The surprising announcement of US President Donald Trump and European Commission President Jean-Claude Juncker in July that they intend to establish a zero-tariff trade regime has left many in China worried that the new trade partnership developing across the Atlantic could end up targeting China.
Given the intensifying Sino-US tariff war, such concerns would only increase, especially because two senior trade officials from Brussels are scheduled to visit Washington on Aug 20 (unusually sacrificing their summer break) to discuss how the two sides can work toward zero tariffs, and zero subsidies for non-auto industrial goods.
But if the new trade alliance Washington and Brussels are trying to work out is not targeted at China, and instead merely aimed at renewing their free trade and investment negotiations, which hit a roadblock after Trump took office in January 2017, there is no reason for Chinese people to be worried.
In fact, Brussels has denied the new transatlantic trade partnership is targeted at China. At a meeting with Foreign Minister Wang Yi early this month, EU High Representative for Foreign Affairs and Security Policy Federica Mogherini said the European Union has no intention to adopt any policy or take any action against China. Instead, the EU stands with China in supporting multilateralism and free trade, and regards China as a major and key strategic partner.
But since the EU played a pioneering role in shaping the current global governance regime, it must uphold international justice, not follow the rule breakers, at a time when globalization is under attack from protectionist forces.
The atmosphere is not conducive to EU officials discussing a zero-tariff trade regime with their US counterparts, especially because the United States has imposed high tariffs on imports from the EU and other economies, especially China that openly opposes protectionism and unilateralism, and strongly supports free trade.
True, the World Trade Organization framework allows bilateral talks on free trade and investment facilitation. But the EU officials should have realized this is not the right time to start such negotiations.
Equally important, the EU should have involved the member countries, especially the two largest EU economies France and Germany, in the negotiations with the US.
Since the 28 member countries of the EU are in different stages of economic development, the bloc as a whole needs the market, complete with its rules, for sustainable development. In manufacturing, for example, France is not as competitive as Germany. And many Central and Eastern European countries, which are still undergoing industrialization, could suffer a heavy blow, in terms of jobs opportunities for example, if US industrial goods were imported by the EU without any tariffs.
That is precisely why French President Emmanuel Macron has been reluctant to accept the US-EU statement after the Trump-Juncker meeting. Moreover, even if the US-EU trade and investment talks enter the final stage, the legislative bodies of the EU and its member states may find it difficult to approve the Trump-Juncker proposal.
Seemingly, zero tariff and zero non-tariff barrier are beautiful terms for politicians to gain public support. But the average tariff level between the US and the EU is already as low as 3 percent, so the two sides' efforts should only be aimed at lifting non-tariff barriers.
The fact that transatlantic trade is mostly about competing against each other, achieving complementarity is difficult. For example, it is unlikely that the EU member states would purchase Boeing aircraft in bulk, and the US airlines would place big orders for Airbus planes.
But the US could sell Boeing aircraft and the EU Airbus planes in bulk if they do business with China. The decision is theirs, but they would decide to deepen trade ties with China only if they truly believe in free trade.