Trump-era trade stress leads Western powers to China

Trump-era trade stress leads Western powers to China

PARIS
Trump-era trade stress leads Western powers to China

Britain's Keir Starmer is the latest Western leader to thaw trade ties with China in a shift analysts say is driven by U.S. tariff pressure and unease over Donald Trump's volatile policy playbook.

The prime minister's Beijing visit this week to promote "pragmatic" co-operation comes on the heels of advances from the leaders of Canada, Ireland, France and Finland.

Most were making the trip for the first time in years to refresh their partnership with the world's second-largest economy.

"There is a veritable race among European heads of government to meet with [Chinese President] Xi Jinping," Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, told AFP.

This is "driven by internal rivalry to secure investments and market access before the China-U.S. summits in February and April", he said.

It's not just China looking more appealing these days: On Jan. 27, India and the European Union announced a huge trade pact two decades in the making, a move to open new markets in the face of a strained status quo.

Vietnam and the European Union also on Jan. 29 committed to deeper cooperation on trade, technology and security.

India and other emerging markets such as South America "are too small to sustain the world's most export-dependent economies, which are in Europe," Lee-Makiyama said.

So they have no choice but to turn to Beijing, despite concern over its human rights record, and accusations of economic coercion.

"Half of economic growth is generated by either the United States or China," Lee-Makiyama said, adding that "the United States is hardly opening up."

Trump's unpredictable tariff onslaught signals that "the United States is no longer a reliable trading partner," said William Alan Reinsch at the Washington-based Center for Strategic and International Studies.

For the new EU-India Free Trade Agreement, "you can argue that, ironically, Trump's policies have pushed it across the finish line" 20 years since negotiations began, Reinsch told AFP.

While the European Union also wants stronger ties with China, it is alarmed by the current trade imbalance, with a gaping deficit of more than $350 billion to Brussels's disadvantage.

Irish Prime Minister Micheal Martin urged "open trade" in his talks with Xi in early January, while France's Emmanuel Macron denounced the trade imbalance on a visit to Beijing in December.

China and India are also seeking ways to cope with Trump's tariffs designed to boost U.S. manufacturing and "make America great again."

In some cases, Trump has retaliated with more tariff threats, including a new 100 percent levy on all Canadian goods if the U.S. neighbor makes a trade deal with China.

Reinsch at the CSIS predicted that the latest agreements would leave the United States at a disadvantage in the long run, while noting they were "surprisingly traditional."

Negotiations on lower tariffs and reducing non-tariff barriers are "exactly what the world has been doing for the past 75 years", he said.

"The outlier is the United States."