foreign Relations, a leading pan-European think-tank, in close cooperation with Asia Centre at Science Po. Even though China is the EU's second largest trading partner, EU policy still has roots in a time when China was a developing country rather than a diplomatic competitor. Following the failure of the EU to put united demands to China at the G20, it is essential that the EU strikes tougher bargains with Beijing and uses the levers at its disposal- otherwise it will be outmanoeuvred at next month's EU-China summit in Prague.

This analysis comes in the Power Audit of EU-China Relations, the first ever pan-European study of EU-China relations. It is written by John Fox, ECFR Senior Policy Fellow; and Francois Godement, ECFR Senior Policy Fellow, Professor and Director of the Asia Centre at Sciences Po, based on extensive fieldwork and interviews in all twenty-seven member states.

Fox and Godement argue that a policy of "unconditional engagement", in which the EU grants China economic benefits in the hope that this will lead to democratic reform, has failed to achieve advances since it was introduced in the mid-eighties. And jostling for influence in Beijing between member states - especially France, Germany and the UK- means that they have refused to support each other on contentious issues such as meeting the Dalai Lama.

This division and outdated strategy are leading to failure across the domestic and foreign policy agenda:

Economics:

The EU's trade deficit with China has now surpassed the US's to become the largest in the world. Despite enjoying open access in European markets, Beijing has not provided equal access to European companies in China. Chinese markets continue to be protected by a maze of industrial policies, restricted access, and opaque procedures. Access to China' s property market and service sector has been limited, and the Chinese have failed to invest in European public bonds or in private capital markets.

Human Rights:

The EU's 24 formal dialogues with China on human rights have been turned by Beijing into "inconclusive talking shops". Despite twenty years of EU pressure, there is no evidence that European lobbying on human rights such as use of the death penalty and religious freedom have achieved anything.

Foreign Policy:

China has been willing to undermine European efforts to improve the behaviour of regimes in Burma and Darfur, while EU efforts to persuade China to isolate Zimbabwe have had "no impact whatsoever". Despite much-heralded European progress on getting China signed up to sanctions against Iran, they remain so weak that there is every chance they will never prevent Iran becoming a nuclear state.

John Fox and Francois Godement say:

"China has learned to exploit the divisions among EU Member States. It treats its relationship with the EU as a game of chess, with 27 opponents crowding the other side of the board and squabbling about which piece to move."

"Whenever China has shifted its position as a result of European pressure, as on Darfur or nuclear proliferation, it has reacted to a coordinated effort from the most influential member states."

The analysis of the 27 member states conducted in this Power Audit allowed the authors to characterise them on the basis of their relations with China into four groups:

Ideological free traders. Denmark, the Netherlands, Sweden and the UK. Mostly ready to pressure China on politics and mostly opposed to restricting its trade. Their aversion to any form of trade management means that they are unwilling to use trade as a bargaining chip when they are dealing with China's centralised and aggressive trade policy.

Accommodating mercantilists. Bulgaria, Cyprus, Finland, Greece, Hungary, Italy, Malta, Portugal, Romania, Slovakia, Slovenia and Spain. Share assumption that good political relations with China will lead to commercial benefit. See anti-dumping measures as a useful tool and oppose awarding China Market Economy Status. Compensate for readiness to resort to protectionist measures by shunning confrontation with China on political questions. But they add to European divisions by refusing to bring pressure to bear on Beijing on human rights and other non-trade issues.

Assertive Industrialists. Czech Republic, Germany and Poland. Only group willing to stand up to China vigorously on both political and economic issues. Ready to pressure China with specific demands for a given sector, to support anti-dumping measures, or to threaten other trade actions. They contribute towards European divisions because some, including Germany, have doubts about an integrated EU approach and still prefer to compete with other member states for Beijing's ear.

European followers. Austria, Belgium, Estonia, Ireland, Latvia, Luxembourg and Lithuania. Most European-spirited group and follow, rather than lead. Many do not consider a relationship with China to be central to their foreign policy. Their strategy adds to EU weakness by feeding the perception that China is not a key European priority - even as they rely on EU support to protect them from pressure on issues like Taiwan or Tibet.

RECOMMENDATIONS

• The EU should abandon its policy of "no strings attached" engagement and strike tougher bargains with Beijing. It should offer to lift its embargo on arms sales to China in return for a Chinese commitment to push for stronger sanctions against Iran. Similarly, China could be offered market economy status under WTO rules in exchange for the removal of trade barriers and improved intellectual property-right protection.
  
• EU leaders should declare publicly that they reject any restriction of their right to meet the Dalai Lama - so that individual members cannot be individually punished, as when China retaliated after President Sarkozy met the Dalai Lama by cancelling the EU-China summit in Lyon.
  
• The European Council should launch a major review of EU policy towards China. Member States should "Europeanise" their national cooperation programmes and key dialogues with China: coordination between national governments in the EU has been no effective substitute for a single, focused dialogue or programme with China.

In addition, the EU should:

• Establish a permanent "open troika" system for engaging China on priority topics. The troika-which would comprise the current and next presidencies and the Commission-should also be open to Member States that would demonstrably contribute on the issue; producing a study of a relevant topic or funding for a project could serve as entry requirements. This open troika format should extend to representation at EU-China summits.
• Press Beijing to grant EU officials increased access to Chinese government machinery - and explain that access to officials in Europe may be limited for Chinese officials if this is not forthcoming.
• Protect European intellectual property by buying partial ownership of the key technologies and patents it helps develop, so as to improve control of technology transfers to China and fend off pressure that Chinese government partners now exert on Europeans to share their knowhow.
• Offer security cooperation with African governments to protect Chinese activities and investments against security threats. This commitment should be traded for greater Chinese support for peacekeeping operations in Africa.
• Offer China a technology transfer package of key energy-efficient and renewable technologies, including EU funding and knowhow transfer. In return, China should commit to a global stabilization goal and to specific domestic targets on emissions in post-2012 negotiations.
• Facilitate Chinese investment in transport infrastructure, energy distribution and telecoms, in exchange for China opening up its infrastructure projects to foreign firms and removing ownership restrictions on Chinese firms.

NOTES TO EDITORS

1. "Power Audit of EU-China Relations" was written by John Fox, Senior Policy Fellow at the European Council on Foreign Relations; and Francois Godement, Senior Policy Fellow at the European Council on Foreign Relations, Professor and Director of the Asia Centre at Sciences Po.

2. This report, like all ECFR publications, represents the views of its authors, not the collective position of ECFR or its Council Members.

3. Power Audit of EU-China Relations assigned scores to Member States' individual policies and actions towards China. The main policies actions scored were: position on Taiwan, position on Tibet/willingness to meet the Dalai Lama, prominence of human rights issues, willingness to raise global issues with China (Iran, Sudan etc.), voting on anti-dumping issues, position on trade deficit, attitude towards Chinese investment in Europe, and more broadly the nature of political statements on China. Member States were scored for actions that were respectively more supportive or critical of China, and to the top or bottom for actions that were more free-trade or protectionist.

4. Mr. Fox can be reached for comment at john.fox@ecfr.eu or on +44 7796 938 268. Mr. Godement can be reached for comment at francois.godement@ecfr.eu or on +33 1 75 43 63 20.

5. For all media enquiries please email press@ecfr.eu or telephone +44 20 7031 1623

6. Launched in October 2007, the European Council on Foreign Relations is a pan-European think tank and advocacy group, co-chaired by Martti Ahtisaari, Joschka Fischer and Mabel van Oranje. European Council on Foreign Relations - www.ecfr.eu

7. Founded in 2005, Asia Centre conducts research and organizes debates on international relations and strategic issues, as well as on the political and economic transformations of the Asia-Pacific, and promotes cooperation and second track dialogue with partners in Asia, Europe and elsewhere in the world. Asia Centre is based at SciencesPo., the Institute of political science of Paris www.centreasia.org