The heavily criticised EU-China Comprehensive Agreement on Investments (CAI) finds itself on the axis of the European Union, China and the US. This constitutes an uncomfortable triangle for the three Baltic countries—Estonia, Latvia and Lithuania, also known as the 3B. The EU-China deal provides a worrying case study about the indirect effects the EU’s foreign policy may have on its member states.
The Dragon from the East
China is a known unknown for the three Baltic countries and they are still in the process of positioning themselves vis-à-vis the new big player in international affairs. This partly explains the 3Bs’ membership of 17+1—to take one step closer to the unknown, though the price of curiosity is becoming higher by the day as partners and allies question the benefits of belonging to the grouping.
Analysis of China therefore takes place largely through the prism of other partners. Regional partners such as Sweden and Finland have had first-hand experience of China. The EU’s China strategy has provided some food for thought. However, arguably most influential has been the thinking in Washington and the assessment of the 3B on how bilateral relations with China affect the transatlantic relationship.
Foreign Policy Across the Atlantic
Looking towards Washington is both a strength and a vulnerability for the 3B. Following Washington’s thinking strengthens relations with the US as the region demonstrates itself as a reliable and like-minded ally. A strong relationship with the US is the 3Bs’ most important foreign-policy objective, which has led to accusations by some Europeans of being under Washington’s thumb.
Worries about finding oneself in the crossfire between the EU and the US therefore exist. The EU’s position on China is more mixed than that of the US, as some member states—most notably Germany—have strong economic interests when it comes to China. The balancing act between security and economic interests is becoming more tense in Europe, while in the States the trade-off is clearer. In Washington, security has won out so far.
Prior to signing the EU-China CAI, Jake Sullivan, the national security adviser in the incoming Biden administration, broke with custom and commented that the EU should wait for the new team in the White House before signing the deal, therefore indicating the Biden team’s wish to liaise with the Europeans on China.
A Growing Headache
The formation of EU foreign policy and activity is a two-way street. On the one hand, the EU acts as the foreign-policy framework, setting an overall direction and the parameters within which member states can pursue their own foreign policies. On the other hand, member states shape and feed into the EU’s foreign policy-making, which is a balance between shaping it to follow one’s interests and fostering a meeting in the middle. Lack of agreement at the European level is a testament to diverging interests among member states with regard to China. Tough questions over Huawei and China’s behaviour in the COVID-19 epidemic are narrowing the gaps.
At the moment, Brussels is exuding an unwillingness to follow the US line on China. Rather, there are attempts to forge an independent path, whereby the balance between security and economic interests is more refined and selective. In the EU-China CAI, Germany’s strong economic interest was the final push over the finishing line.
For the Baltic states and many other transatlanticists in Europe, China poses a challenge not so much in terms of what those countries think about Beijing; rather, it is a much more sensitive question about the transatlantic relationship and EU foreign policy.
More Harm Than Good?
The European Commission was given the negotiating mandate for the EU-China CAI in 2013. Today’s world is a different place, with rivalry between China and the US accelerating. The rush and lack of consultation with member states demonstrates ill-will on the part of the Commission. It saw an opportunity to get the deal signed and pursued it without considering whether the thinking in 2013 was still applicable in 2020.
Some argue that rushing the deal through was about Germany’s economic interests. Others claim it was about establishing a “geopolitical commission” and demonstrating strategic autonomy. For certain, the European Commission’s behaviour must not become a liability for its member states, irrespective of the vision pursued and set by Brussels for itself.
The EU-China CAI has still not arrived in the hands of member states and the European Parliament. Internal EU negotiations therefore still lie ahead. But it represents dangerous and worrying behaviour by the Commission.
Nor is this a good start for the transatlantic reset we were looking for on both sides of the Atlantic. From the 3B perspective, this is the main problem.