Specter of China looms over EU-US summit

LULEÅ, SWEDEN — When senior European and American officials descend on this small, industrial Scandinavian town Tuesday, there’s much they will agree on. They’ll agree on pushing back against foreign interference. They’ll agree on more sustainable trade commitments. They’ll agree on new guardrails around artificial intelligence.

But the one thorny issue they still don’t agree on is the most fundamental to the transatlantic relationship: What to do about China.

With the likes of Valdis Dombrovskis, the European trade commissioner, and Antony Blinken, the U.S. secretary of state, jetting in to Swedish Arctic Circle for the twice-yearly meeting of the EU-U.S. Trade and Tech Council, Washington and Brussels are still at loggerheads over how aggressively to push back against China’s rise in everything from global trade to semiconductors to the latest global cause célèbre, generative AI.

That tension will be everywhere during the upcoming two-day summit when senior officials will announce new plans to work more closely on the greening of each bloc’s economy to providing European Union and United States loans for digital infrastructure projects in Costa Rica and the Philippines, respectively.

Yet it’s the differences on China that are complicating these efforts at rekindling the EU-U.S. relationship that soured during Donald Trump’s presidency. Washington is eager for its ally to take a more aggressive stance toward Beijing, urging Brussels to sign up to commitments that call out China for its alleged anti-competitive and "harmful non-market policies and practices," according to a draft communiqué obtained by POLITICO.

In response, the European Commission, the bloc’s executive branch, finds itself between a rock and a hard place.

Many in the Berlaymont building, including Ursula von der Leyen, the Commission’s president, are prepared to take a stronger line on China. They view the world’s second largest economy as a geopolitical and economic threat that needs to be tackled head on. But several EU member countries — including heavy hitters like France — are more reluctant to cut ties with a lucrative trading partner, while others bristle at what they perceive as U.S. heavy-handed tactics against China that could benefit American companies more than their European rivals.

Margrethe Vestager, Europe’s digital chief who will also be at this week’s summit, acknowledged the fine line the 27-country bloc was trying to navigate between tricky trade disputes and the need to work with China on existential global problems. She claimed, however, that Brussels’ relationship with Beijing had shifted over the last five years as the Chinese Communist Party had taken a more antagonistic stance toward parts of the Western world.

“We have a complex relationship with China,” she told reporters ahead of Tuesday’s summit. “We don’t have a European approach to this. There’s no sort of European prism through which we can see the question of economic security.”

Control+F diplomacy

U.S. officials thought they had scored a home run. When von der Leyen came to Washington in March to meet U.S. President Joe Biden, both leaders outlined a new, coordinated position on China that many in the Beltway took as Brussels falling in line with what American policymakers had urged for years — that the West had to speak with one voice against Beijing’s economic and political threat.

That stance, however, quickly became mired in internal bickering ahead of this week’s transatlantic summit as negotiators squabbled over the fine print of what the event’s final communiqué would say on China, based on discussions with six officials and diplomats involved in those talks. They spoke on the condition of anonymity to discuss ongoing deliberations.

An early European draft, obtained by POLITICO, limited specific references to Beijing to just three — two related to foreign interference, another linked to the global medical devices industry — and merely referred to strengthening transatlantic cooperation on economic security by tackling economic coercion from "non-market economies," a veiled reference to China. Such "Control+F diplomacy," one EU official remarked, reduced complex negotiations into determining whether the U.S. or EU had won this round merely based on the number of references to China that could be found in the final communique with a keyword search.

Yet in later additions from U.S. policymakers, also obtained by POLITICO, the diplomatic language had been punched up to repeatedly refer to Beijing’s anti-competitive practices, and outlined new, formalized EU-U.S. cooperation specifically to thwart China’s economic powers that could be extended to other allies.

Such language, however, was removed by EU diplomats in final-round negotiations last week, according to a Commission official, who spoke on the condition of anonymity because he was not authorized to speak publicly. Three other officials and diplomats, also speaking on the condition of anonymity, said a lack of consensus between governments on Sino-European relations had made it difficult, if not impossible, to sign up to Washington’s effort to create a formal anti-China pact.

Two American officials, who spoke on the condition of anonymity to discuss internal deliberations, expressed their frustration about how EU officials were trying to remove references to China that closely mirrored hawkish public statements from von der Leyen. They questioned what was the purpose of the Commission president taking a harder line on Beijing if it was not followed up with robust commitments.

"The EU is much more reluctant to build an anti-China policy," said Emily Benson, a trade expert at the Center for Strategic and International Studies, a Washington-based think tank. "The Americans are leaning into the idea that Europe is coming on board with their China policy. I don’t know if I would agree with that."

Putting on a brave face

Despite the tensions around China, U.S. and EU officials will reel off a litany of wonky joint policies on everything from future telecommunications standards to more coordinated activities around so-called export controls as a clear sign the transatlantic relationship is as strong as ever.

Brussels and Washington will double down on a joint voluntary rulebook on artificial intelligence that will also be extended to include new applications like ChatGPT and Google’s Bard that have caught the public’s imagination. Both sides will also commit to working more closely to combat foreign interference in Latin America and Africa, as well as greater coordination of sustainable trade goals, electric vehicle standards, cooperation on government and subsidies for semiconductors and joint work on green energy technologies.

The one missing element is a deal on so-called critical raw materials, or an agreement to allow European automakers and their suppliers to access billions of dollars of subsidies via the U.S. Inflation Reduction Act. That pact is stalled over a diplomatic dispute over how to package the deal, with Brussels wanting it to be written in a way that does not require EU member country approval and Washington under pressure from Congress to secure a binding agreement. Dombrovskis, Europe’s trade chief, announced last week that the Commission would soon ask capitals for a mandate to finalize the pact — a realization that Brussels could not sign off on such a deal by itself.

For some, this failure — coupled with ongoing transatlantic friction over the trading relationship with China — has soured what U.S. and EU officials want the outside world to see as a meeting of minds in the small Swedish town.

"The trade dimension of the Trade and Tech Council remains an empty shell," said David Kleimann, a trade expert at Bruegel, a Brussels-based think tank. "The forum has neither been capable of preventing nor solving any meaningful transatlantic trade irritants."

Suzanne Lynch contributed reporting from Brussels.

This article has been updated.