19th EU-China Summit: A historical advance in the Chino-European rapprochement

After the 19th EU-China Summit, the three leaders delivered a joint Press conference. From left to right: Jean-Claude Juncker, President of the European Commission, Li Keqiang, Prime Minister of China, Donald Tusk, President of the European Council. Shoot location: Bruxelles – Belgium. Shoot date: 02/06/2017. Copyright: European Union.

Mainstream media and the two EU Presidents (Donald Tusk of the Council and Jean-Claude Juncker of the Commission), during and after last week’s groundbreaking 19th EU-China Summit (1-2 June), focused on the joint and unreserved pledge of Europe and China to wholeheartedly uphold the Paris Climate Agreement. This was a direct reply to Donald Trump’s repudiation of the environmental pact. Yet, the Chinese Prime Minister Li Keqiang, who represented his country in the Summit, appeared more attentive to the concrete results, which were achieved by the Summit, with the signing of a number of landmark agreements.

Apart from the joint climate avowal, those agreements covered a number of issues which constitute either headway for major Chinese projects or mark a breakthrough in topics, which have been recurring rather negatively in the bilateral EU-China relations. Those deals ranged from a joint investment memorandum between the European Investment Fund and China’s Silk Road Fund, to difficult key policy areas like State Aid Control, steel and steel products trade, Intellectual Property Protection and most importantly the ‘Market Status Economy’ for China in the World Trade Organization (Article 15 of China’s WTO Accession Protocol). Also, it’s worth mentioning that the EU reaffirmed its commitment to the One-China principle (not recognizing Taiwan as an independent state). Let’s take one thing at a time.

A useful coincidence

On the same day, Thursday 1 June, when the Summit was convened, the American President Donald Trump chose to shock the world, by abandoning the Paris Climate Pact and airing hostile remarks against Europe and China. The challenge was chiefly addressed to Europe. Trump once more broadcasted his demands for money, allegedly owed to the US and NATO by a number of European countries, mainly Germany. It was a real provocation which couldn’t remain unanswered. Luckily for them, the two EU leaders found a positively disposed interlocutor about that in the face of the Chinese Prime Minister.

At the joint press conference after the Summit, the President of the European Commission Jean-Claude Juncker said: “As far as the European side is concerned, we were happy to see that China is agreeing to our unhappiness about the American climate decision. This is helpful, this is responsible, and this is about inviting both, China and the European Union, to proceed with the implementation of the Paris Agreement.” In this way, the whole world learned that the EU and China are jointly taking the lead, in protecting the earth from US pollutants.

Supporting free trade

The two sides found the opportunity to lead the world in another globally crucial theme, which is also undermined by Trump, free trade. They both pledge full allegiance to the principles of orderly and multilaterally administered free global trade under WTO supervision. The perfect climate between the EU and China was then extended to cover other important areas. They agreed to cooperate and act jointly in the field of foreign and security policy, “in particular on the situations on the Korean Peninsula, in Ukraine, Afghanistan and Syria, on the implementation of the Joint Comprehensive Plan of Action, and on Myanmar”. This was not a small thing at all. A parallel EU – China intervention in hot spots, like the ones mentioned above, can change the balance of power on the entire planet.

Whereas cooperation in those global key topics is of a more abstract character, the two sides were much more concrete in reference to China’s position in the WTO. According to an account of the Summit released by the State Council of the PRC and published in the ENGLISH.GOV.CN, “The two sides discussed the EU’s fulfillment of its obligations under Article 15 of China’s WTO Accession Protocol and expanded common understanding on this issue. China underscored that the EU should honor its Article 15 obligations and send a signal of respecting international rules to the international community and market. The EU said it is in the process of amending the relevant legislation and commits to doing so in a nondiscriminatory manner and consistent with WTO rules”. This is a pretty clear road to recognizing China as a market economy.

World order

The Summit was also a perfect opportunity for Europe and China to distinguish themselves from Trump’s America, in relation to the world order in international trade. While the time cherished multilateral arrangements of international trade under the rules of WTO, they are now questioned by Washington, “The two sides reiterated the importance of strengthening the WTO’s central role in the multilateral trading system, committed to safeguarding the rules-based, transparent, nondiscriminatory, open and inclusive multilateral trade system and welcomed the entry into force of the Trade Facilitation Agreement. The two sides agreed to work for a successful WTO Ministerial Conference in Buenos Aires in December 2017”.

To be noted, the US is currently supporting a new bilateral system for international trade. Understandably, in this line of Trump thinking, one by one all the countries of the globe will separately negotiate with the US the relevant terms. Obviously, Trump wants that this ‘new’ system – in some miraculous and surely weird way – will aim at eliminating the American trade deficits and minimize the surpluses of China and Germany. In reality, the US tries to impose an ‘imperialist’ exchange system on everybody else , with ‘America first’. God Save the Queen, if the UK ever enters in negotiations with the US, for a bilateral trade agreement.

Friction points

Also last week, EU and China didn’t avoid touching on the very tricky matter of steel and steel products trade. This is a topic which has produced frictions between the two sides for years. However, the 19th, and clearly most fruitful Summit ever between the two world economic super-powers, had an answer for this question too. “The two sides welcomed the preparatory meeting of the China-EU Steel Trade Mechanism held on 18 May 2017, and agreed that the China-EU Steel Trade Mechanism should, in accordance with the consensus of the 18th China-EU Summit, focus on steel trade. The two sides committed to resolving steel trade frictions through friendly consultations and mutually beneficially cooperation”.

Last but not least, the two super powers addressed the central issue of investments. Both acknowledged that they invest immensely more in the US than in each other. To be noted, there is an ongoing dialogue between the two, about drafting an Investment Agreement. This is aimed at creating a better business environment for investors from the other part, institutionalizing more friendly reception and ensuring predictability as far as possible. Speeding up the relevant negotiations was agreed to be a first priority.

Supporting businesses

On the hot issue of investments, there was a vivid exchange of views and experiences amongst the hundreds of Chinese and European business people, who participated in the 12th EU-China Business Summit. This forum, which took place along the lines of the political summit, gave the opportunity to identify the many real problems but also presented the huge opportunities that an investment agreement can offer to both sides.

In conclusion, last week’s EU-China Summit offered a surprisingly large number of political, economic and business openings. The two sides touched with an unseen before zeal upon all areas of bilateral and global interest. The EU and China leaders must have sensed that their cooperation is now more meaningful than ever, because the third party of the ‘great triangle’, the US, has become dangerously unpredictable and divisive, at least for the foreseeable future. That’s why the two sides felt obliged to reassure the rest of the world, that they guarantee the “upholding, the purposes and principles of the UN Charter, safeguarding the WTO rules and fostering an open world economy”.