Author: Daniel Gros
Originally Published: Project Syndicate, 6 March 2019
As part of its effort to contain its main global rival, the US is trying to secure the power to prevent the United Kingdom and the European Union from so much as negotiating trade agreements with China. Although a post-Brexit UK will probably have little choice but to follow Canada’s lead and comply, the EU is big enough to say no.
Two recent developments are bringing America’s trade strategy toward China into focus. The first, which affects bilateral trade negotiations, is no surprise: US President Donald Trump has abandoned his bluster for vague promises – to enforce property rights, loosen restrictions on foreign investment, and stop pressuring foreign companies to share their technology – that China has made before. The second development, which concerns America’s allies, is more revealing – and treacherous.
In the last few months, the Trump administration has released its negotiating objectives for a possible trade agreement with the United Kingdom after Brexit, as well as future talks with the European Union. Most of those objectives are not particularly surprising; they seek to maximize access to UK or EU markets, while protecting sensitive US sectors. But they do include one highly unusual provision.
In its document on the EU, the US states its intention to secure “a mechanism to ensure transparency and take appropriate action if the EU negotiates a free-trade agreement with a non-market country.” The “non-market country” is no doubt China. If the EU agrees to this demand, it would have to inform the US – which would have the right to intervene – even if it is merely negotiating a trade deal with the world’s second-largest economy.
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