By Richard T. Griffiths, (Associate Editor Diplomat Magazine and Professor International Studies, LeidenUniversity).
Last April, an article appeared in the Financial Times examining US foreign trade policy. It observed that the US was simultaneously initiating free-trade talks with the EU and expanding the Trans-Pacific Partnership initiative to include Japan. The striking feature of this burst of activity was the absence of China. “The new trade approach”, it argued, “might be characterised as ABC – Anyone But China.” The article started a discussion that was still reverberating in the Chinese press four months later, when I was in Beijing.
I was surprised when, at an international conference there, I was asked about Europe’s ABC. Until that moment, the thought had not occurred to me. It is well-known that until recently, the EU expended a disproportionate amount of political capital and diplomatic effort in concluding trade deals with (combinations of) countries with which it has little commercial dealings. This emphasis has since shifted, but fully-fledged negotiations with China have yet to commence. The official EU explanation is that until China meets its WTO obligations more fully, more wide-reaching negotiations would be futile. However, not all countries are likely to remain so high-minded, for ever. At that point, we will be on the outside looking in rather than on the inside looking out.
Last year, China and the EU were each other’s most important foreign supplier of imported goods. China is also the EU’s fastest growing export market. The Netherlands is in the vanguard of these developments. According to the Chinese data, in each case after Germany, it is the largest European trading partner, the largest European recipient of Chinese investment and the largest European investor in China. It is true that the service sector still lags far behind and that trade and investment opportunities in China are hampered by domestic practices and by state companies. But these are surely reasons at least to start meaningful negotiations.
At that conference I was also reminded that China’s attention was not always oriented towards Asia and the Pacific. Two millennia ago began the old ‘silk-road’ that had once linked Europe and Chinese civilisations. It could do so again. Since 2012 freight-trains have been trundling along the 11,179 kms of railway linking Chongqing in the East to the Dutch border, in the West. Already these have cut the transport times from five weeks by sea to three weeks by rail and, for the moment, they have eliminated the dangers of piracy. Rail transport is seven times cheaper than air freight and is far less polluting. During my stay, the newspaper headlines were celebrating the heroic work in building the new high-speed rail line for the 1176 kms Lanzsu-Xinjiang section that, when opened in 2014, would slash the total journey time to sixteen days.
At a time when the new “iron silk road” is promising to reduce physical barriers to increased commerce, it would be short-sighted indeed to allow the invisible barriers to trade and finance remain in place. Only the EU can initiate and conduct such negotiations. The Netherlands, as a founder-member, should nudge it in t hat direction.