EU and China Rescue Plan to Present United Front to Trump

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The European Union and China managed to agree on a joint statement for Tuesday's summit in Brussels, papering over divisions on trade in a bid to present a common front to U.S. President Donald Trump, EU officials said.

Diplomats reached an eleventh-hour accord on a draft communique after China made concessions on wording about industrial subsidies that removed a European veto threat, said one of the officials, who asked not to be identified by name. EU Council President Donald Tusk, European Commission President Jean-Claude Juncker and Chinese Premier Li Keqiang are due to attend the gathering in the Belgian capital.

The last-minute agreement highlights European and Chinese determination to present unity in the face of Trump's “America First” challenge to the multilateral order. The EU is China's No. 1 trade partner, while the Chinese market is the second biggest for exports from the bloc after the U.S.

While pressing China to cut industrial subsidies and open up more to foreign investment, Europe is resisting protectionism by Trump, wary of his trade war against Beijing. The EU is also keen for Chinese help in the fight against climate change after the U.S. withdrew from a landmark international accord to cut greenhouse-gas emissions.

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The Trump administration on Monday threatened a sharp escalation in trans-Atlantic commercial tensions by proposing to impose tariffs on $11 billion of U.S. imports of goods from the EU in response to alleged European subsidies to plane maker Airbus SE, a rival of Boeing Co.

In a policy paper on China last month, the EU described the country as a “cooperation partner” in some areas and a “systemic rival” in others. “This requires a flexible and pragmatic whole-of-EU approach enabling a principled defense of interests and values,” said the March 12 paper by Juncker's Commission, the bloc's executive arm.

In their work on a joint statement for the meeting on Tuesday, which will be the 21st such summit, European and Chinese diplomats found a compromise over wording on efforts to bolster the World Trade Organization by enabling it to tackle industrial subsidies, said the EU official. The two sides also worked out a deal on a section of the draft statement related to the international order based on the United Nations, according to the official.

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On a separate issue, the EU has been frustrated by the slow pace of talks with Beijing since 2013 on a bilateral investment accord that would scale back Chinese market barriers for European companies. An investment agreement, which European officials now say could be reached in 2020, is an EU condition for starting free-trade negotiations with China.

At their 2018 summit in Beijing, the EU and China produced a 12-page joint statement in which both sides called themselves “comprehensive strategic partners.” They pledged support for the multilateral commercial system centered on the WTO, deeper cooperation in research and leadership in tackling global warming.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Iain Rogers, Chris Reiter

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