Trade and geopolitics
China EVs drive a widening gulf in transatlantic trade policy
Published 30 July 2024
For a clear illustration of how the US and the EU differ in their approaches to trade, one does not need to look further than their policies on Chinese EVs. Recent actions taken by Washington and Brussels underscore the stark disparities between the two regarding not only Beijing, but their perceptions on cross-border commerce, geopolitics, and the depth of their commitment to international trade rules and obligations.
The US and the EU share a common belief that China’s nationalist economic policies pose a threat to their domestic industries, particularly their automobile industries. Both Brussels and Washington are resolute in their view that Beijing massively subsidizes its electric vehicle (EV) sector. The transatlantic allies agree that there is a problem, and they know they must address it. But here the similarities end.
If the US has made clear that China’s cars – or any Chinese automotive presence – are unwelcome, the European approach has been more subtle. Unlike the 100% duty the Biden administration slapped on Chinese electric vehicles (EVs), the range of duties Brussels has applied to Chinese EV makers – 48%-17.4% in addition to existing 10% tariffs – are not necessarily prohibitive given the yawning sticker price advantage of Chinese producers. Chinese EV makers already have a manufacturing presence in the EU and European officials have made clear that job-creating Chinese investment is and continues to be welcome. Moreover, Brussels and Beijing have both signaled a willingness to find a compromise. No such indications have been forthcoming from Washington.
The EU was founded on a complex and wide-ranging web of treaties and rules that transformed 27 sovereign economies into a single market. International trade rules are considered sacrosanct. Rare is the measure taken by Brussels that has not been vetted by the EU’s battery of trade lawyers to ensure compliance with World Trade Organization (WTO) obligations. For a continent so steeped in the diplomatic and strategic value of commerce, severing trade relations with China is a bridge too far.
Download China EVs drive a widening gulf in transatlantic trade policy by Keith Rockwell:
The US by contrast is by geography and history much more indifferent to or wary of trade, with the exception of underwriting postwar globalization to advance a Pax Americana. Its relatively recent recourse to using national security exceptions to exempt itself from global trade obligations is an indication of the country’s deep-rooted suspicions of other global powers seeking to undercut America’s geopolitical domination. The WTO, where the US was the driving force for decades, is seen today by US policymakers as an irritant, a distraction, and an obstacle. US mistrust of China has led American policymakers to regard international trade itself as a malevolent force, a rigged zero-sum game in which China usually wins.
Explore the forces driving a wedge in the transatlantic consensus on trade and China, and their potential impact of the upcoming US election, in this paper by Senior Research Fellow Keith Rockwell.
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Author
Keith M. Rockwell
Keith M. Rockwell is a Senior Research Fellow at the Hinrich Foundation. Prior to his retirement in June 2022, Keith served as a Director at the World Trade Organization (WTO) and spokesperson for the organization for more than 25 years. He also is Global Fellow at the Wilson Center.
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