Two-faced US trade policy erodes Atlantic alliance


The US is peeved about EU’s new investment pact with China. PHOTO/ Facebook

EU’s new investment pact with China calls Trump’s bluff on a tech war that gives cover to US side deals with Chinese companies

European distrust of American motives was behind EU leaders’ signing last week of a Comprehensive Agreement on Investment with China over the urgent objections of the Donald Trump administration and Joe Biden’s transition team.

Washington’s restrictions on trade and investment with China, Europeans believe, provide pretexts for dodgy deals that favor US companies at the expense of competitors on the other side of the Atlantic.

The Trump administration of course has long been in a trade war with Beijing, and there have been numerous news reports that Biden’s advisers had let European officials know they hoped for a delay that would give the new administration time to chime in before finalization of the pact.

Matt Pottinger, deputy national security adviser to Trump, issued a statement saying, “Leaders in both US political parties and across the US government are perplexed and stunned that the EU is moving towards a new investment treaty right on the eve of a new US administration.”

Europe has ignored the pressure because Washington isn’t fighting a war but rather is talking war while American companies work out their side deals with China.

Another source of conflict is Washington’s dodgy response to Chinese leadership in telecom equipment. The Trump administration backed a putative software-based solution, rather than put resources behind competing 5G hardware from Huawei competitors like Ericsson and Nokia.

As Henry Kressel explained in a December 29 news analysis, a touted software-based alternative will take five to seven years and enormous expense to roll out, while Huawei’s network is ready to install.

One cause of European rancor, the Financial Times reported on December 24, is that US authorities grant exceptions to American companies trading with China while denying them to Europeans.

“European tech executives and diplomats are accusing the US of using its sanctions regime to shut them out of the Chinese market while offering exemptions for American companies,” the newspaper reported. “Over the past two years, the US has imposed aggressive sanctions on Chinese companies such as Huawei and, as of Friday, the chipmaker SMIC, which have prevented them from buying most US-made technologies.”

The Financial Times quoted an unnamed European senior executive as saying the sanctions had created an “America First” trade policy. “So far, US companies have been given licenses to supply Huawei, while European suppliers cannot.”

Many European businesses that produce chips and chipmaking equipment are affected by American sanctions because they rely on US intellectual property. A second European tech executive complained of having once been “stopped from supplying components to Chinese buyers because of suspicions that they could be used for military purposes. But the market for the components was quickly filled by US vendors selling through middlemen.”

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