10/09/2019_Exciting times. The US and China are resuming negotiations on their “trade war.” The signs are not very positive. On the eve of the trade delegations’ meeting, the Trump government blacklisted another 20 Chinese companies/entities active in artificial intelligence (AI). Most prominent on that list is HikVision, the Chinese leader in surveillance equipment. Similar to what happened with Huawei earlier, American chip manufacturers will no longer be allowed to supply chips to the Chinese company.
Speaking of Huawei, on Oct 1 the European Union Cyber Security Agency ENISA was supposed to have published a report summarizing the risks all European member states face regarding the (role of Huawei in the) roll-out of 5G network in their countries. This report will make a major contribution to the regulatory framework for securing 5G roll-out in Europe at the end of 2019. Today it’s October 9, yet we have not seen or heard about the availability of this report.
An interesting little detail: the headquarters of ENISA is located in Greece, one of the countries that have shown considerable interest in and support for Huawei. Greece is actively participating in Xi Jinping’s Belt & Road Initiative (BRI), the development plan for a modern “silk route” aiming to connect China with Eurasian countries through major infrastructural projects, including “the internet and the cloud”. For example, in exchange for substantial Chinese investment in Greek infrastructure, the state-owned China Ocean Shipping Company (COSCO), closely related to the Chinese navy, has purchased and modernized the port of Piraeus in Greece.
In the Netherlands the Standing Committee on Foreign Affairs & the General Committee on Foreign Trade debated with Ministers Blok (Foreign Affairs) and Kaag (Trade) at the end of September on two topics: the Netherlands-China policy memorandum published in mid-May and the so-called China strategy letter published at the beginning of July. The latter gave a rather vague description of our cabinet’s proposed approach (for more info on the letter, check out https://www.mijngroeve.nl/history/dutch-parliamentary-debate-july-4-2019_ajax-huawei-game-over/ and https://www.mijngroeve.nl/history/huawei_implications-of-the-letter-of-the-dutch-government_update/ and https://www.mijngroeve.nl/history/nederland-huawei-wachten-op-rutte/)
The Dutch: country neutral
The Dutch government takes a “country-neutral” position towards 5G roll-out, which means Huawei will not be excluded in advance from participation, unlike what has happened in the US, Canada, New Zealand, Japan and Australia. In addition, the government would like to adhere to the “China strategy” principles laid down by the EU in 2016, which were updated in the spring of 2019. By stimulating and promoting multilateralism and economic interdependence with China, the Netherlands and the EU hope that China will behave constructively and responsibly on a global basis, reducing the chance of military conflicts. The EU no longer considers China a developing country. China is now an economic competitor, offering economic “threats and opportunities”. The economic ties with China must be based more on reciprocity: European companies who want to do business in China should be given the same kind of free access Chinese companies enjoy in Europe. While Europe is concerned about China’s military ambitions and expansion, it does not regard the People’s Republic a military opponent.
Influenced by the recent events in Hong Kong and the disturbing news about the Chinese prison camps in Xinjiang full of arrested Ughyurs, the Foreign Affairs committee’s debate with Minister Blok focused primarily on human rights. Almost all parties criticized the minister for having formulated a strategy in which human rights are not sufficiently addressed. Through various motions they have tried to force the minister to have his officials rewrite the strategy, aiming for a clearer action plan for improving the human rights situation in China. And a number of parties are no longer against trade restrictions if human rights violations continue in the People’s Republic.
Blok not only disagrees with the advice for a tougher human rights approach by the Dutch government, he also discourages a number of other motions, including:
- the motion de Roon (PVV) calling for a Huawei ban in the 5G network roll-out. Blok prefers the country-neutral approach advocated by the government (and for the time being also the EU ..?)
- the motion by de Roon and Bisschop (SGP) urging Blok to follow in the footsteps of the US and Australia and strive publicly for Taiwan’s participation in important international forums. This is driven by the increasing tension in the South China Sea and the major economic and technological role Taiwan plays in the world. Blok said he will stick to the one-China policy in line with the EU, as Taiwan is not internationally recognized. And he will support the existing, excellent relations with Taiwan in other informal ways, instead of making formal, public statements of support such as having Dutch ministerial visits to Taiwan.
- the SP motion asking the Minister of Foreign Affairs to write an America strategy in the context of the changing transatlantic relationships under Trump. Blok countered by stating he is not in favor of drawing up a strategy per country, since no other country, including the EU member states, does such a thing.
Blok probably fears a detailed, well-defined strategy will limit his policy options and maneuvering space, also vis-à-vis the EU. Meanwhile Minister Kaag has reacted positively towards D66’s proposal to subject the export of surveillance software and technology to a formal approval procedure to prevent misuse by suspected Chinese enterprises (read f.e. Hikvision). All motions will still go to the Dutch parliament for a vote later on.
The EU & China
The debate shows the government would like to wait for the outcome of further consultations among European government leaders about China, including the European regulatory framework for safeguarding the 5G networks. The minister discourages motions calling for Dutch protectionist regulations as a counter-measure against unacceptable Chinese practices, such as forcing Dutch enterprises to transfer technology when investing in China or against Chinese companies (allegedly) participating in human rights violations. The government does not want to use its Dutch economical power (f.e. agriculture) as a leverage to push China towards a more open, transparent economic policy and better human rights record. These matters should continue to be pushed primarily at the European level through negotiations with the Chinese. To which Minister Kaag adds innovation and free competition remain the best and preferred way to compete internationally, including against Chinese companies. The Dutch government obviously isn’t a fan of a trade war.
The Dutch cabinet is trying its best to keep a middleground between the US and China. Other European countries are trying to do the same, although it’s hard to discern a coherent China strategy in the EU. China has been given the chance to gain a firm foothold in strategic places in Europe (think Greece / Piraeus, Hungary / Huawei and the BRI discussion with Italy) without the EU standing in its way. It is the same old problem with the EU: how to build a coordinated security and foreign policy? If none of the EU member states, including the Netherlands, wants to take the trouble to work out a more thorough USA & China strategy, it is hard to imagine there will ever be a coherent policy at the European level. The EU is likely to carry on with sometimes opportunistic or belated compromises.The longer term benefits of such an approach are questionable at best, in view of the increasing geopolitical and technological rivalry between the US and China and the changing world order.
Even if Trump steps down or isn’t re-elected, the US Congress will maintain a very hostile attitude towards China. The “USA first vs China first” battle is still in its initial phase. Interestingly UK government officials have threatened the EU this week: the UK will cancel its security and intelligence cooperation with Europe should the EU reject its “new” Brexit proposals. As I have posted before, Boris Johnson as the mayor of London gave Huawei an extremely warm welcome some 10 years ago. But Boris the prime minister (assuming Johnson survives the current parliamentary chaos!) will not hesitate to sacrifice Huawei for the sake of remaining part of the Five Eyes cooperation between the intelligence services of the US, Canada, New Zealand, Australia and the UK.
Trump has already warned that the UK will be excluded from the Five Eyes if Huawei is allowed to be a 5G provider in the UK. The UK is an important partner in the intelligence world for the EU … How intelligence cooperation between the US and the EU will evolve if the latter does accept Huawei as a 5G equipment supplier is actually quite unclear …
Holland-China: New Balance
In its China memorandum this summer, the Dutch government argued for a new balance in its relations with the People’s Republic. “The government is ‘constructively critical’ of China. It wants to work with China on the basis of shared interests, being fully aware of ideological differences.” Earlier this year Rutte even said the Netherlands should not be naive regarding “the signals about espionage by Chinese companies”. In recent years the Dutch and the EU have stood up to the US (Facebook, Google) on privacy and data protection issues for their citizens. Privacy and data protection hardly exists in communist China. No Chinese can reject or ignore requests from the Chinese government or intelligence services to share data. A Chinese court would not help companies in such cases. I really would like to understand how the EU and the Netherlands think they can/will enforce the Chinese to comply with these privacy regulations if Huawei takes part in Europe’s 5G roll-out. In some European countries, Huawei is already in the core of the 3-and 4G networks where customer data are stored …
America first vs China first
The American – Chinese trade war has transformed into a complicated geopolitical and technological battle. “America first” clashes with “China first”. A quick end isn’t in sight: perhaps at best a partial agreement could be reached this week (for example, on the opening of the Chinese market for American agricultural products). Even such a partial agreement is doubtful in the current climate. The dispute over technology transfer, IP protection (source code), Chinese state company reforms and national security will certainly not be resolved now. And in the absence of any agreement, a new round of tariffs will follow…
As said, America has just issued a new ban on ~twenty Chinese high-tech companies. Europe and the Netherlands do not want to take this path and try to walk a middle course, hoping on the one hand not to upset America too much and on the other not to jeopardize trade interests with China. Whether this intention can be upheld by the EU is by no means certain. Imagine, for example, a military action by China in HK, or an aggressive continuation of the China first policy by Xi Jinping, or the continuous silencing of critical domestic and foreign voices about China. Any of these cases will intensify the debate in the EU and the Netherlands on the China strategy.
If I were Blok, I would quietly instruct my officials at the Ministry of Foreign Affairs to prepare a broader China and USA strategy (including all possible scenarios), the sooner the better….
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