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"As long as human rights are violated, there can be no foundation for peace. How can peace grow where speaking the truth is itself a crime?"

EU, China: Honeymoon is Over

June 1, 2008

Dr Axel Berkofsky
Center for Security Studies (Zurich, Switzerland)
May 29, 2008

With their wish lists made public, neither Brussels nor Beijing gets
what they want from the relationship, which has been demoted from one
of "common values" to "converging interests."

"No longer on a honeymoon but having moved on to being married."

The honeymoon for EU-China relations is over and has moved on to a
stale marriage, according to David Shambaugh, director of the China
Policy Program at the Elliott School of International Affairs at
George Washington University, speaking at a seminar at the University
of Florence on 20 May.

Then again, Shambaugh added, "EU-China relations have in recent years
undergone an impressive development and there are far more and deeper
institutional links between the EU and China than between the US and China."

Indeed, Brussels has invested enormous political, diplomatic and
financial resources into expanding its relations with Beijing in all
thinkable areas, referring to China as a "strategic partner" since 2003.

The roughly 25 EU-China "sectoral dialogues" are part of this, taking
place on either working or ministerial levels and covering areas such
as energy, environmental protection, civil aviation, competition
policy, intellectual property rights (IPR), consumer product safety
and maritime transport.

Even if all dialogues do not meet with the same level of progress,
they are nevertheless evidence of EU-Chinese willingness to tackle
the issues on their bilateral agenda.

CRISIS? WHAT CRISIS?

So far so good, but it still takes two to tango and the EU is not
making the right moves, Bingran Dai of the Centre for European
Studies at Fudan University in Shanghai tells ISN Security Watch.

"The problem is that the atmosphere has changed drastically since
2006 and the Chinese public and the government feel quite frustrated
about the changes in Europe, of its attitude towards China," he says,
referring to the EU's October 2006 China trade and policy papers.

Those papers had presented Beijing with a long list of requested
changes in areas ranging from human rights, freedom of speech to
intellectual property rights and economic and financial deregulation.
At the time, Chinese officials and scholars were offended by that
list and wondered openly if this was how the EU treated its strategic partners.

The EU Commission, for its part, is having none of this pessimism -
although it did not go unnoticed in Brussels that few of the issues
(skeptics would argue none) have been addressed let alone solved by
Beijing since the papers' publication.

The so-called EU-China Partnership and Cooperation Agreement (PCA),
which the Commission has been lauding for some time, will be the next
big bang of bilateral relations.

While the EU insists that PCA will take EU-China relations to the
"next level" (without ever defining what exactly that means), outside
observers often refer to the PCA as yet another codification of
existing institutional ties as opposed to one of substance that would
truly upgrade EU-China cooperation.

SEEING GUNBOATS, AGAIN

To be sure, Beijing seems in no hurry to sign this new agreement with
Brussels, and Olympic torch disruptions in Europe haven't helped to
increase China's trust in Europe, Shambaugh says.

"When the Olympic torch relay was partly spoiled in Europe, China saw
extra-territoriality and European gunboat diplomacy," he said at the
conference, referring to western imperialism and colonialism leading
to the collapse of China's last imperial dynasty (Qing dynasty) in 1912.

There were more gunboats on the horizon as the EU Parliament
(Beijing's arch-enemy for the past few years) adopted a legally
non-binding resolution condemning China's heavy-handed response to
the recent turmoil in Tibet in the strongest possible terms, asking
among other things, to discuss an EU boycott of the Beijing Olympics.

The EU Parliament - typically with the strong support of the
parliament's "Taiwan lobby" - and Beijing have in recent years
clashed numerous times over the parliament's human rights resolutions
and its outspoken criticism against China's move to increase the
number of missiles directed at Taiwan.

"The European Parliament has very rarely passed any constructive
resolutions regarding China," Zhongping Feng, director of the
Institute of European Studies at the China Institute of Contemporary
International Relations in Beijing, told ISN Security Watch.

DISCUSSING HUMAN RIGHTS, CHINESE-STYLE

Brussels' increasing outspokenness on what it refers to the lack of
progress in discussing human rights with Beijing has also annoyed
China. The EU has been discussing human rights with China on an
institutional level since 1996 and the 25th EU-China human rights
dialogue took place in Slovenia on 15 May.

According to China's state-controlled media outlets, the recent
dialogue round led to "great dissatisfaction in Beijing." The EU's
official press release on the dialogue explains why. The EU
"underlined its deep anxiety about the human rights and humanitarian
situation in Tibet following recent events," the 16 May Slovenian EU
Presidency press release read.

Beijing has until the second half of 2008 to digest EU complaints
when it hosts the dialogue's next round in Beijing. Human rights in
Tibet, for sure, are very unlikely to again make it to the top of the
agenda with China hosting the dialogue.

Realistically, the EU does not have the instruments to influence the
human rights course in China.

DAMNED IF YOU DO, DAMNED IF YOU DON'T

The "Taiwan issue" is another subject Beijing wants to deal with
alone, and so far the EU has honored that request. The Commission
does not have a position on the "Taiwan issue" beyond declaring that
it is in favor of a peaceful solution.

Beijing bars the EU (and anybody else for that matter) from
"interfering" in the "Taiwan issue," but being a believer in the
projection of force through military power Beijing tends to be more
impressed by robust US-style security policy rhetoric and conduct
backed by military capabilities.

Ironically, it might just be the EU's refusal to have anything
resembling an outspoken position on a security issue with potentially
global implications that has Beijing taking the bloc less than
seriously as a global security player.

Like it or not (and EU bureaucrats don't) Brussels finds itself in
the middle of a "damned-if-do-damned-if-you-don't" setting of
international politics charged with making the right calls with a
quick-tempered emerging economic and military superpower looking over
its shoulder.

THE TROUBLE WITH TRADE

While Europe become China's biggest trading partner in 2004, the EU
still exports more to Switzerland than to China, which is not least a
result of market access obstacles for European business in China, the
Commission maintains.

The EU's trade deficit with China is growing by "15 million per hour
having reached -- 60 billion in 2007, with total bilateral trade
amounting to more than -- 300 billion.

However, non-Chinese (i.e. largely EU and US companies) account for
60 percent of exports out of China - meaning in essence that European
multinationals are producing part of its trade deficit themselves.

That of course is only part of the problem, and the 120 European
anti-dumping cases against China at the World Trade Organization
(WTO) in Geneva are dealing with what Brussels refers to as
"excessive" state subsidies for Chinese exporters distorting fair
trade and competition.

Settling some of the trade disputes in Geneva, however, remains only
one (admittedly the most effective and legally binding) option for the EU.

An EU delegation headed by Commission President Jose Manuel Barroso
traveled to Beijing on 25 April to launch the newly established
"EU-China High Level Economic and Trade Dialogue Mechanism" (HLM) - a
dialogue meant to deal with trade and investment cooperation,
innovation and technology transfers and other issues related to trade
facilitation.

Not surprisingly, in view of complaints by European businesses
operating in China, the Delegation of the European Commission in
Beijing has a slightly different take on what the dialogue should be.

"The dialogue will be a new tool for dealing with the problems
confronting European companies trying to establish themselves in
China, especially in the fields of investment, market access and
protection of intellectual property rights," reads an April press
release, calling the dialogue what it really is for the EU: a forum
to remove the remaining WTO non-compliant market access obstacles and
violations confronting European businesses in China.

Either way, the HML is unlikely harmonize differing definitions of
"as soon as soon as possible" in Brussels and Beijing in the short
run, Dai maintains.

"China is a developing country in every sense, and will compromise on
that base. It will honor its WTO commitments, but I think the
Commission is expecting too much too soon from China. However, I am
not worried, compromise will come."

Maybe, but the EU is clearly running out of patience, and European
protectionism and additional tariffs on goods made in China is slowly
but surely moving up the EU's China agenda, Shambaugh fears.

"European protectionism could be part of EU-China relations before
too long and the Chinese will scream and complain. But it's not that
they have not been warned," he said.

WISH LISTS

What does China want from the EU? Well, that's easy: No human rights
resolutions; advice on global and regional foreign and security
policy behavior and conduct; and substantive technology and know-how
transfers and technical and financial assistance helping to promote a
more sustainable, geographically more balanced and above all
environmentally less damaging Chinese high-speed economic growth.

Brussels is equipped to provide China with just that, and will be
investing "224 million from 2007 to 2013 in China on what is known as
"capacity-building" in EU lingo, providing China with economic,
financial and technical assistance.

But there is more on China's EU wish-list - for starters, the lifting
of the EU weapons embargo imposed on China after Tiananmen in 1989
and the granting of market economy status (MES) to Beijing.

The EU, for its part, has yet to make sure that European business is
not loosing -- 20 billion per year in China through copyright and
trademark infringements and encourage a significant increase of
Chinese foreign direct investment (FDI) in Europe beyond the
currently very modest level.

In sum, neither Brussels nor Beijing gets what they want from each
other and earlier rhetoric of allegedly "common values" has recently
been replaced by a less fancy one suggesting "converging interests."

Dr Axel Berkofsky is Adjunct Professor at the University of Milan and
Advisor on Asian Affairs at the Brussels-based European Policy Centre (EPC).
CTC National Office 1425 René-Lévesque Blvd West, 3rd Floor, Montréal, Québec, Canada, H3G 1T7
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