Monday 19 November 2018

Europe rejects alliance with China to fight Trump on trade

Relations have soured between US President Donald Trump’s administration and that of Chinese President Xi Jinping since they met in Beijing last year, sparking fears of an all-out trade war. Photo: Bloomberg
Relations have soured between US President Donald Trump’s administration and that of Chinese President Xi Jinping since they met in Beijing last year, sparking fears of an all-out trade war. Photo: Bloomberg

Robin Emmott and Noah Barkin

The European Union has rejected the offer of a formal alliance with Beijing against US President Donald Trump's trade policies, ahead of a Sino-European summit in Beijing on July 16 and 17.

China is putting pressure on the EU to issue a strong joint statement against President Trump's trade policies at the summit but is facing resistance, European officials said.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including vice-premier Liu He and top diplomat Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.

One proposal has been for China and the EU to launch joint action against the US at the World Trade Organisation.

But the EU, the world's largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of the summit.

Instead, the summit is expected to produce a modest communique, which affirms the commitment of both sides to the multilateral trading system, and promises to set up a working group on modernising the WTO, EU officials said. Mr Trump has indicated he's examining leaving the WTO altogether.

Yesterday, the EU's top two officials warned about greater trade tensions with the US as Mr Trump weighs tariffs on foreign cars after irking American allies with metal-import levies.

EU Council president Donald Tusk said Europe must be prepared for "worst-case scenarios" in international commerce. The head of the European Commission, Jean-Claude Juncker, said Mr Trump's fixation on a US trade deficit in goods ignores a services surplus.

"We feel the deficit is on the other side," Mr Juncker told the European Parliament yesterday.

"If you add up all of the trade in goods and services and the profits made by American companies, the benefit is on the other side of the Atlantic."

The global commercial order is being shaken by the Trump administration's use of an obscure US trade-law provision on national security to justify steel and aluminium tariffs against a host of countries including defence allies.

As traditional alliances fray, Liu He has said privately that his country is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China's Premier Li Keqiang and top EU officials.

Chinese media has promoted the message that the EU is on China's side, officials said, putting the bloc in a delicate position.

The past two summits ended without a statement due to disagreements over the South China Sea and trade.

"China wants the European Union to stand with Beijing against Washington, to take sides," said one European diplomat. "We won't do it and we have told them that."

Brussels shares Washington's concern about China's closed markets and what western governments say is Beijing's manipulation of trade to dominate global markets.

"We agree with almost all the complaints the US has against China, it's just we don't agree with how the United States is handling it," another diplomat said.

China's stance shows the depth of concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars of Chinese imports on Friday. (Reuters and Bloomberg)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business