Category: Global Governance

EU-US Summit : towards a new transatlantic partnership ?

“America is back” and the Trump years are behind us, as evidenced by the holding of the EU-United States summit in Brussels on June 15, 2021: being the first meeting of this type since 2017, it marked the launch of a renewed partnership and a joint program for cooperation between the EU and the United States, following a sectoral approach. This meeting notably enabled three major commercial achievements to revive and deepen transatlantic trade in a context of Sino-American tensions.

 Civil aircraft cooperation agreement closes 17-year dispute

Leaders Joe Biden, Charles Michel, president of the European Council, and Ursula von der Leyen, president of the European Commission, have committed to creating a cooperative framework for large civil aircraft, taking a major step toward ending the dispute over the sector. After 17 years of dispute between Brussels and Washington before the WTO, this agreement initiates a new transatlantic relationship in the aeronautics sector. At the root of the dispute: illegal subsidies granted to aircraft manufacturers Airbus and Boeing. Under the Trump administration, tensions were exacerbated and the WTO authorized the imposition of taxes on $7.5 billion worth of imported European goods and services, including 25% on wine and 15% on Airbus aircraft. 

At the end of the summit, the leaders announced the suspension of punitive tariffs imposed on each other, as part of a five-year truce. The resolution of this dispute, which has plagued bilateral relations, is a strong signal that the Biden administration is moving toward a rapprochement that will create a level playing field and address new industrial challenges. 

This search for appeasement reflects an attempt to bring the EU on board in the US tug-of-war with China by strengthening the U.S.-European position. Especially since this former duopoly of aircraft manufacturers is now becoming an oligopoly with the entry of the new Chinese player Comac. This common-sense measure therefore also has the potential to counter the Chinese breakthrough in this sector and to challenge China’s perceived unfair competition practices. The idea is also to set up an effective cooperation model to jointly address other challenges posed by China’s economic model. While it is not certain that a compromise will be reached at the end of this truce, there is a real American will to reach an agreement. Indeed, when the dispute began in 2004, Airbus was gaining ground on the international market to the detriment of Boeing, whereas today the threat comes from China and it is time for unity on both sides of the Atlantic.

Negotiations to resolve steel and aluminum dispute underway

Leaders agreed to begin discussions to resolve the steel and aluminum trade dispute and to lift all additional and punitive tariffs by the end of the year. Ursula von der Leyen announced a working group on this issue that has marred transatlantic relations since Donald Trump announced in 2018 the imposition of taxes of 25% on European steel imports and 10% on aluminum imports, provoking European countermeasures in return. 

Lifting these taxes in the spirit of appeasement that prevails today would be a much-awaited political gesture by the EU, which expects strong actions beyond intentions. However, this diplomatic gesture should not change the face of European trade, nor turn the European steel and aluminum market upside down, as prices have risen in an unprecedented manner over the past six months, drowning out the impact of the US taxes.

Moreover, the actual resolution of the conflict is likely to be thorny, as the EU does not have a tariff and trade logic but a border tax logic that is different from the United States. The partnership is not self-evident and leaves the door open to a possible rapprochement with China, whether on the American or European side. 

The establishment of an EU-US Trade and Technology Council 

It is no longer a question of Europe and the United States entering into a free trade logic, as the Transatlantic Trade and Investment Partnership negotiated since 2013 is no longer relevant. However, a Trade and Technology Council will be created to provide a platform for cooperation on trade, investment, technology, digital issues and supply chains. It embodies a willingness to cooperate in developing compatible and international standards and to promote innovation while avoiding unwarranted new trade or technical barriers. It will enable the partners to align on global technology issues, such as artificial intelligence, cybersecurity, clean technologies… Both sides have already committed to a partnership on rebalancing semiconductor supply chains as a priority. 

This third announcement is both the most imprecise and the most structuring for the future of EU-US bilateral relations. At a time when a technological war seems to be underway with China, the issue of technological coordination is central. After a first American and commercial globalization, which was undermined by the Trump years, Biden now has the project of knitting a new one, which will take the form of technological liberalization. 

The African diaspora recalled by the continent?

The sustained growth of the last two decades and the two global crises of 2008 (Subprimes) and 2020 (Covid-19) have revealed new challenges on a global scale, which are illustrated in Africa by a sustainable modernisation challenge. The role of the diaspora in accessing international finance is one of the keys to Africa’s challenges. Morocco published this Tuesday, May 25, 2021 its report entitled “The New Development Model, unleashing energies and restoring confidence to accelerate the march towards progress and prosperity for all”.

Read here the french paper : La diaspora africaine rappelée par le continent ?

Contradictory trends on EU-China, relations? The case of industry

The paradoxical observation of deep disagreement and necessary cooperation

Relations between the EU and China are conditioned by a double observation : observation of a deep disagreement on political values, in terms of human rights and democracy, but also observation of the need for the two powers to cooperate on major issues, such as climate, strategic materials or industries of the future.

Such is the Bliken doctrine, with the exception that the US play the confrontational rivalry while the Eu remains more soft spoken.

While the EU is now the largest trading partner and foreign investor in China, a deep and lasting mistrust marks bilateral relations and tends to poison them. Strategic partners and systemic rivals, the EU and China are now reaching a turning point in their relations. Also, the EU must redefine its Chinese policy, between taking an assumed position, pragmatic cooperation, and inevitable negotiations, to get out of the stop and go provoked by these antagonistic tendencies.

Whether it takes the form of a technological, trade or human rights war, a tendency towards confrontation is gaining ground in diplomatic relations between Chinese and Western powers. Rising diplomatic tensions between the EU and China, illustrated by European sanctions over forced labor in Xinjiang province and the subsequent Chinese counter-sanctions, have brought bilateral cooperation to a halt, as demonstrated by the vote of the European Parliament on May 20 in favor of the suspension of negotiations for the ratification of the Agreement on Investment announced in December 2020.

However, the same day, a partnership was announced around battery materials between the German manufacturers BASF and Chinese Shanshan. This twofold topicality testifies to an inconsistency in the European line of conduct towards China. Beyond the apparent incompatibility of the two political systems illustrated by an increasingly less diplomatic tone, a real complementarity of interests between the two parties remains. In fact, the EU and China cannot do without having discussions with each other, if not cooperation, at least an open and pragmatic dialogue on certain issues.

BASF and Shanshan enter into joint venture in battery materials sector

If the light is red in terms of political cooperation with China, Sino-German industrial collaboration is for its part in good shape. The two leaders have embarked on a joint venture serving the Chinese market, the largest in the battery materials sector. For BASF, a leading global supplier of Computer Aided Manufacturing to the automotive industry, this is an opportunity to access the Chinese CAM market, expanding its global footprint with an integrated cathode active materials supply chain and unique. BASF would become the first company to have capacity in all major markets by 2022. For its part, Shanshan, a leading supplier of lithium-ion battery materials serving both the electric mobility market and consumer electronics, would benefit from BASF’s global network of automotive customers to strengthen its competitiveness in the Chinese market.

Thanks to the strong technological and development capabilities with a global footprint of one, and the vast experience of the Chinese market on the other, these two giants, by combining their expertise, will be able to offer incomparable competitiveness in terms of innovation, customer proximity and cost and become one of the world’s leading CAM suppliers. The aim is to generate important technological synergies and accelerate the transformation of the electrification of the transport industry.

The issue of this partnership is central when we consider that China has control over the value chains of strategic materials necessary for the manufacture of batteries, for which it dominates the market and holds around 90% of world production. In addition, China is a key player in the supply chains in key areas of energy transition (solar panels, wind turbines, hydrogen).

What method for a coherent European position?

Between deep political dissension and innovative cooperation on issues of the future, the Sino-European relationship is subject to contradictory trends which seem irreconcilable and prevent the EU from maintaining a unambiguous course of action.

In any case, the Sino-European divorce is not consummated. Beyond the sirens of political rivalries, points of convergence still make it possible today to talk about shared visions of the future. In view of the COP26, it is necessary to establish essential strategic axes towards which to orient Sino-European cooperation. The subject of raw materials, agricultural and mineral, is for example a central point of support for this cooperation, as is the climate or the energy and industrial transition.

The EU will only be able to impose its views if it shows a unanimous and coherent discourse. It should therefore first agree internally on its course of action, then externally by positioning itself according to a flexible method capable of breaking out of permanent stop and go in international relations. Thus, it will be able to hold a precise but firm dialogue in negotiation, redefine demanding and lasting partnerships, respectful of the law, and based on real reciprocity. In short, assume a role of “balancing power”.


Our analysis of Morocco’s New Development Model

Context:

Ambassador and former Interior Minister Chakib Benmoussa, Chairman of the Special Commission on the Development Model (CSMD), presented his general report on Tuesday 25 May 2021 at a ceremony presided over by King Mohammed VI. The latter will give rise to a national pact for development – an unprecedented proposal in Morocco. The objective is to anchor the New Development Model as a common reference for the actors and to commit the different parties. In other words, the pact will be the tool for renewing the relationship between the State and the development actors (political parties, constitutional institutions, the private sector and social partners, territories and the third sector); a renewal whose key words are: accountability, subsidiarity, partnership, sustainability and inclusion.

Read our report in french here

Download the version PDF in French here: The Bridge Tank_analyse_Maroc_Juin2021

Financing the African economy: Supporting the Modernization of African Economies

By Clarisse Hida & Joël Ruet

As the Summit on the financing of the African economy will be held on May 18, 2021 in Paris, at the invitation of Emmanuel Macron and with the African heads of state and government, solutions must go well beyond refinancing of sovereign debt, to integrate the dynamics of an African financial system undergoing a great transformation, and must include the banking sector, both at the level of the private sector and of commercial banks.

Africa has been resilient since the economic crisis of 2008 with controlled debt until the covid pandemic, and, for many countries, debt has been raised in connection with a transformation, an extension of the tax base, with margins remaining in this in terms of debt sustainability. But above all the continent, and in particular sub-Saharan Africa, has demonstrated a real boom in its economies, served by the growth of pan-African banks, which now desreve better support internationally.

But today Africa remains underbancarised, and a “classic” treatment of African economies by the tools of the banking system possibly supported by a multilateral public tool for the correct assessment of risks, including the issues of “rating”, looks promising.

Key Take-aways :

► The issue of financing the African growth should be approached through:

– Maintaining development assistance in the context of COVID-19 which, in itself, does not constitute a specific risk for Africa.

– The revival of public and private foreign investments in Africa, by improving the perception of African opportunities, including a fairer rating of private and sovereign financial assets.

– And finally, through support the access to capital markets for commercial banks since it is clear that many banking regimes are sound and should not be underestimated.

► In each of the avenues proposed, the international community must play an integrating or intermediary role that goes beyond the framework of development aid.

► This triple approach would make it possible to tap new types of financers, who would be able to better understand the specificities and strategies of African countries, particularly, but not only, with regard to debt and its refinancing.

The Bridge Tank at the BOAO Forum for Asia 2021: a partnership anchored in a shared vision for the future

The Bridge Tank at the annual “Chinese Davos” meeting

After a year of pandemic which led to its suspension in 2020, the BOAO Forum renewed its annual conference from April 18 to 21, 2021 in a context fluctuating between resumption of international trade and temptation to withdraw. As such, the “Chinese Davos” plays a decisive role in the international calendar by advocating an open multilateral dialogue, at a time when the Covid19 has lastingly disrupt the international balance and created a series of new challenges while exacerbating those which pre-existed to it.

Since 2018, the chairman of the Bridge Tank Joël RUET has participated to the BOAO Forum, of which the think tank is a partner. As every year, he spoke at a high-level conference alongside international leaders from the political and business worlds, such as Dmytro KULEBA, Ukrainian Minister of Foreign Affairs, Jens ESKELUND, vice-president at the Chamber of European trade in China, or LIU Hualong, president of China Poly Group, but also the director general of the WTO, Ngozi OKONJO-IWEALA, or the South Korean Minister of the Environment.

He was one of the three French speakers, embodying the circle of think tanks, while Jean-Pierre RAFFARIN and Henry GISCARD D’ESTAING, respectively represented the political and economic world. This high-level platform of dialogue, eagerly awaited in the context of a return to international discussions, aspires to build a global consensus and promote common and sustainable development. This meeting was an opportunity to discuss the measures takenby the BRI countries to keep the economic and trade volume roughly stable and normal during the COVID-19 pandemic when the global economy plunged, and cross-border trade and investment slowed down. The role of China-Europe Railway Express in stabilizing the global supply chain was also discussed, as well as the role played by e-commerce in renewing and developing international economic cooperation. In the context of an implementation of the New Silk Roads, but also of an Investment Agreement between the EU and China which is debating, the future of Sino-European relations also occupied the space of discussion.

For Joël Ruet, chairman of the Bridge Tank, “the investment of today makes the business of tomorrow”

In his speech, Joël Ruet stressed the need to optimize Eurasian trade, embodied by the rise of the China-EU Railway Express, by emphasizing the role of upstream investment. As such, it calls for a rebalancing of trade, in favor of exports of European technologies and equipment to China. On this point, the Bridge Tank discussed at length the subject of the EU’s competitive advantages to be brought to bear in its trade with China.

He also addressed the energy issue : the Belt and Road Initiative (BRI) could play an important role in connecting the two hydrogen champions Asia and Europe. The Bridge Tank has also developed several avenues of cooperation in terms of research that it would be strategic to develop between the two regions.

Joël RUET added that the EU did not intend to tackle the climate issue as one subject among others, but as an issue that conditions and prevails over everyone’s interests, and compared this approach to the Blinken line: dealing separately with technological rivalries and coordination for the climate. Joël Ruet said it remains to be seen whether this separation is audible by the Chinese side.

He also reflected on the place of Africa in the Belt and Road Initiative, suggesting that Africa wants and must find its place there. According to him, investments on the African continent, still too limited to infrastructure, would benefit from further enhancing contact between individuals by focusing on human capital and skills training.

Ukrainian Foreign Minister in favor of an ambitious European cooperation on hydrogen

The Ukrainian Foreign Ministry raised the many challenges brought to light by the pandemic. He argues that international trade will play a key role in the global economic recovery, provided cooperation is boosted. To achieve this, and like Ukraine, which is posed as a strategic logistics hub, the regions of the world must enhance their connectivity in order to foster multilateral interactions.

He advocates enhanced European cooperation in the sector of alternative energies such as hydrogen. He therefore calls for coordinated efforts to invest in hydrogen technologies, ensuring that Ukraine intends to play its role as a strategic partner. The Bridge Tank shares with interest the Minister’s enthusiasm for innovative cooperation around hydrogen, as evidenced by these numerous works on the subject.

For Jens Eskelund, Managing Director of Maersk and Vice-President at the European Chamber of Commerce in China, “the business world allows constructive international dialogue beyond politics”

Jens Eskelund spoke about the pre-Investment Agreement between the EU and China, whose ratification has been suspended due to political disputes. For him, this is the dangerous symptom of a phenomenon of politicization of world trade: the political circle meets the business world. However, this situation is untenable in the long term: both parties must be aware of the need to maintain an open dialogue. For him, trade remains the area where constructive and frank links can be maintained regardless of political differences. The business world therefore has a role to play in maintaining contact where diplomatic relations face an impasse.

According to him, and the Bridge Tank totally agrees with him, international cooperation is indeed crucial to meet future challenges such as the climate challenge: on this subject, the EU and China cannot afford to develop technologies in parallel without converging.

LIU Hualong and the importance of working towards a state of trust to rebuild international relations

In a context of tension in diplomatic exchanges, the CEO of Poly Group insisted on a return to a state of trust, a necessary prerequisite for any trade or international investment. According to him, sharing experience and building trust are essential to rebuilding a sustainable post-covid world and stabilizing the global supply chain.

Joël Ruet bounced back from this intervention, emphasizing that constructive relations must be rooted in a state of mutual understanding, fueled by international networks and cultural projects. In fact, for a rapprochement on investment to be made by companies, it is essential to get to know each other, through multicultural initiatives.

The Bridge Tank at the BOAO Forum : to go further

If the Bridge Tank has been a faithful partner of the BOAO Forum since 2018, it is because it works to offer a vision of the world converging with the vision shared at BOAO, in favor of openness and cooperation. The interviews suggested below, given by Joël Ruet to Chinese media, allow us to deepen the meaning of this shared vision.

During an interview with CGTN TV, Joël Ruet proposed avenues for reflection on environmental cooperation between China, the European Union and the United States. He also mentioned the need to strengthen coordination between the G20 and the BRI and addressed the issue of governance of these new Silk Roads to these journalists.

Joël Ruet was quoted by CCTV13, a Chinese national news channel, about the role of BOAO in the economic integration of Asia, but also of the world on a global scale.
 
In an interview with Xinhua news on the occasion of the opening of the Forum, the president of the Bridge Tank presented his point of view on the trade of tomorrow, necessarily based on proactive and ambitious investments, a reform of the WTO, and the greening of the New Silk Roads. Quoted in an article of Xinhua news on the place of China in sustainable development on a global scale, Joël Ruet argued that the BRI has a big role to play in the energy transition, in particular in the field of hydrogen.
 
To find all the media resources of the Bridge Tank about this 2021 Edition of the BOAO Forum : (insert link of the short post).
 

EU-China Comprehensive Agreement on Investment: Stakes for a constructive balance of power

By Philippe Coste, Pierre-Noël Giraud, Stéphane Gompertz, Henri de Grossouvre, Fatima Hadj, Brice Lalonde, François Loos, François Quentin, Joël Ruet, Raphaël Schoentgen, Alex Wang, avec Clarisse Comte et Claire Thomas.

After seven years of negotiations, the European Union and China reached an investment agreement on December 30, 2020. While Beijing sees in it the promotion of a “high degree of openness”, the EU aspires through this treaty to establish the long sought after “equality of market conditions”.

To carry out this project, a balance between the strategic interests of each side and common objectives on which to agree remains to be found… just as it remains to find avenues for concrete action.

Find the analysis note in French :2021-03-Issue-Brief-UE-CHINETélécharger

• This treaty provides for the intensification of economic and trade relations between the EU and China. It guarantees EU investors greater access to China and also helps to create more balanced conditions of competition.

• Areas of collaboration are proposed here, in various fileds : political (place of China in international organizations, global governance), legal (international standards, ESG), industrial (mobility, decarbonisation, role of SMEs), economic, environmental, scientific , technological (energy transition, carbon capture, hydrogen, nuclear, new energies), financial (coordinated introduction of carbon prices) and cultural.

• For the EU, it is above all a matter of asserting its strategic interests in a coordinated manner with the member countries during the ratification process.

The long-term issues of technological sovereignty, of competition between blocs, all possible causes of “stop and go” in bilateral relations must be seriously dealt with.

Despite the identified obstacles, maintaining an open but precise dialogue between the EU and China is essential. The European Union must continue its transformation and ensure respect for its increase in diplomatic power both within the EU and in its relationship with China: beyond state-to-state relations, it is up to the EU in as a community to negotiate the terms of a new bilateral relationship with China. It is in this way that it will confirm its status as a “balancing power”.

The Organization for the Development of the Senegal River Basin (OMVS) will be a candidate for the Nobel Peace Prize

On 12th March 2021, in Kayes, Mali, our Board Member Hamed Semega, announced the Senegal River basin organization (OMVS) will run for the Peace Nobel Prize. OMVS, an international organization under Guinea, Mali, Mauritania, Senegal, today celebrates its 49th anniversary. Heading towards 50, and ahead of the upcoming Word Water Forum, the 4 states realize the OMVS has been a factor of peace, stability and development in the region. Just as IPCC got the Prize on climate change mitigation, we wish the OMVS will get the prize for huge climate adaptation efforts it does on top of peace.

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