By Claude Barfield

Over the past weeks, the Joe Biden administration has
pursued two geographic bookends of US foreign economic and strategic policy —
namely the first public statement of US trade and investment
policy toward China and the convening of the US-EU Trade and Technology Council’s (TTC)
first meeting. The substantive results were inconclusive in both cases, leaving
major policy questions unanswered for both Asian and European allies.

First, as previously noted, US Trade Representative Katherine Tai’s widely
anticipated unveiling of the Biden administration’s China policy failed
to spell out a strategy for dealing with the fundamental trade and technology
elements of China’s predatory state capitalism (e.g., huge subsidies for
domestic industries, forced tech transfers, intellectual property theft, and
closed tech sectors). Tai subsequently spoke with her Chinese counterpart, Vice Premier Liu He,
but the meeting was merely an exchange of views in which Beijing refused to
offer any changes to current industrial and trade policies. Tai has stated that the administration would take action if initial
talks produced no concession from Beijing, but the open question remains under
what circumstances the administration will “utilize the full range of tools”
and fashion new strategies to counter Chinese economic aggression.

This lack of US policy clarity will directly affect the
future of the TCC, which, as mentioned above, met for the first time in late
September. The council has been tasked with a wide-ranging, ambitious agenda that includes working groups on semiconductors,
artificial intelligence, supply chains, technical standards, and cybersecurity
— among others.

Ultimately, though there are valid independent issues such
as privacy and international tech standards, the US-EU alliance will be highly
dependent on the development of a common front in response to predatory Chinese
state capitalism. And within the EU, France will play a decisive role in
Europe’s reaction to a nascent Biden China strategy — not least due to the
vacuum left by nine months of the new administration dithering on China policy.

In addition, recent events (including France’s sense of betrayal over the newly minted US-UK-Australia submarine deal) will certainly add to French President
Emmanuel Macron’s dissent on US-Asia and China policy. But the issues run
deeper than personal pique and represent a stream of European thought — “strategic autonomy” — that is potentially at odds with US
policy toward China.

Of particular importance is a little-noticed series of
interviews given recently by French Finance Minister Bruno Le Maire while
attending International Monetary Fund meetings in Washington, DC. Le Maire, who
is close to Macron, told CNN that the larger reality Europe had to face was
that in the future the US would place top priority on Asia, not Europe. On
China, he told The New York Times, “The United States wants to
confront China. The European Union wants to engage China.” In this
circumstance, Le Maire continued, Europe’s “strategic priority” must be
independence “to defend its own economic interest, to have access to key
technologies and not be too dependent on American technologies.” With the TTC,
one can already see this stance playing out on semiconductors and, likely in
the future, on artificial intelligence.

Though TTC working groups are no doubt hard at work, the
council itself won’t meet again until sometime next spring, giving ample time
for Macon’s strategic independence plans to challenge TTC goals in parallel.
This is not to underplay the role of the European Commission. But with German
Chancellor Angela Merkel off the scene and an untested triparty coalition not
likely to wield great power initially, France will occupy the pole position in
determining Europe’s future trade and technology agenda, with or without the
US.

The post A fraught linkage: US-China trade policy and the US-EU Trade and Technology Council appeared first on American Enterprise Institute – AEI.