BRUSSELS — U.S. and European Union officials are planning for a high-tech divorce from China, with the launch of a council that could enable the transatlantic alliance to establish a “common market” unstained by Beijing’s espionage and human rights abuses.
“In general, the idea would be to open and to become as a common market for the tech, to come closer and closer,” a senior Baltic official familiar with the conception of the Trade and Technology Council told the Washington Examiner.
That proposal is emblematic of the divergence between President Joe Biden and former President Donald Trump, who evinced deep skepticism of the integrated trade policies that characterize the European Union. Yet the prospect of a transatlantic set of regulations and standards for cutting-edge technologies has bipartisan support in the United States, where some conservatives see it as a way to prevent Chinese technology companies such as Huawei, widely perceived as an asset for Chinese spy agencies, from dominating high-end technological innovation.
“The Euros (and many Americans) are worried about the economic impacts of losing market access to China, and that colors how much they are willing to push back on China issues more broadly,” a Senate Republican aide said. “Helping to create economic opportunities elsewhere is an important point and will, hopefully, free everyone from kowtowing to Beijing.”
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Biden’s team struck an ambitious note upon the unveiling of the council at Tuesday’s U.S.-EU summit, his third meeting with European officials in a diplomatic roadshow designed in part to orient the transatlantic alliance toward threats from China. Against that backdrop, Biden and EU officials unveiled their intention to “write the rules of the road for the economy of the 21st century” in the new council.
“And dealing with China’s nonmarket practices, its economic abuses, and, of course, its efforts to shape the rules of the road on technology for the 21st century will be … an important part of the work of this council,” a senior administration official told reporters prior to the EU summit. “And this fits with President Biden’s fundamental strategy of managing competition with China by coordinating closely with and developing common approaches with like-minded democratic partners and allies.”
They paired that negotiation with a breakthrough in a 16-year fight over subsidies for major airplane makers Boeing and Airbus, with both sides agreeing to suspend for five years hefty tariffs authorized by the World Trade Organization. “Significantly, we also agreed to work together to challenge and counter China’s non-market practices in this sector that give China’s companies an unfair advantage,” Biden added in a Tuesday statement. “The U.S. and EU will work together in specific ways that reflect our high standards, including collaborating on inward and outbound investment and technology transfer. It’s a model we can build on for other challenges posed by China’s economic model.”
The priorities of the council are also shaped by the recent experience of Huawei offering a cut-rate deal to build next-generation wireless infrastructure — a tempting offer, despite then-Secretary of State Mike Pompeo’s oft-repeated warnings that the company presented grave security risks, due to the perception that a “market failure” in Western countries had left the allies without an alternative provider. “We have to admit that there [are] some, probably, deficiencies in our technological side … So we have to work together to find common solutions towards Huawei as well,” the senior Baltic official said.
U.S. and European officials intend for the council to tackle other trade disputes in private before they erupt into the kind of acrimonious disputes that marked Trump’s percussive relationship with Western European allies. They might replace those controversies with agreements that empower Western companies to coordinate and, in passing, deflect threats from suspect state-owned Chinese companies.
“We are not talking too much currently about Chinese or third countries but in general to promote trade between between the EU and U.S.,” the senior Baltic official. “Naturally, there will be such [new] rules, and most probably they will be difficult for Chinese companies to apply them, and naturally, [the U.S. and EU] become much more deeper partners.”
That combination of replacing the financial inducements offered by the Chinese market while raising standards out of Beijing’s reach, in the eyes of some China hawks in the U.S., portends a major split in global economics.
“The ‘decoupling’ language between [the U.S. and China] has existed for a while, but many saw it as unrealistic,” the Senate Republican aide said, adding that Beijing’s truculence during the pandemic “has really shifted things and will force the world into one of two camps.”
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The Western camp, the aide emphasized, needs to extend beyond Europe and North America. “This U.S.-EU council should hopefully have a plan for expanding to other parts of the world,” the aide said. “I hope U.S.-EU does not stay U.S.-EU but grows to the developing world, too, where China is working hard to solidify their influence.”
