EU seeks ‘fair and balanced’ trade ties with China, says bloc’s foreign policy chief Borrell

SINGAPORE: Trade is the biggest challenge that the European Union faces in its relations with China, said the bloc’s foreign policy chief Josep Borrell. 

Both sides share substantial economic ties, with the volume of bilateral trade exceeding £2.3 billion (US$2.5 billion) per day.

“So it's very difficult to decouple from the Chinese economy. We want to continue in a mutually beneficial relationship, but it has to be fair and balanced,” Mr Borrell told CNA on the sidelines of the Shangri-La Dialogue in Singapore on Sunday (Jun 2). 

The bloc has complained of trade imbalances and China's industrial overcapacity, which it says is flooding EU markets with cheap imports.

“FREE TRADE HAS TO BE FAIR”

Highlighting anti-subsidy probes launched by the European Commission into Chinese electric vehicles, Mr Borrell said the investigation will determine if there are possible state subsidies that could imbalance trade. 

The investigation, which has escalated tensions between the EU and Beijing, will help the bloc decide whether to impose punitive tariffs to protect European EV makers. 

“We are not very much in favour of putting tariffs,” said Mr Borrell. “We believe in free trade, but free has to be fair, and the Commission will issue an analysis on the basis of the information that we receive in a transparent manner… and we will balance the market (based on) the results of this investigation.”

Last month, United States President Joe Biden slapped major new tariffs on Chinese-made electric cars, solar cells, steel and other goods. The tariff rate on EVs is set to quadruple to 100 per cent this year, said the White House. 

On whether tariffs are still on the cards, EU’s Mr Borrell said: “We are not following the US. We are doing our own policies.”

He added: “We have our own personality, our own interests, and we don't have to follow anyone.” 

Meanwhile, China has accused the EU of working to suppress Chinese companies, and will take action to safeguard its interests if it continues. 

Any trade war would result in the loss of the “optimality of the economic relationship”, said Mr Borrell on the likelihood of stern measures from China. 

“This is something that has to be avoided. And we have been telling our Chinese friends: ‘You have to open your economy. If you don't open your economy, we will be obliged to close our economy, and it is not going to be good for you or for us’”.

There is a need to screen Chinese investments in Europe amid security concerns, he noted. 

“Trade today is being weaponised,” stressed Mr Borrell. “Today, everything is being weaponised. Migration is being weaponised. Information is being weaponised.”

Over-reliance on any particular country can become a threat, he added.

Citing how Europe was highly dependent on Russian energy resources before the invasion of Ukraine, Mr Borrell said: “When we were buying Russian gas, it was in our interest. But then suddenly, we were importing 40 per cent of our consumption from Russia and the war came, and this dependency became a problem. 

“So we have to avoid excessive dependencies, and in particular in dependencies on critical sectors.”

EU WANTS CHINA TO USE INFLUENCE TO STOP RUSSIA

The EU has urged China to use its influence over Russia to stop its aggression against Ukraine. 

This comes as Chinese exports to Russia have risen in the last two years since the invasion. 

Trade on dual-use goods in particular, which can end up being used in the battlefield, has been "increasing a lot”, said Mr Borrell. 

“That is why for example, we have been taking measures against some Chinese firms that we suspect are circumventing sanctions, importing goods from Europe and then re-exporting to Russia.”

At the Shangri-La Dialogue on Sunday, Ukrainian President Volodymyr Zelenskyy accused China of helping Russia to disrupt an upcoming peace summit on the war in Ukraine.

He told the security conference that diplomacy, in the form of the peace summit later this month, was the best way to end a "cruel war".

Mr Zelenskyy said that 106 countries and organisations have so far confirmed their attendance, but he noted that it was disappointing that some world leaders had not yet offered their support. 

“The purpose of this conference is to bring as many people as possible to discuss how peace could look like,” said Mr Borrell, adding that the EU has a “strong moral commitment” to back Ukraine against Russian invaders.

“This country wants to explain to the rest of the world what's happening and which are their proposals to stop the war, and the more people (attend) at the highest possible level, the more the international community has to use their influence and their capacity to stop this war. It's not a peace conference, it's a conference about peace.”

In 1994, three years after its independence, Ukraine gave up its arms and nuclear arsenal – the third largest in the world at the time – to Russia in exchange for security assurances that its territorial sovereignty would be respected.

Ukraine was then a nuclear power, but it returned all the missiles “because the international community was not in favour of proliferation”, Mr Borrell pointed out. 

“Russia signed a commitment ensuring the territorial integrity of Ukraine. So whoever says that the problem is NATO (The North Atlantic Treaty Organization) encircling Russia, Russia didn't fulfil the commitments they took when they recovered the nuclear arms that Ukraine was having as inheritance of the Soviet Union.”

Any peace in Ukraine must be based on the country's right to sovereignty, he noted. 

“A lot of people are willing to facilitate peace. But how? What kind of peace?” he added. “The peace that has to be based on the right to sovereignty and territorial integrity. 

“A peace based on surrender, because you don't have the capacity to fight, will not be a peace. It will be a domination.”

“SECURITY HAS A COST, AND IT IS NOT FOR FREE”

Meanwhile, the EU needs to invest more on its security, and rely less on the US for protection, Mr Borrell stressed. 

“We have been doing that for years since the end of the Cold War. We have been using the American umbrella to spend not too much in defence, because the big brother was there to protect us,” he added. 

“This is not something which we can rely on forever. And even if we can rely, there is a share of the burden that has to be taken by ourselves.”

Mr Borrell emphasised that “security has a cost, and it is not for free”. 

“If you want to be sure, you have to put your own capacity, not just relying on someone else coming to support you,” he added. 

Mr Borrell believes crises that happen elsewhere can affect Europe. 

“Every crisis is interconnected,” he said. “We cannot say that what's happening here or there is not of my concern.”

Isolationism has never been Europe's approach, noted Mr Borrell. 

“This has never been our solution. It has never been our approach to world problems.”

DIVISIONS AMONG EU MEMBERS OVER GAZA 

In the interview with CNA, Mr Borrell touched on the EU’s division over the conflict in Gaza.

“On the issue of the Israel-Palestine conflict, there has always been a big divide for historical reasons. And this divide is there,” he said. 

In Europe, 10 of the 27 EU members recognise a Palestinian state.

“We are united on the need to stop this war, to release the hostages, to increase humanitarian support, and to discuss a political solution based on two states, because this war cannot be won militarily,” said Mr Borrell, adding that the only rational solution is to divide the land with mutual security guarantees. 

“It's not going to be a solution that could be built by just killing people.”