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EU-Asia relations set to deepen despite Brexit

EU-Asia relations set to deepen despite Brexit

4 February 2020

Britain’s departure from the EU is undoubtedly a blow to the bloc’s foreign and security policy ambitions. Ursula von der Leyen, the new president of the European Commission, has called for Europe to play a more “geopolitical role” but this will be more difficult with the loss of a nuclear power and one of the two permanent seats on the United Nations Security Council. It could potentially lead to competition between the 440 million EU and the 60 million UK in terms of seeking Asia’s attention. But Brexit will not derail the EU’s plans to deepen ties with Asia this year. An array of summits is planned with Asian partners as both sides seek to preserve a rules-based international system under threat from U.S. President Donald Trump.

 

Asia increasingly views the EU as a stable and predictable actor, a regulatory superpower, and a pillar of the multilateral system. As Japanese Prime Minister Shinzo Abe said in Brussels last year, ‘closer EU-Asia relations can only result in a win-win situation.’ His sentiment was widely shared by many Asian foreign ministers at the Asia Europe meeting (ASEM) in Madrid in December. The purpose of the meeting was to prepare for a full summit in Cambodia in November when EU and Asian leaders will discuss global trade, climate change and connectivity. The EU diplomatic machine will move into high gear next week when Thailand’s foreign minister visits Brussels to launch the EU-ASEAN sustainability pact. Korea’s foreign minister will also be in town for talks prior to attending the Munich security conference.

 

In March India’s Narendra Modi visits Brussels to discuss global issues with the new EU leadership team. The caravan then moves to Seoul and Tokyo when von der Leyen and Charles Michel will have an opportunity to get to know Moon and Abe as well as develop bilateral ties

 

The biggest challenge will be dealing with China, now branded a “systemic rival” by the EU. Beijing was taken aback when the EU came out with a tough new policy paper last March and has since been trying to woo the EU with statements about their common commitment to multilateralism. There are two summits planned, in April in Beijing (coronavirus permitting) and a special summit in Leipzig in September, in which President Xi Jinping is set to meet all 27 EU leaders in a setting designed by Chancellor Angela Merkel to promote EU unity.

 

But if there is no agreement by then on the bilateral EU-China investment treaty negotiations, Brussels stands ready to introduce a number of measures to restrict Chinese business activity in Europe. This could involve a tougher investment screening process and restrictions on Chinese bids for public projects. The EU is also taking steps to close the technology gap exposed by the debate over 5G and Huawei case The guiding principle, according to Phil Hogan, the EU’s trade czar, is reciprocity. In other words, the EU is now ready to play hardball with China. If China continues to impose barriers to European companies in China they will face the same situation in Europe.

 

Trade will continue to be a top priority in EU-Asia relations. Last year trade deals were signed and ratified with Japan and Singapore, following a successful deal with South Korea a few years ago. The European Parliament is about to ratify an FTA with Vietnam and negotiations are ongoing with Australia and New Zealand. Other Asian countries including Thailand, Malaysia and Indonesia are prepared to start talks. This demonstrates that nearly all Asian countries want access to the EU’s Single Market and are increasingly under sway of the EU’s regulatory standards.

 

This brings us back to Brexit. Most Asian leaders are baffled by the UK’s decision to walk away from the world’s biggest market right on its doorstep. In each case, even those countries with close ties to Britain, the priority will be securing their trade relations with the much bigger EU market. The UK plans to open a few more trade posts in Asia but this is unlikely to change the overall perception in Asia of who is the most important economic partner. Many Asian countries, and Japan in particular, also feel deceived at Britain reneging on previous promises they were given regarding open access to the Single Market if their companies set up shop in the UK.

 

In contrast to the packed schedule of EU-Asian summits, there are no plans for Boris Johnson to visit Asia. Nor is it clear that he will be given a warm welcome. India will not be happy if there are no extra work visas on offer. Japan’s disappointment at the UK is not likely to disappear soon. And China make clear that any future trade deal will be dependent on Huawei continuing to participate in Britain’s 5G network. This in turn will anger Washington and impact negatively on the fading special relationship.

 

Britain was a traditional champion of free trade but this will continue post-Brexit as the proliferation of trade deals between the EU and Asian countries demonstrate. The UK may try and play the security card to increase its influence. It has promised to send its new aircraft carrier to the South China Sea at some point in the future but this will inevitably irritate Beijing. Apart from France, which also has a military capability that can be deployed in Asia, other EU member states and the EU itself will be relying more on soft security: cyber, countering proliferation and building resilience. Helping to resolve disputes and rebuild societies torn apart by conflict may not be as eye-catching as sailing aircraft carriers through the South China Sea but equally such activities should not be under-estimated.

 

The EU is already the main donor in Asia in terms of development and humanitarian assistance. The EU’s connectivity strategy which puts the emphasis on transparency and sustainability of infrastructure projects linking the two continents has been welcomed in Asia. The aim is not to let China have a free hand with its Belt and Road Initiative. But how effective this will be depends largely on the money the EU is prepared to put on the table and this will only be known when the new budget is agreed in a couple of months.

 

The EU hopes that Asian leaders will show greater understanding for the importance of soft power, of working together to solve disputes and even replicate some of the EU’s achievements. Every month there are delegations from ASEAN in Brussels seeking to benefit from the EU’s experience in different fields.

Dr. Fraser Cameron is Director of the EU-Asia Centre, Brussels.