Europe and Asia Move to Bolster Global Systems That Trump Has Attacked

https://www.nytimes.com/2018/07/18/world/europe/trump-eu-china-japan-trade.html

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BRUSSELS — From trade to regulation to security, America’s traditional allies are accelerating their efforts to buttress a global system that President Trump has seemed prepared to tear down.

After months of stunned indecision, they have undertaken a flurry of efforts intended to preserve the rules-based order the United States created after World War II and championed ever since.

The most obvious example came on Monday, the same day a stunned world watched Mr. Trump praise President Vladimir V. Putin of Russia as a competitor after having dismissed Europe as an economic “foe.” A few thousand miles away, in Beijing, the leaders of the European Union and China held a long-scheduled meeting of their own.

In the past, expectations for such meetings were low, given the conflicts on trade and human rights between the Europeans and the Chinese. But while those differences remain, this summit meeting produced an unusual joint declaration and a common commitment to keep the global system strong.

The next day, the Europeans traveled to Japan and signed the biggest free-trade agreement in history, just the sort of deal the Trump administration has criticized.

And on Wednesday, Europe’s top regulator announced a $5.1 billion fine against Google, another strong indication that Brussels is not just fighting to maintain the rules-based trading order, but is also positioning itself as the watchdog of that system.

After months of denial, anger, bargaining and depression, Europe and other parts of the world have accepted that Mr. Trump and his mission of disruption are not going away.

Both France and Germany have started study groups on how to deal with the United States under Mr. Trump and how to find areas of leverage, especially on trade. The European Union is preparing whopping tariffs to counter Mr. Trump if he imposes “national security” tariffs on cars, a big issue for Germany.

The European Commission president, Jean-Claude Juncker, goes to Washington on July 25 to discuss the budding trade war.

“The one thing you could say in Trump’s favor is, he’s brought the world together on trade,” said Jeffrey Wilson, the head of research at the Perth USAsia Center at the University of Western Australia.

“It’s Trump versus the world,” he said. “Rather than all the other countries getting into trade disputes with each other, what’s happening is there is a surprising amount of cooperation and comity.”

There are caveats, of course. The United States remains the world’s leading economic and military power, and the Europeans in particular hope that Mr. Trump’s successor will eventually return to embrace the global system. Europe still harbors considerable ambivalence about getting too close to China, which talks more about open trade than it actually practices.

And the Europeans are unwilling to single out the United States as a villain — in large part because they agree with Mr. Trump’s complaints about China’s predatory behavior and would rather join with Washington to alter Beijing’s practices. But that route seems closed by Mr. Trump’s unilateral trade warfare.

So for now, the Europeans and others are making contingency plans. More than that, the language of pushback against Washington is strong and striking.

The Chinese president, Xi Jinping, told the Europeans that both sides should “join hands to defend multilateralism and a rules-based free-trade system,” echoing comments he made at Davos in January 2017, before Mr. Trump started imposing tariffs.

The European Council president, Donald Tusk, said that “it is the common duty of Europe and China, but also America and Russia, not to destroy this order but to improve it.” That duty is not simply to shun trade wars, he said, “but to bravely and responsibly reform the rules-based international order.”

Mr. Tusk added: “There is still time to prevent conflict and chaos.”

But the absence of American participation has for now set off a scramble for alternative partners.

The European Union-Japan trade agreement, for instance, was accelerated last year when Mr. Trump abandoned the Trans-Pacific Partnership, a deal President Barack Obama and the Japanese intended as a bulwark against China.

The European Union and China are not natural allies on trade. The Europeans, unlike the Trump administration, continue to push China on human rights violations. And in the past two years, in the face of Chinese investment, the Europeans have become much more critical of China’s industrial espionage, its cavalier attitude toward intellectual property and its ambitions to overtake the West in advanced technologies.

China has used special summit meetings with European Union members and aspirants, especially those in Central Europe and the Balkans, to push strategic infrastructure investments — creating obligations and debt that could undermine the bloc’s unity.

European businesses have also grown disenchanted with the difficulties of operating in China, particularly rules about data retention and the presence of Communist Party units in workplaces.

Still, both the European Union and China have benefited from the rules-based order Mr. Trump has challenged. So, oddly, he has given them reason to bridge their differences. China, in particular, is looking to Europe to help shore up the World Trade Organization so it can fend off a serious trade war with the United States.

Mr. Trump’s threats on Chinese exports have alarmed Beijing, said Mark Leonard, director of the European Council on Foreign Relations.

Beijing is making every effort to avoid publicly escalating its trade dispute with America, the council has said, but it is also rediscovering the merits of greater engagement with Europe. Chinese authorities, in particular, have sought to demonstrate to Europe that economic reforms are coming.

Simon Fraser, a former top British diplomat now with the management consultancy Flint Global, said that European trade officials remained frustrated with China.

“Trump has a point on China trade, and we want to work with the U.S. on this in the W.T.O., but we can’t because Trump is slapping tariffs on us,” he said. “Europe is being pushed into a trade war no one wants, and again Trump has a good idea, but is going about it the wrong way.”

That was why this European Union-China summit was so important, after two years of meetings when the two sides could not even agree on a symbolic joint communiqué, said Theresa Fallon, director of the Center for Russia Europe Asia Studies, a research institution in Brussels.

With China muting some of the demands of previous summit meetings — primarily that Europe grant it “market economy” status — the Europeans found more agreement with Beijing than in the past, while carefully keeping a distance.

“The European Union and China found some common ground at their summit, but even with Trump in the White House, the Europeans are mindful of the alliance with the United States of more than 50 years,” said Jörg Wuttke, the former head of the European Chamber of Commerce in China. “Common ground was found without changing sides.”

The communiqué mentioned the need for Chinese transparency and open markets, and the Europeans acknowledged the value of China’s global infrastructure project, the Belt and Road Initiative, without exactly endorsing it. The statement listed numerous infrastructure projects on which the two sides could cooperate.

That was a considerable concession, Ms. Fallon said, given that 27 European Union ambassadors (all except Hungary’s) signed a letter in April refusing to support Belt and Road because of its lack of transparency, lack of environmental protection and failure to provide a level playing field.

The Europeans and Chinese also agreed to work on a bilateral investment treaty, another European concession.

It was a dramatic change from the summit meeting of a year ago, noted Mr. Leonard. “Last year was particularly grotesque,” he said. “Xi Jinping told Davos he was a champion of multilateralism and then refused to sign a joint statement with the European Union unless it granted China market economy status. But now that China finds itself under pressure, it is keen to have a common statement.”

China is taking steps to show it is more open to foreign investment, including approving a $10 billion petrochemicals project by Germany’s BASF that does not require the joint venture structure typical of foreign investment. Ms. Fallon called it a favorable deal “symbolic of the importance to China of Germany,” about which Mr. Trump seems to have a special animus.

However unlikely China and the European Union are to form a common front against Washington, both sides showed a willingness to compromise on the communiqué at a time Mr. Trump has waged his attacks.

That is also true of the Japan-European Union trade deal, which cuts customs duties on European wine and cheese in exchange for gradually lowered tariffs on Japanese cars.

For Japan, the deal represented a clear hedge against Mr. Trump’s threats to impose tariffs on Japanese cars, but it also gave Europe the kind of access to Japanese agricultural markets that the Trans-Pacific Partnership would have granted to the United States if it had joined.

For the European Union, a positive summit with China and a clear statement about cooperation to reform the W.T.O. and against unilateralism “is clearly pointed at the United States,” Ms. Fallon said.

“The Europeans want to show that we have other options — and the trade deal with Japan is another display that we have other options.”