European Union

Coauthored with Ashley Feng, research associate in the international institutions and global governance program at the Council on Foreign Relations. As the rest of the world is distracted by President Donald J. Trump shredding the transatlantic alliance and groveling to Russian President Vladimir Putin, China is taking advantage of the distractions to burnish its own claims of leading the international trading order. In the days leading up to and after the NATO summit, China has met with many of the United States' traditional transatlantic partners. This culminated Monday in the annual European Union (EU)-China summit. This is a remarkable turnaround in China’s image. This is the same nation, after all, that has continuously stolen trade secrets and intellectual property from western firms, restricted foreign investment in its domestic sectors, and refused to fully implement its World Trade Organization (WTO) accession agreement. What has made China appear to be a reasonable actor is international outrage at U.S. unilateralism. U.S. protectionism isn’t just limited to China. The United States has also imposed steel and aluminum tariffs on its closest friends and allies, including the EU. Trump’s reckless economic strategy is allowing China to present itself as the savior of the global trading system, while depriving the United States of the partners it needs to make common cause against Chinese mercantilism. The administration’s scattershot approach undermines the WTO and shifts the spotlight from predatory Chinese practices to its own rash behavior. Recent speeches by Chinese President Xi Jinping and Chinese propaganda have amplified China’s claims that it is a defender of the liberal trading order—a position to which the EU has now given tentative support. In their joint statement concluding the EU-China summit (the first in two years), both sides expressed strong support for “the rules-based, transparent, non-discriminatory, open, and inclusive multilateral trading system with the World Trade Organization (WTO) as its core.” The statement echoed the joint declaration that Germany and China released just before the summit. Titled “Responsible Partners for a Better World,” it “rejected all forms of protectionism.” U.S. actions haven’t just hurt countries abroad. Attacking foreign companies and imposing tariffs on imports have also made the United States a less attractive place in which to do business. During the first quarter of 2018, foreign direct investment (FDI) flows into the United States decreased by almost 40 percent compared to 2017 levels. Increasingly, countries and companies looking for investment opportunities may turn toward China. In its latest economic and trade dialogue, the EU expressed interest in speeding up negotiations on an EU-China bilateral investment treaty, shutting out U.S. businesses. While the United States continues to close itself off and pulls apart global supply chains, other countries are moving on. The day after the Trump-Putin summit in Helsinki, Japan and the European Union signed a free trade agreement that covers a third of the global economy. The Pacific Alliance, composed of Chile, Colombia, Mexico, and Peru, is also in talks with Canada, Australia, New Zealand, and Singapore to sign a multilateral FTA, launched six months after Trump announced the U.S. withdrawal from the Trans-Pacific Partnership (TPP). In Southeast Asia, countries are in a bind. They are dependent on exporting intermediate goods to China, which are then exported as finished goods to the United States. In order to avoid choosing between the world’s two largest economies, they are trying to increase intraregional trade. The result will be to stabilize their own supply chains, but this will put U.S. economic interests at a long-run disadvantage. In enacting unilateral trade penalties, the United States—a founder and defender of the WTO—now faces the likelihood that both the European Union and China will bring cases against it within that body. There have even been rumors that the United States will pull out of the WTO—abandoning the system that it helped build. Withdrawing from the WTO would be a critical mistake—the trade equivalent of an own goal in soccer. The United States is the most frequent complainant in the WTO dispute settlement system, where it has won over 90 percent of the cases it has brought. Instead of tearing apart the organization, the U.S. should continue working with like-minded partners like the EU and Japan to improve the system. Countries don’t want to have to choose between the U.S. and China. Until now, the European Union has resisted forming an anti-U.S. alliance with Beijing. But this forbearance may not last. If the United States continues to pursue its reckless trading strategy, the other players in global trading system will shut it out and move on.

The following is a guest post by David Gevarter, an intern for European studies at the Council on Foreign Relations. Before the recent North Atlantic Treaty Organization (NATO) summit, observers feared how President Donald J. Trump’s populist, illiberal tendencies could damage the transatlantic security relationship. These concerns proved true in many regards, but it would be wrong to assume that only U.S. populism could cause upheaval in the alliance. European politics matter too, especially in the areas that are most crucial to the Pentagon, like nuclear weapons. As part of NATO’s shared nuclear deterrent, the United States currently deploys the B61 gravity bomb in five NATO countries: Belgium, Germany, Italy, the Netherlands, and Turkey. While nuclear weapons are not popular among the European public, technocrats in European governments have recognized that the NATO nuclear deterrent is an unpleasant but strategic imperative. However, the rise of populist and nationalist movements across Europe could damage this consensus and threaten the integrity of NATO’s nuclear mission. The Trump administration believes that the United States must deploy more tactical (non-strategic) weapons in Europe through NATO to signal to Russia that any use of tactical weapons would be met by an equivalent response. The 2018 U.S. Nuclear Posture Review claims that Russia is more likely to use tactical nuclear weapons in a first strike to gain advantage because it believes the United States would not escalate with a strategic nuclear strike. As such, the Trump administration has placed great importance on expanding the United States’ arsenal of tactical nuclear weapons—such as the B61—as a way of countering the perceived Russian advantage in this field. Yet, this strategy could encounter serious obstacles as populist governments gain a foothold on the continent, exacerbated by growing anti-American sentiment. As the wave of populist governments gains popularity in Europe, instead of upholding long-standing NATO commitments, these governments might cave to the will of the masses. They could order the withdrawal of NATO—namely, U.S.—nuclear weapons from their territory, disregarding strategic necessity. The surge of populism in Germany, the backbone of the European project, can do the most damage to the shared nuclear deterrent. The current German government has thus far maintained the nuclear status quo despite opposition, but Angela Merkel’s hold on power is not what it used to be. Recent figures show that 71 percent of Germans favor banning nuclear weapons, and a change in Germany’s executive government could put NATO interests at risk. In the 2017 federal election, Merkel’s political alliance lost a significant percentage of its seats in the Bundestag, most notably to the populist, right-wing party Alternative for Deutschland (AfD). In its platform, AfD explicitly calls for the withdrawal of all NATO troops and nuclear weapons from German territory. With the near collapse of the current German government over immigration, the possibility of a rise to power by AfD or a party with similar views is no longer far-fetched. Like in Germany, the specter of populism has become very real in Italy, with the anti-establishment coalition formed by the League and 5-Star parties taking power. This could spell trouble for the NATO shared deterrent, given the broad unpopularity of nuclear weapons in the country. Accordng to a 2007 survey, 70 percent of Italian respondents indicated that the use of NATO nuclear weapons would never be justified, even in the context of war. Over half of respondents indicated that they believed NATO nuclear-sharing agreements violate the Nuclear Nonproliferation Treaty and that Italy should not be party to such agreements. Maintaining and expanding the U.S. nuclear arsenal in Italy will require significant cooperation from the Italian government, but Prime Minister Giuseppe Conte's government has shown little intention to acquiesce to President Trump's demands for NATO, such as increasing defense spending. It appears that the new, pro-Russia government in Italy is willing to do whatever it takes to appeal to public opinion, irrespective of the ramifications. Russia has always wanted the withdrawal of U.S. nuclear weapons from Europe and such a move could be part of an Italian strategy of warming relations with the Kremlin. The 2016 attempted military coup showed that Turkey is the most unstable NATO country, where the future of nuclear sharing is, at best, unsure. Since the attempted coup, President Recep Tayyip Erdogan’s populist government has further undermined Turkey’s relationship with the United States, NATO, and other Western countries as the country secures diplomatic and military rapprochement with Moscow. Erdogan has leveraged populist rhetoric to consolidate power, galvanizing support for his agenda and eroding checks and balances on his rule. Erdogan himself is no fan of nuclear weapons, and it is easy to imagine a scenario in which, as part of a pivot toward Moscow, Erdogan orders NATO nuclear weapons out of Turkey. Even if that is not the case, many experts argue that the United States should withdraw its nuclear weapons from Turkey, given the deteriorating political climate in the country. This, given the country’s proximity to Russia and other areas of interest in the Middle East, could jeopardize NATO’s ability to hold enemy targets at risk with its nuclear arsenal. The uncertainty throughout NATO countries prompts questions regarding the future of the shared nuclear deterrent. If U.S. tactical nuclear weapons are withdrawn from Turkey or elsewhere in Europe, where else could they go? Some have suggested Poland, given the country’s desire for an increased NATO presence, but this unprecedented expansion of the nuclear deterrent to Eastern Europe could—and likely would—spark a dramatic showdown with Russia, turning the Polish border with Kaliningrad into a hot zone. The worsening wave of populism in Europe could give impetus to European popular opposition to nuclear weapons, forcing their withdrawal from the continent. If the Pentagon truly wants to adhere to its designs to expand its arsenal of tactical nuclear weapons deployed in Europe as part of the NATO shared nuclear deterrent, it needs to start coming up with contingency plans. At the very least, President Trump should stop antagonizing NATO allies and try to preserve what little good will remains toward the U.S. agenda.

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