Global crises pushing US and Europe into closer commercial partnership, top EU trade official says

Dovetailing transatlantic legislation will offset China’s influence in face of unfair competition, says European Commission’s Sabine Weyand
Ukraine war described as crisis that strengthened bond between two allies, with Beijing posing ‘bigger challenge’ over long term

European Union

Laura Brickmanin Washington

Published: 6:28am, 14 Jul 2022

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Global crises from Covid-19 to the war in Ukraine have effectively pushed the United States and European Union into closer commercial partnership and could enable the two to counter China in the future, a top EU trade official said on Wednesday.

Sabine Weyand, the European Commission’s Director General for Trade, outlined Europe’s rethinking of its trade policies in light of Russia’s invasion of Ukraine. Dovetailing transatlantic legislation would serve to offset China’s influence and “ensure security and level the playing field in the face of unfair competition” over the long term, Weyand said in remarks delivered at the Centre for Strategic and International Studies in Washington.

“We have a closer degree of cooperation right now than we’ve had in a very long time,” added William Alan Reinsch, a former president of the National Foreign Trade Council and moderator of the CSIS event. “The war is a crisis … but the bigger challenge long term is China.”

Describing a decline in adherence to international law, particularly China’s contested application of World Trade Organization rules addressing forced labour, Weyand explained EU efforts to mitigate the problem, such as screenings of foreign direct investment in cooperation with the US since the start of the coronavirus pandemic.

The EU has also revised export controls and implemented anti-coercion instruments, similar to recent American legislation banning various Chinese imports in response to forced labour practices in Xinjiang.

Other rules designed to shore up the effectiveness of climate policies include a ban on products from deforested areas and a carbon border adjustment mechanism to avoid carbon leakage – laws that by and large impact Chinese products.

The effectiveness of such policies hinges on cross-border cooperation, Weyand said, with the Ukraine war providing the impetus for enhanced collaboration and prompting the US and EU to implement coordinated sanctions and export controls through their joint Trade and Technology Council.

Another common EU-US objective is to diversify import streams, evident during the pandemic as countries around the world sought to reduce their reliance on goods and raw materials from China in anger over Beijing’s handling of the global health emergency. Such concerns resurfaced in the abrupt decoupling of Russia from the world economy after its invasion of Ukraine in February, Weyand said.

In advocating for regulated and diverse supply chains to avoid the kind of disruptions borne by the pandemic and war in Ukraine, Weyand touted a global strategy through WTO leadership to bring in stakeholders from developing economies and adhere to international laws.

“The times are over when the EU and the US working together was enough to provide the necessary leadership” to establish international laws, she said.

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Collaborations like the US’s Indo-Pacific Economic Framework and the EU’s parallel Strategy for Cooperation in the Indo-Pacific will play a leading role, the senior trade official added, as mitigating China’s clout in the region and globally is a shared goal.

Whether managing the green transition or economic and supply-chain digitalisation, the greatest challenges today require cooperation, Weyand said. “If we do not shape the rules … others will fill the void.”