China and Europe: Why the EU is Right to Restrict Trade With Beijing

During a recent visit to China by the European Union’s diplomatic “big two” — European Council President Herman Van Rompuy and High Representative for Foreign Affairs Catherine Ashton — kind words and pleasantries did little to defuse a fundamental tension. Underlining the visit was an ongoing disagreement over an EU arms embargo against Beijing, as well as a dispute over China’s “open market” status and the EU’s own protectionism that has quickly escalated into a "trade war."  

However, whilst there is some merit to Chinese accusations of hypocrisy, the EU should hold its ground. By refusing to deal with China on equal terms, the EU is in fact enforcing the normative influence of its vision of foreign policy.

The Chinese stance is unequivocal: Both EU positions represent a prejudicial and hypocritical policy position which is an affront to China’s global standing. "The Chinese side is strongly discontent with the EU's wrong decisions and will firmly oppose it," one Chinese official declared last month.

Indeed at first glance, banning arms transfers and restricting certain Chinese imports are both a classic example of EU duplicity. The EU, it could be argued, essentially takes the cheap goods and credit offered by the Chinese market; whilst withholding top-quality weapons transfers and locking out unwanted Chinese competition at home. They have their cake and eat it, to Beijing’s fury.  

Yet such a view misses a fundamental element of the EU’s foreign policy stance — a belief in the normative power of economics.

The EU is, at its roots, a normative institution. For every binding regulation between European states stands a host of accepted protocols, commonly shared values and non-binding principles of conduct. These reflect a shared commitment to ideals such as human rights, democracy, and freedom of speech that underline the EU’s identity.

When looking abroad, the EU openly broadcasts that such principles will be important criteria in defining the depth and equality of economic relations. EU High Representative Catherine Ashton recently said in a speech on the “Arab Spring” that the EU's policy stance abroad reflected a desire for “deep democracy.”

This moves beyond elections alone, and calls for “respect for the rule of law, freedom of speech, respect for human rights, an independent judiciary and impartial administration.” Indeed, it is “not just about changing governments, but about building the right institutions and the right attitudes.”

Under this understanding, access to the EU market (the largest in the world by GDP) comes at a price: accepting EU conditionality on human rights and democratic reform. Ignore such normative influence, and you face restrictions. Break these norms outright, and you will be denied access to the EU market completely, as recently seen in Libya.

Turning back to China, the question can now be asked: Why has the EU historically taken these trade stances? The arms transfer embargo is over 20 years old, enforced in the wake of the Tiananmen Square massacres. The EU promptly forbid all forms of “military cooperation” with Bejing, which had proven its ability to turn its weapons of war on unarmed, pro-democracy protestors.

Indeed despite strong lobbying by arms-exporting Europeans such as the United Kingdom and France earlier this year — and even the controversial backing of Ashton herself — the EU27 are simply not prepared to sanction equipping a state with such an appalling human rights record with European high-end hardware. (Perhaps as a final incentive, there are obvious geo-political tensions behind supplying a potential military rival of the U.S. with military equipment.)

What then about the “open market” dispute? Here the EU have a weaker position. Indeed, the WTO have themselves ordered the EU to alter their stance by 2016 or face sanctions. Despite claims it is a purely “technical” restriction, the EU will likely acquiesce.

Yet the fundamental fact remains: Chinese citizens and industry operate in an environment of extreme repression by their government, complicating the moral basis of trading with them. Artistic or political figures face arbitrary imprisonment; and China continues to support regional autocrats in North Korea and Myanmar. 

So whilst the EU has, along with the rest of the world, accepted that trading with China is a “necessary evil," an appalling human rights record and continued political repression make it an un-easy relationship. The EU may ultimately be willing to trade in its values for cheaper goods, but the moral ethic is still there, just beneath the surface. As Von Rompuy told Chinese opposites during his recent visit, China’s reputation and influence are “unlikely to be decided by economic factors alone.”

So until we see real “Chinese democracy,” the EU has it right on trade.

Photo Credit: Wikimedia Commons