China, East Asia and the European Union : Strong Economics, Weak Politics? [1 ed.] 9789004291430, 9789004291423

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China, East Asia and the European Union

International Comparative Social Studies Editor-in-Chief Mehdi P. Amineh (Amsterdam Institute for Social Science Research, University of Amsterdam, International Institute for Asian Studies, Leiden University) Editorial Board W.A. Arts (University College Utrecht, The Netherlands) Sjoerd Beugelsdijk (Radboud University, Nijmegen, The Netherlands) Harald Fuhr (University of Potsdam, Germany) Joyeeta Gupta (University of Amsterdam, The Netherlands) Nilgün Önder (University of Regina, Canada) Gerhard Preyer (Goethe University Frankfurt am Main, Germany) Islam Qasem (Webster University, Leiden, The Netherlands) Kurt W. Radtke (International Institute for Asian Studies, The Netherlands) Ngo Tak-Wing (Leiden University, The Netherlands) L.A. Visano (York University, Canada)

Volume 35

The titles published in this series are listed at brill.com/icss

China, East Asia and the European Union Strong Economics, Weak Politics? Edited by

Jan van der Harst Tjalling Halbertsma

LEIDEN | BOSTON

Cover illustration: Earth’s city lights. Detail depicting Europe and East Asia. Data courtesy Marc Imhoff of NASA GSFC and Christopher Elvidge of NOAA NGDC. Image by Craig Mayhew and Robert Simmon, NASA GSFC. The Library of Congress Cataloging-in-Publication Data is available online at http://catalog.loc.gov LC record available at http://lccn.loc.gov

Typeface for the Latin, Greek, and Cyrillic scripts: “Brill”. See and download: brill.com/brill-typeface. issn 1568-4474 isbn 978-90-04-29142-3 (hardback) isbn 978-90-04-29143-0 (e-book) Copyright 2017 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Brill Hes & De Graaf, Brill Nijhoff, Brill Rodopi and Hotei Publishing. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill NV provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, MA 01923, USA. Fees are subject to change. This book is printed on acid-free paper and produced in a sustainable manner.

Contents Acknowledgements  ix List of Figures and Tables  xi List of Abbreviations  xii List of Contributors  xv 1 Introduction: China, East Asia and the European Union—Strong Economics, Weak Politics?  1 Jan van der Harst and Tjalling Halbertsma

Part 1 Economics 2 Overcoming Economic Weakness in Japan and the EU: The Role of Political Entrepreneurship and the Political Economy of Reforms  15 Werner Pascha 3 The Sino-EU Economic Relationship under the Sovereign Debt Crisis  34 Ding Chun and Li Junyang 4 Trade and Economic Relationships in East Asia: Does Globalization Lead to Higher Legalization?  55 Herman Voogsgeerd

Part 2 Politics 5 Weak Politics—Depoliticization as Strategic Choice: an Analysis of Chinese Priorities in Sino-EU Relations 73 Daniel R. Hammond and Jing Jing 6 Same Name, Different Substance? Exploring the Impact of Issue Perceptions on China-EU Relations  91 Frank Gaenssmantel and Liu Feng

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Contents

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Misunderstanding and Convergence in Sino-Italian Relations During the Cold War: Implications for the Present  113 Enrico Fardella

8

How are Norms Resisted? Insights from China’s Engagement in the Shanghai Cooperation Organization 129 Nadya Stoynova

Part 3 Security and Geopolitics 9

EU-Asia Security Cooperation: Security Cooperation Between the People’s Republic of China and the European Union  155 Neil Duggan

10

Taking or Avoiding the Path to China-US Rivalry: European Perspectives and Responses  169 David Kerr

11 Reconceptualizing EU-East Asia Security Cooperation: Process, Norms and the Quality of Interaction  186 Susanne Kamerling 12

Sovereignty Over the Skies: The European Union and East Asia’s Air Defense Identification Zones  203 Christopher K. Lamont

Part 4 Regional Integration and Trans-Regional Cooperation 13 The EU Pivot Towards Southeast Asia: Between Regional Integration and Security Dynamics  217 Elisa Hörhager 14

Asia-Europe Parliamentary Dialog: Strong Economics, Strong Politics but What Value?  233 Silja Keva

Contents

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A Cinderella Story: The Asian Development Bank and its European Member States  253 Maaike Okano-Heijmans

16

Concluding Remarks  271 Jan van der Harst and Tjalling Halbertsma

Bibliography 277 Index 299

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Acknowledgements This volume is the result of the launch conference of the Centre for East Asian Studies Groningen (CEASG) convened on 8 and 9 May 2014 at the University of Groningen. Themed ‘East Asia and the European Union: strong Economics, weak Politics?’, the conference consisted of six panels exploring contemporary dimensions and interactions regarding East Asia and the European Union: 1. Asianization, Sovereignty and Rivalry: Power Relations; 2. China and the EU: Culture, Strategy and Media; 3. Political Economy of East Asia and the EU; 4. Maritime Security Governance; 5. China-EU relations: Issue Perceptions, Norm Diffusion and Mutual Understanding; 6. ASEM and ASEAN: Regional Integration and Regional Identity. CEASG was fortunate to welcome speakers and scholars from East Asia and Europe to this conference and a selection of their contributions are included in this volume. But what was launched at this conference, resulting in the present volume? Established in September 2013, under Globalization Studies Groningen, the interfaculty CEASG initiates and supports inter-disciplinary teaching and research on contemporary East Asia, including China, Japan, the Korea’s and Mongolia. Institutionally, the Center builds on longstanding partnerships in East Asia, including the University’s Dutch Studies Center at Fudan University in Shanghai, the Tsinghua-Groningen Research Center at Tsinghua University in Beijing and the Dutch Studies Center at Osaka University in Osaka, as well as the University’s manifold cooperation with partner institutions in East Asia. At the opening of the conference, the organizers likened CEASG’s launch to the proverbial first step in a long journey bringing ‘more Groningen to East Asia and, importantly, more East Asia to Groningen’. Since, CEASG has supported the establishment of a number of new Chairs and appointments in East Asian studies, Chinese studies, and Korean studies, and created new programs for students interested in contemporary East Asia. In addition the center has developed related facilities such as a Korea Corner and exhibitions on East Asia at the University Library and various Faculties. CEASG is also an active participant in the development of a branch campus in China, tentatively named the University of Groningen Yantai. In short, the launch of CEASG has resulted in a wide range of East Asiarelated activities and facilities at the University of Groningen, including the present publication.

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Acknowledgements

The editors, both affiliated to CEASG, are grateful to the participants of the launch conference and to those who took the time to contribute their thoughts in writing to this volume. For biographies see the List of Contributors. They would also like to thank publisher Brill for supporting the conference, and its series editor Mehdi P. Amineh for including the present volume in his International Comparative Social Studies series. Finally, the editors would like to thank CEASG’s first Office Manager Marloes Viet for not only coordinating the launch conference but also the volume resulting from it.

List of Figures and Tables Figures 3.1 3.2 3.3 3.4 3.5 5.1 6.1 6.2

EU trade with China 2003–2013 35 EU trade in services 2004–2012 39 EU members investment flows in China in 2011 40 Barriers for China’s investment in EU 46 Governmental barriers for China’s investment in EU 46 Red lines of Sino-EU engagement (adapted from Chen, 2014) 80 Issue perceptions and approaches to solutions 100 Ideal-types of interaction based on perceptions about primary issue content 101 7.1 China-related resolutions, orders of the day, and written and oral questions (Interrogazioni) raised before relevant commissions and the full Chambers of the Italian Parliament, XVI Legislature 127 Tables 3.1 The net value of the European countries trade with China from 2008–2012 37 3.2 EU trade with China in goods by product by Standard International Trade Classification (SITC) sections 37 3.3 Anti-dumping and anti-subsidy investigations by EU 42 15.1 Voting power vs. contributions in the Asian Development Bank of key members 256 15.2 Procurements and consultancy services in the ADB 262

List of Abbreviations AB ACFTO ADB ADF ADIZ ADMM+ AEBF AEC AEPF AETUF AIIB AMISOM APEC APR APT ARF ASEAN ASEM ASEP ASMAE BIT BoJ CCP CEACR CEASG CFSP CGPCS CICA CMF CMFA COSCO CSCAP CSDP CSHRS CTF DC

Appellate Body All-China Federation of Trade Unions Asian Development Bank Asian Development Fund Air Defense Identification Zone ASEAN Plus Defense Ministerial Meeting Asia-Europe Business Forum ASEAN Economic Community Asia-Europe People’s Forum Asia-Europe Trade Union Forum Asian Infrastructure Investment Bank African Union Mission in Somalia Asia-Pacific Economic Cooperation Asia-Pacific Region ASEAN Plus Three ASEAN Regional Forum Association of Southeast Asian Nations Asia-Europe Meeting Asia-Europe Parliamentary Partnership Archivio Storico del Ministero degli Affari Esteri [Archives of the Italian Ministry of Foreign Affairs] Bilateral Investment Treaty Bank of Japan Chinese Communist Party Committee of Experts on the Application of Conventions and Recommendations Centre for East Asian Studies Groningen Common Foreign and Security Policy Contact Group on Piracy off the Coast of Somalia Conference on Interaction in Confidence Building Measures in Asia Combined Maritime Forces Chinese Ministry of Foreign Affairs China Ocean Shipping Company Council of Security in Asia Pacific Common Security and Defense Policy China Society for Human Rights Study Combined Task Force Democrazia Cristiana [Italian Christian Democratic Party]

List Of Abbreviations

DPJ DPRK DSB EAS EBA ECB EFSF EMU EP EPA ESDP ESM EU FDI FIR FTA FTC GATS GATT GDP GPA GRINGO ICAO ICCPR ICN ICTU ILO IMF IPR IPU IR IRTC JCG JGB LDP MFA MITI MOFCOM MoU NATO NDRC

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Democratic Party of Japan Democratic People’s Republic of Korea Dispute Settlement Body East Asia Summit Everything But Arms European Central Bank European Financial Stability Facility European Economic and Monetary Union European Parliament Economic Partnership Agreement European Security and Defense Policy European Stability Mechanism European Union Foreign Direct Investment Flight Information Regions Free Trade Agreement Fair Trade Commission General Agreement on Trade in Services General Agreement on Tariffs and Trade Gross Domestic Product Government Procurement Agreement Government-Run/Inspired Non-Governmental Organization International Civil Aviation Organization International Covenant on Civil and Political Rights International Competition Network International Confederation of Free Trade Unions International Labour Organization International Monetary Fund Intellectual Property Rights International Parliamentary Union International Relations Internationally Recommended Transit Corridor Japan Coast Guard Japanese Government Bond Liberal Democratic Party Ministry of Foreign Affairs Ministry of International Trade and Industry Ministry of Commerce Memorandum of Understanding North Atlantic Treaty Organization National Development and Reform Commission

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List Of Abbreviations

NTB Non-Tariff Barrier OBOR One Belt One Road OCR Ordinary Capital Resources ODA Official Development Assistance OECD Organization for Economic Co-operation and Development OEF Operation Enduring Freedom OMT Outright Monetary Transactions PACE Parliamentary Assembly of the Council of Europe PCA Partnership and Cooperation Agreement PCI Partito Comunista Italiano [Italian Communist Party] PLAN People’s Liberation Army Navy PR Public Relations PRC People’s Republic of China PSI Partito Socialista Italiano [Italian Socialist Party] PV Photovoltaic QDR Quadrennial Defense Review RCI Regional Cooperation and Integration ReCAAP Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia RMB Renminbi ROK Republic of Korea SAARC South Asian Association for Regional Cooperation SCO Shanghai Cooperation Organization SEA Southeast Asia SHADE Shared Awareness and Deconfliction SITC Standard International Trade Classification SNMG Standing NATO Maritime Group TAC Treaty of Amity and Cooperation TRIPS Trade-related aspects of Intellectual Property Rights UK United Kingdom UN United Nations UNCHR United Nations Commission on Human Rights US United States USA United States of America USD US Dollar WANA West Asia and Northern Africa WFP World Food Program WMD Weapons of Mass Destruction WTO World Trade Organization

List of Contributors Editors Jan van der Harst is professor of European Integration at the University of Groningen. He is academic director at the Centre for East Asian Studies Groningen (CEASG), director of the Dutch Studies Center at Fudan University, and director of the Tsinghua-Groningen Research Center at Tsinghua University. Tjalling Halbertsma is professor of East Asian Studies with a focus on modern-day Mongolia at the University of Groningen, and Director International at the Centre for East Asian Studies Groningen (CEASG). Contributors Ding Chun (in this volume co-author with Junyang Li) is professor of Economics and holder of the Jean Monnet Chair, both at Fudan University, Shanghai, as well as director at the Center for European Studies and the Dutch Studies Center FudanGroningen. He specializes in European integration, European economy and modes of European welfare and social protection systems. He is vice-president and chief secretary of the Chinese Society for EU Studies, senior researcher at the Institute of European integration studies (ZEI) at Bonn University, AB-member of the Center for European studies at Gothenburg University and Member of the Global Agenda Council on Europe at the World Economic Forum. He is the editor-in-chief of World Economy Outlook and the Chinese Annual Report on European Economic Development. He has published over 150 contributions in academic periodicals and journals in China and abroad. His monograph Comparative Studies on Performances of Major Four Health Care Systems in the World has won an academic award in China. Neil Duggan is director of the MSC International Public Policy and Diplomacy at the Department of Government of University College Cork (UCC), Ireland, where he also received his PhD. In 2008, he earned an MA in East and Southeast Asian Studies from Lund University. Since completing his PhD, he has worked at the

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department of East Asian Politics, Ruhr Universität Bochum and as acting chair in Modern Chinese Society and Economy at the Georg-August-Universität in Göttingen. Duggan’s main areas of research are Sino-African relations, East Asia’s role in global governance reform, and nontraditional security issues. His recent publications include ‘The Africa Policies of the European Union and the People’s Republic of China’, Revolutions: Global Trends and Regional Issues (May 2014) 3; ‘Existing and Emerging Powers in the G20: The Case of East Asia’, Asien 128 (2013): 1–15 (with Yves Tiberghien), and ‘Expectations and Adaptation: China’s Foreign Policies in a Changing Global Environment’, International Journal of China Studies 2 (2011) 1: 1–26 (with Jörn-Carsten Gottwald). Enrico Fardella is associate professor at the History department of Peking University and executive director of the Center for Mediterranean Studies at the same university. He also works as global fellow at the Woodrow Wilson International Center for Scholars, and as Research Scholar at the Machiavelli Center for Cold War Studies (CIMA) and the Torino World Affairs Institute (T.wai). Fardella has been at the East China Normal University (ECNU) and was a fellow of the Science & Technology China Program of the European Commission. He is the coordinator of T.wai’s research agenda on China’s role in the Mediterranean and of the ThinkINChina forum in Beijing, as well as deputy editor of the OrizzonteCina monthly review. His main fields of interest are: Chinese foreign policy, history of international relations, history of contemporary China. Frank Gaenssmantel is assistant professor in the department of International Relations and International Organization at the University of Groningen. He has previously held a position as research fellow at the Center for Advanced Studies on Contemporary China (Centro di Alti Studi sulla Cina Contemporanea, CASCC) in Turin and taught at the School of Advanced International and Area Studies at East China Normal University in Shanghai. He received his PhD from the European University Institute (EUI) in Florence. His research interests include China-EU relations, Chinese and EU foreign policies, foreign policy analysis and diplomatic interaction. Daniel R. Hammond took up the post of lecturer in Chinese Politics and Society at the University of Edinburgh in 2011. His research focuses primarily on Chinese policy-making in a number of areas including urban and rural social assistance, perceptions of poverty, and animal welfare in Asia. He also works with others on research

List Of Contributors

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in Sino-EU relations, Sino-ASEAN relations as well as relations between China and particular Southeast Asian states, and the South China Sea. Elisa Hörhager is a research fellow at the Goethe University in Frankfurt in the interdisciplinary project ‘Protecting the Weak’. After having studied Applied Political Science in Germany and France and Sinology in France and China, she is writing her PhD thesis on social movements, risk and disaster management in China. She has completed a postgraduate Masters at the College of Europe in EU International Relations and Diplomacy funded by the German Federal Ministry of Education and Research, with a focus on EU-Asia relations. Her publications in this area are on China-ASEAN relations as well as on the politicization of natural disasters. Jing Jing (in this volume co-author with Daniel R. Hammond) is a PhD candidate in Chinese Studies at the University of Edinburgh working towards a thesis on ‘A discourse-oriented constructivist perspective on contemporary Sino-EU relations (1995–2015)’. She is also interested in translation and interpretation studies. She is dedicated to facilitating the communication and understanding between China and the western countries in and outside academia. Susanne Kamerling is a researcher and lecturer at the International Relations and International Organization department of the University of Groningen and an associate fellow at the Netherlands Institute of International Relations ‘Clingendael’ in The Hague. She is a PhD candidate working on a dissertation about the role and self-perception of China and India in international security issues. She has a background in Political Science (International Relations) and Social Geography (International Development Studies) at the University of Amsterdam and Sciences Po in Paris. Her research interests are international security issues, the role of China and India in international security, their security and defense policies, maritime security and counter-piracy, the EU’s Common Security and Defense Policy (CSDP) and external relations with Asia. David Kerr teaches Chinese politics and Asian International Relations at Durham University, UK. His research specializes in three areas: Chinese foreign policy, Asian strategic politics, and relations between China and Europe. He is editor of China’s Many Dreams: comparative perspectives on China’s search for national

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rejuvenation (Palgrave, 2014). A previous edited volume (with Liu Fei) was The International Politics of EU-China Relations (Oxford University Press, 2007). Silja Keva works as a university teacher at the Center for East Asian Studies of the University of Turku. Keva conducts research on the Asia-Europe parliamentary dialogue within the wider Asia-Europe Meeting (ASEM) process as part of her doctoral dissertation. In 2005 and 2006 she was a researcher in the Ten Years of ASEM research project, commissioned by the Ministries for Foreign Affairs of Finland and Japan. In 2006 she also participated in the ASEM6 summit preparations at the ASEM6 Secretariat of the Ministry for Foreign Affairs of Finland. Christopher K. Lamont is assistant professor of International Relations and International Organization at the University of Groningen. Lamont was a research fellow at the Tekijuku Commemoration Center and taught at the Osaka School of International Public Policy at Osaka University. In 2015, Lamont was also professor by special appointment at Osaka University. Lamont’s research interests focus on democratization, transitional justice and international law. He is author of International Criminal Justice and the Politics of Compliance (Ashgate, 2010) and Research Methods in International Relations (Sage, 2015). Previously, he was a Fulbright fellow at the University of Zagreb and RCUK post-doctoral fellow at the Transitional Justice Institute of the University of Ulster. Liu Feng is an associate professor and the vice chair of the Department of International Relations, Zhou Enlai School of Government at Nankai University, Tianjin, China. His research interests focus on International Relations theory, East Asian security, and Chinese foreign policy. Liu is the author of The Logic of Balancing: Structural Pressure, Hegemonic Legitimacy and Great-Power Behavior (2010), and co-editor of China’s Rise & World Order (2011). He is also an editor of The Chinese Journal of International Politics. Maaike Okano-Heijmans is a senior research fellow at the Netherlands Institute of International Relations ‘Clingendael’ in The Hague. Her research interests are in economic diplomacy and international relations in East Asia (with a special focus on Japan) and in consular affairs and diplomacy. She regularly lectures on these themes at policy-oriented institutes and universities. She obtained a PhD from the University

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of Antwerp and holds Master degrees from the University of Amsterdam and Waseda University in Tokyo. She is a Dutch member of CSCAP-EU (Council for Security Cooperation in the Asia-Pacific, the organization promoting a security dialogue in Asia). Okano-Heijmans is author of Economic Diplomacy: Japan and the Balance of National Interests (Martinus Nijhoff, July 2013). She contributed research articles to the European Journal of East Asian Studies, the Internationale Spectator, the Hague Journal of Diplomacy, and the Pacific Review. Werner Pascha is professor of East Asian Economic Studies/Japan and Korea at the Mercator School of Management, and director of the Institute of East Asian Studies of the University of Duisburg-Essen. He has studied Economics at the University of Freiburg, the London School of Economics and Political Science and Nagoya University, Japan. Pascha’s visiting positions include Doshisha University, Kyoto (JSPS Invitation Fellowship) in 2011 and Busan National University in the Republic of Korea in 2013. Among honorary activities, he is a member of the Steering Group and Executive Board of EastAsiaNet (European Research School Network of Contemporary East Asian Studies) and Vice- President of the Japanese-German Center Berlin (JDZB). His research interests include the political economy of institutional change in East Asia, particularly Japan and Korea, and international economic relations of the East Asian region. Nadya Stoynova obtained a Bachelor’s degree in International Relations and International Organization from the University of Groningen and a Master’s degree in Global Criminology from the University of Utrecht. At the time of writing, she was pursuing a second Master in International Security at the University of Groningen. Her main interests lie in transnational security issues, power configurations on the international stage and the life cycles of international norms as well as the interplay between all these factors. She had the opportunity to work on security issues in the Bulgarian and EU context as an intern in the security program of one of the leading Bulgarian policy think tanks, the Center for the Study of Democracy. Herman Voogsgeerd holds degrees in public international and EU law and in contemporary history. His PhD from 2000 is on EU internal market law. He presently works as a Senior Lecturer in International Political Economy at the department of International

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Relations and International Organization (Faculty of Arts) and in (international and European) company and labor law (Faculty of Law), both at the University of Groningen. His research interests focus on balancing social and economic rights, corporate governance of large firms and the rise of Asia. He is co-editing a publication on comparative regionalism and regionalization in EU-East Asia, which is part of a cooperation project between the Universities of Groningen and Osaka.

CHAPTER 1

Introduction: China, East Asia and the European Union—Strong Economics, Weak Politics? Jan van der Harst and Tjalling Halbertsma Introduction When policy-makers in East Asia reflect on Europe, their immediate association, at least till very recently, has been the Eurozone debt crisis, culminating in the heated struggle to prevent Greece’s financial collapse. Asian countries, particularly China, have monitored the crisis with fervent interest because the EU is one of their largest export markets. Mutual economic relations were threatened to be affected by lower demand and expectations. Yet, despite the crisis, the EU still makes its influence felt in Asia, most notably in the area of trade. After all, the countries taking part in the Asia-Europe Meeting (ASEM) together represent more than 60 percent of global commerce. Since some time, the EU has endeavored to extend its network of Free Trade Agreements in Asia. An agreement with South Korea was concluded in 2011 and further arrangements are underway (or concluded) with several member countries of the Association of Southeast Asian Nations (ASEAN). Japan is next in line (negotiations started in March 2013) and also China has reached out to the EU, especially after finding a solution to the long-running dispute on solar energy panels. On top of this, European investments in East Asia are steadily increasing, simultaneously with East Asian investments in Europe. These developments show why and how the EU and its member states continue to matter for Asian economies, and vice versa. Compared to this, Europe’s involvement in broader issues, such as East Asian politics and security, has proved to be an entirely different matter. Europe has been blamed for taking a one-dimensional view of Asia’s rise, considering the region primarily as an area for economic opportunities. Indeed, for a long time, the EU has been conspicuously absent if it concerns the ‘high politics’ of the East Asian region, such as maritime disputes between China and its neighbors in the South China Sea, nuclear threats posed by North-Korea or regional rivalry on energy resources. To its chagrin and despite its request for observer status, the EU has not been invited to the East Asia Summit (EAS) meetings, not only due to its inability to speak with one voice but also because of a­ pparent lack of © koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_002

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political clout. Hence, the fundamental question has been asked what Europe’s role is going to be if the world stage moves further towards the Asia-Pacific. Is the EU still an actor that needs to be taken into account? This is not to say that there is no European political presence at all in the region. The two successive EU High Representatives for Foreign Affairs and Security Policy, Catherine Ashton and Federica Mogherini, have launched several initiatives aimed to increase Europe’s visibility in East Asia. President Obama’s ‘Pivot to Asia’ encountered a lukewarm response in the region and created leeway for the EU to make its own mark. Moreover, multilateral ASEAN-EU contacts stand at an interesting point, with the two blocks striving to enhance mutual cooperation. With disputes about Myanmar largely left behind, the EU’s debt crisis has offered opportunities to restructure relations with ASEAN on a more equal basis. While the EU looks for ways to participate in Asia’s growth, Asia has become aware of the significant impact of failing European demand on its economies. Discussions are opened on extending the existing Enhanced Partnership (2013–2017) between the EU and ASEAN into a Strategic Partnership. Apparently, the two organizations have a common problem: both experience trouble in making their political voice heard externally and both tend to allow their unity to be split by outside powers. In this respect, it is worthwhile investigating whether and to what extent China, Japan and South Korea are willing to team up with ASEAN in the so-called ASEAN Plus Three (APT) framework. Despite some recent developments signifying an opposite direction, this introductory sketch seems to confirm the prevailing notion that the relationship between East Asia and the EU is still characterized by the traditional dichotomy ‘strong economics, weak politics’. The question is to what extent this dichotomy remains tenable if we look closer—empirically and theoretically— at the recent development of interregional relations and the outcomes of interactions. Is it possible and scientifically productive to rigidly separate economics from politics? And, more important, what does this all mean for the role Europe is able and willing to play in East Asia, as well as for the role East Asia allows Europe to play under the given circumstances?

This Volume’s Chapters

Based on the above-mentioned questions we have approached sixteen international scholars, from both East Asia and Europe, to expound their views on the issues under consideration. Their contributions to this volume have been divided into four parts, each focusing on a distinctive thematic area of EU-East

Introduction

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Asian relations. Although the volume aims to cover East Asia as a whole, it is obvious that the prominent position of China in the region (and also globally) finds reflection in the contents of the various chapters. Part 1 addresses the economic aspects of the relationship, including the impact of the European debt crisis on mutual affairs. In Chapter 1 Werner Pascha makes a comparison between Japan and the EU focusing on the question of how the two actors have reacted to the macro-economic challenges that have confronted them as a consequence of severe problems with their financial systems and public finance. These reactions have proved to be vastly different. After a long period of inertia (‘lost decades’), Japan has proceeded to an extremely ambitious stimulus program (‘Abenomics’) to fuel the domestic economy, just at a time that the EU prefers to stick to more conventional reform measures in the financial and government sectors of affected European economies. Pascha attributes the difference to the role of political entrepreneurship displayed by the Japanese government, as well as the latter’s mobilization of support through political communication and the ‘creation of ideas that fit older storylines’ (e.g. the symbolism reflected in the government’s use of the ‘three arrows’). Instead, the European Union has opted for a more cautious and less activist policy in its attempts to beat the Eurozone debt crisis. It is difficult to find out which of the two strategies works best. Pascha argues that where Japanese political entrepreneurship ‘offers an escape from the pessimism of more conventional reform strategies, such activism may sometimes come at a high price’. In his contribution on the impact of the sovereign debt crisis on Sino-EU economic relations, Ding Chun argues in Chapter 2 that while in the short run we face mainly negative consequences (not only Europe, but also China’s economy has suffered from the European crisis), the prospects for the longer term are actually rather positive. Trade and investments will continue to grow, as long as both sides are willing to support the cooperation and manage to control the possible dangers that might interfere, predominantly in the form of erupting trade conflicts and anti-dumping policies. The two parties have mutual interests. Faced with deflationary risks, sluggish economic growth, as well as an approaching British exit, the EU is in urgent need of China’s demand dynamics, whereas the Chinese economy looks eagerly at EU’s technologies and seeks to learn from the latter’s ‘experiences of industry transformation and economic development’. Ding Chun’s chapter clearly indicates that strong economics are instrumental for a smooth development of political relations. In Chapter 3 Herman Voogsgeerd approaches the Sino-European economic relationship from a different perspective, focusing on the degree of ­legalization

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in the trade policies of China and the EU. Voogsgeerd argues that although legalization (in the form of a strict observance of common trade rules) is on the rise in China, especially after the latter’s WTO entry in 2001, Beijing still seems to prefer loose standards to precise rules and limited delegation of authority to full application of international conventions. Since Western economic actors, in their turn, continue to emphasize predictability and transparency in global trade policies, the ‘system friction’ between China and the EU is likely to be prolonged for some time. As Voogsgeerd concludes: ‘sovereignty matters in China, more than the globalization of the economy.’ Following the economic section, Part 2 of this volume deals with the political angle of the relationship between the EU and China. In Chapter 4, Daniel Hammond and Jing Jing analyze why politics generally lag behind compared to economics. In their view, based on an analysis of speeches and newspaper articles, the problem of weak politics between China and the EU is caused by a basic misunderstanding. In areas of human and democratic rights, Europe ‘is seeking outcomes through the relationship with China, which China has both no interest in developing and also actively seeks to avoid’. Moreover, China has a ‘clearer strategic articulation’ in the relationship: the current Xi-Li government emphasizes de-politicization and bilateralism as opposed to European preferences for politicization and multilateralism. Hammond and Jing recommend the EU to reorient itself on how to conduct business with China. It could do this by adopting a ‘rewards delay’, which means temporarily playing down its ‘ambitions to seek deeper political interactions with China and a better political environment in China and reserve it for later for a better effect’. To do this, the EU should focus on what China prioritizes, the further development of (depoliticized) economic relations, and tie these to specific political developments. This contrasts, at least partly, with Frank Gaenssmantel and Liu Feng’s views put forward in Chapter 5 of this volume. In their opinion, the deliberate politicization of problematic areas by the EU may sometimes prove an effective (albeit painful) method to move the Sino-EU relationship beyond economics and provide an impetus for breakthroughs in areas where the two actors are facing an impasse. Gaenssmantel and Liu have looked at the compatibility of each side’s perceptions regarding the nature of the issues on their common diplomatic agenda and the resulting approaches to those issues. In other words, to what extent do Chinese and European diplomats have similar interpretations of how mutual economic and political problems should be addressed? What is their preferred strategy: complying with the internationally established rules or reverting to a classical bargaining approach? Such a strategic choice has strong implications for the ability of the two parties to cooperate. Similar

Introduction

5

perceptions and approaches promote understanding while a mismatch makes it more difficult to find agreement. On the basis of two case studies, the arms embargo and the solar panel crisis, the authors conclude that a congruence of perceptions and approaches (as in the initial phase of the arms embargo negotiations) tends to strengthen Sino-European cooperation, while an asymmetric situation (as in the initial phase of the solar panel crisis) not only hinders cooperation but even allows for growing tensions. In both cases a change of negotiation tactics along the way prompted inverse outcomes: on the solar panel issue agreement was reached after the EU had decided to engage in classical bargaining (as the Chinese preferred), while on the arms embargo issue initial successful cooperation became deadlocked after a European switch towards involving human rights issues. With these last findings, Gaenssmantel and Liu end up coming close to what was argued in the previous chapter by Hammond and Jing. In Chapter 6, Nadia Stoynova writes about China’s resistance to international norms in the area of human rights policies. The EU’s pursuit of civil and political rights is hampered by cultural and situational factors. That is, China objects both to the substance of the norms and the engagement tactics of the norm entrepreneur (EU). The EU’s good trade relations with China have proved inadequate to overcome these barriers. On the contrary, as Stoynova argues, there is evidence to suggest that the insistence on a genuine implementation of Western notions of civil and political rights leads to a ‘shift in Chinese international policy towards engaging more closely with less demanding partners’, like the member countries of the Shanghai Cooperation Organization (SCO), the organization which links China to Russia and a number of former Soviet states in Central Asia. SCO members attach increasing value to this new forum as representative of their shared values, an engagement which becomes all the more attractive if compared to the conditionality approach used by Western states. On a more bilateral level, Enrico Fardella in Chapter 7 studies the historical development of political relations between China and Italy, a relationship which has been characterized by misunderstanding and misperceptions ever since the proclamation of the People’s Republic of China in 1949. During the Cold War period Italy and China attributed different importance to their bilateral relations. While both countries hoped to use these relations as an instrument to ‘flex the constraints of the bipolar system’, China, as a developing power under constant threat of war, regarded Italy as a ‘mere function in its anti-hegemonic struggle’, whereas Italy hoped to benefit from China’s increasing global role to enlarge its manoeuvring space within the Atlantic alliance, both politically and economically. ‘Italy looked at China as a ­tempting

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o­ pportunity to upgrade its status’, in Fardella’s words. In reality, the two countries proved incapable to correctly estimate the other side’s intentions. The Italians displayed a lack of knowledge of the Chinese Communist Party’s inner workings, complaining about the secrecy of the Chinese political system and the absence of a free press. The Chinese, on their part, looked suspiciously at the ‘anti-communist logic’, which dominated Italian politics during the entire Cold War period and which consistently excluded leftist forces from the executive. The end of the Cold War failed to bring the hoped-for improvement in Sino-Italian relations. Prolonged political instability in Italy still weakens the creation of a strategy in support of Rome’s long-term interests in its relationship with Beijing. Furthermore, the relative freedom which post-Cold War Italy managed to acquire vis-à-vis Washington, was soon levelled out by a new structural and involving relationship with the EU. Trade agreements between the EU and China sometimes have proved to be counter-productive for traditional economic sectors in Italy, such as the textile and shoe-wear industries. As a result, China is often targeted as a scapegoat by political forces in Italy that are ‘trying to gather consensus by capitalizing on the frustrations of people hit by the crisis’. Fardella concludes that ‘Italians’ widespread lack of knowledge of Chinese culture and history encourages prejudice and suspicion in public opinion’. Part 3 of the volume is dedicated to the security and geopolitical dimension of the relationship between the EU and East Asia, in particular China. In recent times, both China and the EU have become more pro-actively engaged in global security matters, the issue of a possible axis between the two has therefore emerged. However, as Niall Duggan (Chapter 8) points out, in terms of security governance the EU is bound by serious limitations, due to an internal role conflict that prevents the Union from moving beyond its function as a civilian power. As a result, China tends to view the EU as a non-traditional security actor, different from actors like the US and Russia which are perceived by Beijing as having a traditional security role. At the same time, China itself attempts to play the role of a responsible great power in global governance, shown by its increased presence in global security operations. As a consequence, areas of cooperation between China and the EU are necessarily limited to issues like terrorism, (non-) proliferation of Weapons of Mass Destruction (WMD), regional conflicts, organized crime, environmental damages, pandemics, and the like. Moreover, because of existing limitations, cooperation can only occur outside each other’s geographic neighborhood and that of their key ally/rival, the US.

Introduction

7

In Chapter 9, David Kerr points to the difficult security dilemmas Europe is faced with in its relations with China and the East Asian region. The principal dilemma is that Europe does not have sufficient resources to expand and diversify its range of strategic choices. But even if this ‘matching of effective means to effective ends’ were to be achieved there remains the problem or need of an independent course of action. Being paired with the US, as is often the case now, does not necessarily work to Europe’s advantage in trying to draw Beijing into deeper discussions about the relevance of European experiences with international law and institution building. Kerr argues that Europe needs to be sufficiently engaged with both China and the US to exert influence over their increasingly competitive relationship, but also sufficiently independent to defend its own values and interests. This requires a balancing act which in the current circumstances is very unlikely to succeed. Kerr quotes Axel Berkofsky who has said that in terms of security involvement in Asia Europe seems to be in a position of ‘damned if it does, damned if it does not’. This rather pessimistic view is challenged by Susanne Kamerling, who in Chapter 10 rejects the traditionally exclusive focus on the perceived weakness of EU-East Asia security cooperation. She argues that, by emphasizing the lack of concrete deliverables in the relationship, one misses out on the ‘value that lies in the process itself and the quality of interaction’. Especially when emerging countries like China interact with more established powers such as EU member states, there is a socialization of those newcomers into the international community, particularly in the transitional phase. By only looking at measurable results and outcomes, we might be overlooking what is actually happening in the interaction process, and how this happens. On the basis of her research on recent maritime security cooperation between the EU and East Asia, Kamerling concludes that new governance styles and mechanisms have arisen which, although hardly institutionalized or formalized, ‘can be valuable in developing creative and beneficial ways of organizing the well-functioning of international life’. In the final Chapter 11 of Part 3 on security issues, Christopher Lamont addresses the problem of ‘sovereignty over the skies’. Since 2013, contestations in East Asia over territories and waters have spilled over into airspace. In that year China unilaterally proclaimed an enlarged Air Defense Identification Zone (ADIZ) in the skies over the East China Sea, holding obligations upon all aircraft entering demarcated international airspace. For the EU, which aims to preserve the existing architecture of public international law, China’s actions constitute a growing challenge to multilateralism in East Asia, conflicting with existing ADIZ norms. Lamont makes a plea for a return to the initial

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j­ ustification for establishing ADIZs, in the sphere of air defense, thus excluding additional non-security justifications for the unilateral imposition of reporting obligations upon aircrafts. Finally, Part 4 of this volume is dedicated to regional integration and transregional cooperation. In times of difficult political relations with China, the development of ASEAN and the evolving regional security architecture in East Asia offer key opportunities for the EU to demonstrate its multilateral experience as an engaged actor in the region. Elisa Hörhager writes in Chapter 12 that some observers have identified a demand for ‘more Europe’ coming from ASEAN member states. Now a significant stumbling block in EU-ASEAN political relations has been removed with the political transition in Myanmar, prospects are bright for an EU strategy that underlines the need to revitalize effective multilateralism through the strengthening of international institutions and a rules-based international order. Unlike the prevailing pessimistic views put forward in Part 3 of this volume, Hörhager argues that the absence of an EU military presence in Southeast Asia could be interpreted as an advantage, in that the Union ‘strengthens its potential as a neutral arbitrator in territorial disputes’. Silja Keva (Chapter 13) has focused her research on the Asia-Europe Parliamentary Partnership (ASEP) and argues that, despite the prevailing importance of the economic relationship, political dialog is not weak or missing in the inter-parliamentary cooperation. Throughout ASEP’s history many political topics have come up for discussion, ranging from security and terrorism to social issues and human rights. The cooperation is focused primarily on dialog and confidence-building—issues which take time and rarely produce concrete or direct results, as Keva indicates. ASEP is only a small actor and its ability to influence ASEM (Asia-Europe Meeting) or other international fora is limited. One of the key problems is to strike a fair internal balance between the motives and interests of so many different players: democratic and authoritarian regimes, advanced and emerging economies etc. However, ASEP’s importance should not be underestimated. Its real value, as Keva concludes, lies in the unique opportunity for parliamentary diplomacy by participants from both sides. In the volume’s final Chapter 14, Maaike Okano-Heijmans assesses the engagement of European countries with the Asian Development Bank (ADB) throughout the past decades. She observes an ‘untapped politico-strategic potential’, illustrated by the generally low level of European involvement in the Bank. Unlike the US and Australia, which have deep-rooted security ties with the region and participate in many of the existing regional forums, European member countries still regard the Asian Development Bank mostly as a

Introduction

9

d­ evelopment organization. They tend to limit their focus on ‘narrow economic diplomacy and value-oriented advocacy’. This is a missed opportunity, according to Okano-Heijmans, because the opportunities the Bank offers to reinforce ties with Asian member states and to further stability in the region commonly go unnoticed. Moreover, European member states of the ADB ‘remain aloof of the fact that the Bank’s non-Western diplomatic style provides lessons on how to operate successfully in tomorrow’s world, wherein Europe will be less influential’. Conclusion Most of the chapters in this volume adhere to the traditional notion that economics matters more than politics in the contemporary relationship between the European Union and East Asia. To date, the two regions have enjoyed far more success and progressive development on the front of trade and investments than in sensitive areas regarding human rights and security cooperation. Discussions on human rights turn out to be a continuous source of friction and irritation, particularly between China and Europe. In terms of security, European countries, unlike the United States, maintain a very small military presence in the Asian region, limited to some British troops in Brunei and French forces in New Caledonia and French Polynesia. Regarding conflicting claims towards islands or resources in the South China Sea, a highly contentious security concern between China, Japan and the United States, European countries have confined themselves to rare statements from Brussels indicating a general reluctance to get involved. At the regular EU-China summits, the most pressing issues under review include protection of intellectual property rights, customs agreements, science and technology and climate change. Hard security matters, however, continue to be emphatically absent from the discussions. In consequence, the dichotomy ‘strong economics, weak politics’ still seems to matter if we study current interregional relations. This does not mean that the sharp distinction made between politics and economics is necessarily an academically productive or tenable one. As this volume shows, many issues dealt with in the relationship between the EU and East Asia are multifaceted, intrinsically connected and impossible to unilaterally categorize under one of the two headings. In current processes of globalization, regionalization and growing interdependence the two elements have become increasingly intertwined. This particularly applies to the enduring sensitive relationship between Brussels and Beijing. Practice shows how difficult it is to take the political angle out of mutual dealings, even from those

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issues with undisputed economic origins. For example, EU anti-dumping policies against China have an economic rationale, but their political implications do affect the entire relationship. More in general, trade policy is not only about lowering customs duties, it is increasingly about domestic regulations and institutions, as well as the level of infringement with national sovereignty. Especially for a country like China, matters of sovereignty are essential, more so than the need of legalizing the international trade system. Hence, despite attempts at de-politicization, China often plays the political card, particularly in a context where the government has not retreated but is still actively involved. The tendency towards politicization is the inevitable consequence of having two distinct political and economic systems, both trying to upload their preferences to a new system of global governance. The concomitant ‘system friction’ inevitably leads to clashes and misunderstandings, particularly in a context wherein one of the two (generally the EU) displays strongly normative stances in its foreign policy behavior, to the chagrin of the other side. On the basis of the main arguments put forward in this volume, we may conclude that the dichotomy ‘politics vs. economics’ has proved to be just as counter-productive and obsolete as the ‘high politics’ vs. ‘low politics’ divide in the past. In reality, the current global stage is too hybrid and complex to justify such a simplified way of looking at interregional relations. This is also confirmed by two recent developments which for time reasons could not be covered in this volume, but which have come to feature high on China’s policy-making agenda: the initiatives towards establishing a new Silk Road and the Asian Infrastructure Investment Bank (AIIB). Both initiatives aim to foster ‘connectivity’ in Asia and the world; both are signals of the dynamic pace and momentum of change in East Asia. The Silk Road initiative, launched in 2013 as the Silk Road Economic Belt and expanded in 2015 with the One Belt One Road (OBOR), was developed by President Xi Jinping with the aim to boost international trade, infrastructure and economic cooperation between East Asia, Central Asia and Europe. But the initiatives clearly have political incentives as well: lessening China’s energy dependence on Russia; promoting political stability in the Central Asian region; and confirming China’s increasing presence in the world and in Europe. The AIIB, also developed in 2013 and related to OBOR, is a Chinese proposal for creating an international financial institution in the Asian region, with headquarters in Beijing. One of the purposes of this multilateral development bank is to provide finance to infrastructure projects. Many Asian and non-Asian countries, including European states, have joined the project, others, such as the US, Japan and Canada, have refused to get involved. Especially the US regards the AIIB as a rival for the IMF, World Bank

Introduction

11

and ADB. China, on the other hand, says it has become frustrated with what it regards as the slow pace of reforms and governance in the international financial system. It wants greater political input in the IMF, World Bank and ADB, which it claims are dominated by American, European and Japanese interests. In both cases (OBOR and AIIB) economic aims and political incentives (particularly the upgrading of China’s regional and global status) are ingeniously brought together. What does this all mean for the role Europe is able and willing to play in East Asia, as well as for the role East Asia allows Europe to play under the given circumstances? Interestingly, as indicated above in the case of the AIIB, it were the EU countries rather than the US, who welcomed and supported the initiative, in fact against the lobbying of the US. This may be a signal for increased European assertiveness regarding East Asia. However, at second glance the prospects for greater EU involvement in East Asian affairs are rather gloomy. At present, the EU is still highly inwardlooking, concerned as it is about the deep impact of the Eurozone crisis (which is still not entirely solved), the Ukraine-Russia skirmishes and the recent yet significant migration flows from Syria, Eritrea, Libya and elsewhere. All these events absorb considerable energy from the Union, which it fails to expend abroad in its relations with non-European countries. Moreover, to make things worse, China is currently hit by a moderate economic slowdown, which limits its operational possibilities at home and abroad. In the wake of the 2015 stock market crash, China’s growth rates are rapidly decreasing and Beijing is getting increasingly nervous about it. After the devaluation of the Renminbi, a new economic stimulus program is expected to be launched, but its feasibility is still uncertain. China’s formerly abundant capital reserves are shrinking at rapid pace. The country needs to transform its growth model based on exports and investments to services and domestic consumption, which doubtlessly is a painful experience, if manageable at all. For the moment, the focus is on damage control within the own borders. Because of these developments the reasons for the EU and individual European countries to support China with new initiatives (like OBOR and AIIB) will probably become less compelling. Hence, during the last year we have witnessed a change of picture, due to China’s sudden economic hiccup. Although it might be tempting to do so, there is no reason for Europe to relish such a change. This volume points out that East Asia and Europe are in increasing need of each other’s well-being and engagement. Two underperforming regions do not bode well for future relations, both economically and politically.

Part 1 Economics

∵

CHAPTER 2

Overcoming Economic Weakness in Japan and the EU: The Role of Political Entrepreneurship and the Political Economy of Reforms Werner Pascha Introduction In recent years, both Japan and the EU have undergone considerable economic hardship, in Japan associated with the so-called ‘lost decades’, in the EU with the European debt crisis. In spite of the underlying strengths of both Japan and of leading European countries as some of the world’s most competitive and wealthy economies, at least with respect to a medium-term perspective there is the common challenge of how to overcome a period of weak macroeconomic conditions. There are some striking differences between Japan and the EU of how the political systems have reacted to the macroeconomic challenges, however. While Japan has been frequently associated with political inertia during the 1990s and 2000s, the December 2012 general election was the starting-point of an extremely ambitious stimulus program, whose philosophy is frequently referred to as Abenomics. On the contrary, the European debt crisis, which arguably started with an EU-IMF emergency loan package to Greece in May 2010, did not lead to a similarly pro-active stimulus program. Rather, the emphasis was and still is (as of autumn 2014) on reform measures in the financial and government sectors of affected European economies, whereas in Japan, such reform measures, often referred to as the ‘third arrow’ of the economic policy package of the cabinet led by prime minister Shinzo Abe since late 2012, have been conspicuously delayed, at least according to many observers. Summing up, while the experience of macroeconomic weakness, following problems and even shocks in their financial systems have been somewhat similar in both Japan and the EU, the policy responses in recent years have been remarkably different: Japan has focused on ambitious stimulus measures, with promised reforms being belated, whereas the EU and the Euro area in particular have focused on implementing reforms, while refraining from determined stimulus measures.

© koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_003

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The following paper discusses how such different responses can be explained. More particularly: Can theory make a contribution to explaining such divergent policy responses? The paper is organized as follows: We will first establish the argument for comparing the policy activism of the new Abe government and the EU debt crisis response more firmly: Despite all differences, does it make sense to contrast both cases? In the next chapter, the theoretical approach of dealing with both incidences will be presented: the political economy reform. It will be argued that the conventional approach lacks or at least underrates the role of political entrepreneurs and their incentives as well as means to start reforms. In this context, the creation and handling of ideas in terms of political communication will be discussed as an important mechanism in democratic societies to pursue the objectives of political entrepreneurs. The main empirical part will apply this reasoning to the two cases under investigation. It is concluded that with respect to the recent experience of Japan, the sudden outburst of policy activity cannot easily be explained by the conventional political economy of reforms. However, it makes perfect sense when interpreted in the light of political entrepreneurship and as an instance of the smart use of political communication. As for the EU case, already by applying the conventional political economy of reforms it is apparent why the EU has not turned to a similarly audacious program. It is unlikely that a comparable political entrepreneurship similar to Japan will emerge in Europe, as the mental landscapes and public spheres to base convincing story lines for bold measures on are too diverse and fragmented. From the vanguard of political communication, the Japan case shows that bold policy proposals do not have to be ‘real’ reforms, and the EU case demonstrates that the circumstances for value-creating political entrepreneurship depend on a number of supportive circumstances and cannot be taken for granted.

Comparing Japan’s Abenomics and the EU Response to the Debt Crisis

The recent economic malaise in Japan and the EU have many aspects in common, well beyond the parallel difficulty of achieving significant and sustainable positive economic growth rates. Both cases of retarded growth are connected with serious incidents in the financial system. In Japan, the burst of the financial bubble around 1990 initiated the so-called ‘lost decades’. The bursting bubble led to rapidly depreciating real estate and stock market values, non-performing loans in the business and banking sectors, looming insolvencies, and lack

Overcoming Economic Weakness in Japan and the EU

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of private investment as some of the most pertinent consequences. There have been episodes of reform orientation, like the Big bang-liberalization program on the financial markets in the late 1990s, or the period around 2003 under prime minister Koizumi with the solution of the non-performing loan problem for major banks, but the call for a major overhaul of Japanese economics institutions remained. Even the general election of 2009, when the DPJ and its allies took over the government from the LDP, which had ruled the country for decades with only a short intermission, did not turn out to mark a sea change, because most reform attempts were eventually scrapped or unsuccessful. From that background, the introduction of Abenomics, following the December 2012 general election, proved to be a game changer. It encompasses three major parts that are usually referred to as ‘arrows’: the 1st arrow encompasses a major expansion of the monetary base. The Bank of Japan buys significant amounts of Japanese Government Bonds (JGBs) and secured private securities. The goal is to reach an inflation rate of 2% within two years. The 2nd arrow is a major debt-financed expenditure expansion of the state, for instance to renew infrastructure, with a magnitude of some 110 billion USD. The 3rd arrow is understood as a growth strategy, which shall include major reforms to increase the productivity of the private sector, to make the labor market more efficient, and to support new industries and exports; not only ‘reforms’ in the narrow sense of major institutional changes are addressed, but also operational policy measures like reconsidering the corporate tax level. Summing up, the program focusses on unprecedented stimulus measures that can be implemented immediately, plus the promise of supply-oriented measures including major reforms that will take longer to install and to take effect. In the European case, major macroeconomic problems surfaced at a later point in time. At the risk of oversimplifying, a major starting-point for the crisis was 2005, when France and Germany exceeded the 3% debt-to-GDP limit but remained unsanctioned: The Stability and Growth Pact was formally weakened in 2005, and this may have ‘invited’ others to disrespect the rules of the Euro area as well. In May 2010, an EU-IMF emergency loan package for Greece had to be arranged, with Greece agreeing to a severe austerity package. At the same time, the EU set up a temporary bailout fund with limited funding (European Financial Stability Facility, EFSF). Soon, Ireland and Portugal sought bailouts. Other noteworthy events include a private investor ‘haircut’ for Greek bonds and a new aid package in October 2011, an ECB decision to offer banks unlimited cash for three years and to ease collateral rules in December 2012, an agreement on the so-called European Compact on fiscal austerity in May 2012, the European Stability Mechanism (ESM) in September 2012 and the famous ECB commitment to unlimited Outright Monetary Transactions (OMT), which

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is still to be reviewed by the European Court of Justice. The last major incident among the ‘mini-crises’ was the Cyprus bailout in March 2013, when banks were downsized and private creditors to some extent bailed in. 2014 witnessed the decision to entrust European banking supervision to the ECB. Economic weakness in the sense of lack of economic growth, the danger of deflation, ultra-low interest rates, high debt levels and a looming debt crisis are major similarities between Japan and the current EU. The similarities notwithstanding, there are also considerable differences of course. Some of the key variables exhibit, despite superficial similarities, different specificities. Consider indebtedness: In Japan, the ratio of gross public debt to GDP is around 240 percent of GDP and thus a major concern, while in Europe the situation is much more mixed: While there are some EU member countries with serious public debt issues, like Greece, there are others like Spain, where instead of the state the business and the banking sector have a debt issue.

The Political Economy of Reform

Despite the differences noted between the Japanese and the EU case, the similarities are striking and motivate the question why the policy reactions are so different. This question is the domain of the political economy of reform, particularly as applied to democracies that operate through elected representatives, namely parliament and governments, which have to face elections. Unfortunately, the political economy of reform is much more successful at explaining why reform may be retarded, than showing how to overcome impediments to reform. One of the most basic problems is related to time inconsistency:1 While politicians have an incentive to promise reform in order to win elections, they have little incentive to actually carry out such reform, because that would usually hurt some groups and because politicians may not benefit from the longer-term benefits of reform. Uncertainty about policy outcomes adds considerably to the difficulties of achieving reform. If voters and politicians are unsure about the gainers and losers of reform, they will tend to resist change. Behavioral economics has shown that loss avoidance is a stronger force than the promise of benefits. Apart from

1  See Kydland, F. & Prescott, E. (1977). ‘Rules Rather Than Discretion: The Inconsistency of Optimal Plans’, The Journal of Political Economy 85(3): 473–492.

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the status quo basis,2 uncertainty may also lead to a war of attrition and thus delay reform further: when interest groups are uncertain about their benefits and costs associated with major changes, there will likely be a chicken game about who moves first to make concessions, while marginal benefits and costs change slowly over time.3 Circumstances may change the likelihood of achieving reform. It is almost folk wisdom to argue that the outbreak of crises facilitates reform. During widespread crises, the potential costs of policy inertia are felt by almost all interest groups, so it is easier to overcome opposition and demand sacrifices from at least some groups. The typical atmosphere of confusion during acute crises adds to the ease of pushing reform decisions through the political system.4 Another moderator of the possibility of reform is the longer-term stability vs. change orientation of political regimes: They operate under path dependency, and this will influence the likelihood of effective change for a given policy problem. Finally and related, the role of veto players in the political system should be considered: The greater their number, the more cohesive they are and the smaller their ‘distance’, the less likely it will be to bring about change.5 Reviewing the conventional political economy of reform with such broad sketches, it will often seem highly unlikely to expect true political reform. Such reform will often come as a surprise. One way to overcome this weakness of the conventional theory is to move beyond a mechanistic interpretation of the political system, in which politicians and voters only react to well-defined stimuli. In his survey of the field, Mukand6 reminds us to focus more on the politician as an entrepreneur, who recognizes and implements opportunities in order to succeed against her competitors in the world of politics.

2  See Fernandez, R. & Rodrik, D. (1991). ‘Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty’, American Economic Review (81): 1146–1155. 3  See Alesina, A. & Drazen, A. (1991). ‘Why Are Stabilizations Delayed?’, American Economic Review (81):1170–1188. 4  For empirical evidence, see for instance Alesina, A. et al. (2006). ‘Who Adjusts and When? The Political Economy of Reforms’, IMF Staff Papers 53, Special issue; Campos et al. find that political crises play a bigger role in begetting reforms than ´simply´ economic crises, supporting the importance of taking the forces dominating the political system into consideration, in Campos, N.F. et al. (2010). ‘Crises, What Crises? New Evidence on the Relative Roles of Political and Economic Crises in Begetting Reforms’, Journal of Development Studies 46(10). 5   Tsebelis, G. (2002). Veto Players: How Political Institutions Work. Princeton: Princeton University Press. 6  Mukand, S.W. (2008). Policy Reform, Political Economy of, The New Palgrave Dictionary of Economics. Second Edition. London, Palgrave Macmillan.

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Political Entrepreneurship

How is the politician as a political entrepreneur able to overcome the reluctance for change and reform? A key will be to change the preferences of the voting population. The politician will thus have to be innovative, in finding and developing ideas that brings such attitudinal change about. Amidst uncertainty in preferences, constraints and choices, political entrepreneurs can overcome political inefficiencies, while protecting their power and rents, through innovative ideas.7 It would of course be too simplistic to see the politician as an isolated individual trying to handle the idea sphere. Rather, the individual politician is part of a more encompassing arena. Building on earlier work by Keynes and Hayek, among others, Leighton and López8 have identified three main sets of actors in this arena: They refer to them somewhat tongue-in-cheek as ‘academic scribblers’, ‘intellectuals’ and ‘madmen’, following a rather casual remark by Keynes. The scribblers in academia or as individual authors develop new ideas, which are mediated by the intellectuals in the newspapers, television, etc., and eventually implemented by the madmen in politics who may hardly understand the original concepts. This is not simply a top-down process from the world of ideas, but encompasses bottom-up processes as well from the level of the individuals, coming from as deep as biological and cultural dispositions, transformed into beliefs and transmitted through phrases, fashions, faiths or else— which in an evolutionary terminology could be referred to as memes in the sense of the term as introduced by the biologist Richard Dawkins, i.e. a selfreplicating unit that can be spread through cultural evolution.9 In this complex process of idea formation, persuasion becomes of utmost importance, as a path-dependent process, related to widespread beliefs (‘causal stories’) and desires.10 From a technical perspective, persuasion works through skillful communication, so political entrepreneurship is intimately

7  Rodrik, D. (2013). When Ideas Trump Interests: Preferences, World Views, and Policy Innovations, National Bureau of Economic Research Working Paper Series 19631, November. 8  Leighton, W. & López, E. (2013). Madmen, Intellectuals, and Academic Scribblers: The Economic Engine of Political Change. Stanford, Stanford University Press. 9  Ibid. 10  Blyth, M. (2007). ‘Powering, Puzzling, or Persuading? The Mechanisms of Building Institutional Orders’, International Studies Quarterly (51): 761–777.

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linked with public relations efforts or what shall be referred to as political communication here.11 Related terms like ‘propaganda’ or ‘spin-doctoring’ suggest that political communication has acquired a rather negative reputation. The obvious reason is that such communication may not only be used to ‘sell’ benevolent policies that serve the common well-being, but may be employed to persuade the electorate of more problematic policies as well, hiding drawbacks behind a veil of ideology, hurting longer-term interests, subduing disadvantaged groups or even promoting extremist strategies with potentially devastating consequences. Why should political communication be associated with such negative connotations, however? From the perspective of the Austrian school of economics, which has studied entrepreneurship intensively, two political ‘profit’ opportunities for politicians can be distinguished: productive in the sense of creating value through efficiency-increasing political action and predatory in the sense of transferring wealth from one group to another.12 Obviously, predatory action is not Pareto-efficient and will often create significant profit opportunities, with some of them being diverted to the politicians, either in a direct way (‘bribery’) or as political profit. While predatory opportunities also exist for business entrepreneurs in a market system, they are particularly prevalent in the political system, because in politics the will of politicians can be forced upon individuals and groups through majority decisions. From that perspective, the role of political communication may indeed very often be to prepare for and legitimize predatory political decisions, giving ‘spin-doctoring’ such a bad reputation. The line between productive and predatory opportunities drawn from an Austrian perspective may be too sharp, however. In the real world, the distinction between raising efficiency and engineering transfers may often be blurred, particularly with respect to major reforms as complex bundles of policy instruments. Indeed, political entrepreneurs may well prefer such fuzzy policy measures, because it helps them to conceal profitable predatory opportunities, it offers them rewards for the considerable risks involved with their entrepreneurial activities and it may be helpful for blame-shifting if things go wrong. Even if politicians start-off with ‘good’ intentions, the logic of surviving in the political system will nudge them towards more shady policy strategies. One might even argue that in order to secure a majority for some bold 11  McNair. B. (2011). An Introduction to Political Communication. 5th edition, first published in 1995, Abingdon: Routledge. 12  Holcombe, R.G. (2002). ‘Political Entrepreneurship and the Democratic Allocation of Economic Resources’, The Review of Austrian Economics. 15(2): 143–159.

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reform s­ trategy with unreliable results in a world full of uncertainty, it may be important to add some element of predation to raise the available benefits against the considerable odds. From that perspective, the more encompassing and bolder a political agenda, including far-reaching reform, the more important political communication tends to be, which may frequently involve some rather shady ingredients. We will now proceed to interpret Japanese and EU attempts to overcome the economic weakness in recent years by making use of the conventional political economy of reform and by adding considerations of political entrepreneurship and political communication later.

Interpreting the Emergence of Abenomics in Japan

Overlooking the economic landscape in Japan around early 2012, it seems fair to argue that most observers did not expect a major reform drive any time soon, as important macro-economic variables did not point toward any imminent crisis. The somewhat unusual combination of very high public debt and docile investors was continuing: Despite of the state’s indebtedness, investors did not flee from Japanese government bonds, with interest rates remaining very low, without any apparent risk premium. Unemployment remained low as well, and while there was a mild deflation, no deflationary spiral seemed looming. In terms of the conventional political economy of reform, a strong status quo-bias and a long war of attrition were to be expected. The DPJ-led government had proposed a reform of social security, in line with its 2009 election manifesto, but this proved difficult to push through parliament. It was combined with a proposal to raise consumption taxes. Policy makers had to take into consideration the so-called ‘Split Diet’, i.e. different majorities in the Upper House and the Lower House of parliament. Consequently the package had to be watered down during negotiations for a parliamentary majority. The position on the reform agenda was quite contested even within the ruling coalition.13 Considerable de facto veto power in the sense of potentially effective obstruction could be noted. The relationship with the bureaucracy was frail and still recovering only slowly from earlier attempts of the DPJ-led coalition to restrain the power of the ‘mandarins’. Finally, in Japan one finds a legacy of a stability-oriented political regime and only incremental policy 13  Mark, P. (2012). Japan’s ‘Integrated Social Security and Tax Reform’ from the Perspective of the Political Economy of Policy Reform, unpublished Master thesis, University of Duisburg-Essen.

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change, with the mediation of interests among insider groups considerably more prevalent than a pro-active enforcement of the majority will on the rest of the country. Little decisive change could therefore be expected. From this perspective, the general election of December 2012 delivered a major surprise. The surprise was not so much that after three years out of power, another LDP-led government with prime minister Shinzo Abe at the helm was elected. Indeed, many observers had not expected the DPJ-led government under Prime Minister Noda to survive the election: The attempts to start serious reform, with the combination of a consumption tax hike and increased welfare spending (‘Integrated Social Security and Tax Reform’), was already considered a failure, and voters had been expected to deliver their verdict on Noda’s ‘suicidal strategy’ for dual reform. Rather, the surprise was that Abe won the election with promising (another) bold reform bundle, and that his cabinet immediately started to enact the first ingredients of ‘Abenomics’ during the early weeks of 2013. In terms of the conventional theory, only one major condition had changed due to the election: The ‘Split Diet’ had been overcome. Because the DPJcoalition had already lost its majority in the Upper House before, winning the more important Lower House elections meant for the LDP and its allies that it had to be less concerned about the Upper House than its predecessor. Indeed, through the following Upper House election of July 2013 the LDP-led coalition consolidated its grip on the Upper House and thus on both Houses further. It is questionable, however, whether this single factor can truly explain the sea change of economic policy-making in Japan. It is indeed doubtful whether strong and (at least temporarily) uncontested majorities really support decisive reforms. Backbenchers, representing established interest groups, may for instance feel particularly safe in such a situation and confident to obstruct farreaching change. There is indeed some evidence that political instability may support painful reforms.14 It may therefore be helpful to reinterpret the introduction of Abenomics in 2012/13 from a political entrepreneurship and political communication perspective. In this context, the program appears as an innovative bundle of measures that fits earlier LDP positions, while at the same time maximizing support and minimizing potential opposition. Political communication played an important role to ‘elucidate’ the complex bundle of efficiency-increasing

14  Campos, N.F. et al. (2010). ‘Crises, What Crises? New Evidence on the Relative Roles of Political and Economic Crises in Begetting Reforms’, Journal of Development Studies 46(10): 1670–1691.

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and rent-shifting policy measures, and the program even implicitly points to a number of handy potential scapegoats, if the need arises. The basic ingredients of Abenomics are not new. Challenging the Bank of Japan (BoJ) to loosen monetary policy further already started well before the December 2012 election. The central bank reacted under the leadership of a reluctant Governor Shirakawa, and a significant extension of the balance sheet of the BoJ can indeed already be noted during 2012. Moreover, the fiscal activism encapsulated in the second arrow of the Abe program, including support of the construction sector, can be considered the traditional ‘signature proposition’ of the LDP. Finally, considering a dedicated growth strategy, encompassing deregulation on the labor market, a reduction of corporate taxes, increased economic integration, etc., was already proposed in the context of the Abe 2006/7 Cabinet’s ‘New economic growth strategy’, i.e. during Abe’s earlier stint as prime minister. What is new about Abenomics is the ingenious rebranding and bundling of expansive monetary, expansionary fiscal and fuzzy reform policies. The various ‘arrows’ support each other in a remarkable way, creating significant synergy. The program combines very risky but—in the short-term—promising measures (stimuli) with a longer-term vision (reforms). Critics challenging the daringly voluminous stimulus measures can thus be countered by pointing towards the reform promise, while those concerned about becoming the losers of a reform push can be pacified by pointing to the stimuli. Another upside of the program was that it bought time and support for the Upper House elections in July 2013. The LDP and its allies could thus consolidate their position in terms of parliamentary seats before potentially negative effects of the program started to set in. Moreover, the early-phase success of the package depended to a considerable extent on the psychological effect and was thus self-supporting. A positive sentiment on the stock market could be hoped to support a breakout from a low-growth, mildly deflationary state of the economy. Such a positive momentum also allowed policy makers to get away with a number of side-effects that might otherwise have annihilated a less skillfully branded and bundled economic program. First, the government got away with undermining the independence of the BoJ, which had been installed with the 1997 Bank of Japan Law. While critical observers had always seen rather little commitment of the government to honor the new law and while it had always contained some loopholes for government intervention,15 the unprecedented pressure on the BoJ Policy Board to introduce monetary hyper-expansion, 15  Heckel, M. (2014). The Bank of Japan—Institutional Issues of Delegation, Central Bank Independence and Monetary Policy, PhD thesis, University of Duisburg-Essen.

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eventually inducing Governor Shirakawa to step down early, was only conceivable under the public euphoria about the new government program. Second, the government got away with significant yen devaluation, interpreted as a mere side-effect of the Abenomics package. This is quite remarkable in the context of a staggering global economy and wide-spread criticism of countries like China for arguably trying to undervalue their currency. Third, the government got away with financial repression, i.e. by pushing down interest rates, which lowers its fiscal burden but is contrary to the interest of asset holders. Behind the three ‘get aways’ mentioned, there still looms a more basic factor: international sentiment. In late 2012, the US was still embarking on and actually intensifying a huge program of monetary expansion involving unconventional measures (‘quantitative expansion’ QE), while the Bank of England had followed with a rather similar strategy. The ‘odd man out’ was the Euro group, with the ECB not having the mandate to follow a similar path (see The Economist16). The European reluctance was very much criticized in the AngloAmerican economic circles and beyond, so a Japanese program could hope for considerable public acclaim on the international level. Even if there might have been some concerns, in the given global economic situation the Japanese government could expect and did receive a lot of support from important segments of the international community. As a final consideration, the complex conditions necessary for a longer-term success of the package point to potential scapegoats elsewhere if the program were to perform inadequately. For instance, if inflation sets in, if the consumption tax is raised and if households start to lose real purchasing power because of devaluation (which indeed happened), companies have to raise wages in order to compensate negative effects on income and on consumption. If they do not do so, the government can argue that it is not to be blamed but rather the business world. Moreover, upcoming international tensions or global recessionary tendencies can serve as scapegoats as well. We conclude that the emergence of Abenomics, difficult to explain by the conventional political economy of reform, can be understood as an act of political entrepreneurship, presenting a novel idea to succeed in the political marketplace. Its innovativeness rests on the innovative branding and bundling of policy propositions that offer considerable, hitherto unrealized synergies. This interpretation shall be illustrated with respect to two phenomena: The political communication aspects of Abenomics and the handling of theoretical issues underpinning the Abenomics philosophy, focusing on the role of deflation. 16   The Economist (2014). ‘The Euro-zone economy. Asset-backed indolence’, 13 September.

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With respect to political communication, it has been pointed out17 that Abenomics was prepared and implemented on the basis of a rigorous and highly professional publications relations (PR) campaign. It is said that it was masterminded by Isao Iijima, who had already successfully supported former prime minister Junichiro Koizumi during his reign, and involving several PR experts in strategic government positions. Shinzo Abe as a person had accumulated a rather negative reputation for his public performance during his first term as prime minister in 2006/07, sometimes being ridiculed with the popular expression KY (‘kûki yomenai’, 空気読めない, ‘can’t read the air’). With the new PR campaign, Abe gained a new image. On an international scale, the skillful presentation as a forceful leader became apparent, for instance, with his acclaimed ‘Buy my Abenomics’ speech at the New York Stock Exchange on 25 September 2013 or his appearance at the Davos World Economic Forum on 22 January 2014. The PR campaign did not only involve the prime minister himself, but other important members of his government as well. The clever use of terminology, like the neologism, also points to the important role of PR. The symbolism of the ‘three arrows’ is particularly noteworthy. It relates to the legend of an ageing lord during the civil-war-like period of the warring states, who gave the arrows to his three sons: While each arrow may easily be broken, if they are bundled and stay untied, nobody can break them. Employing this legend cleverly captures the idea of how the three parts of the program are related, and thus fulfills one of the key prerequisites for a successful PR campaign in politics. A second aspect that shows the important role of political communication is the handling of the theoretical underpinnings of the Abenomics program. From an economics perspective, proposing certain policy instruments, including a bundling of such instruments, involves critical assumptions about causal relationships between important economic variables. Seen from the vanguard of political economy problems, such causal relationships can never be fully verified. Thus there is always considerable uncertainty about their ­reliability.18 It is the role of political communication to create such confidence, and p ­ olitical 17  Kingston, J. (2013). ‘Abe-phoria: A National Punching Bag Morphs into a Popular Leader’, The Japan Times, 7 April 2013; Legewie, J. (2013). ‘Polished PR, Perception Strategy Fourth Arrow in “Abenomics” Quiver’, The Japan Times, 22 April 2013. 18  Taking methodological concerns seriously, scholars can never hope to verify theories or individual hypotheses on causal relations, so the best one can hope for is that such expectations meet falsification attempts. Single seemingly successful cases of falsification will be met with doubt, however, so considerable uncertainty remains and is unavoidable from a Popperian or Lakatosian perspective.

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entrepreneurs need to skillfully convince the public about the appropriateness of policy concepts, with the actual empirical basis for such claims only a secondary concern. This can be exemplified by the claim that the mild deflation in Japan since the late 1990s is a major reason for the economic stagnation of the economy since. This argument is important for Abenomics, because it legitimizes the introduction of unconventional monetary expansion (first arrow). Without the deflation-argument, the proposed doubling of the monetary basis might have been considered much too risky, possibly leading to uncontrollable inflation, and only serving to create a short-lived ‘flash in the pan’ through rising stock prices, a devaluation and an accompanying expansion of exports. Looking at the empirical evidence, there is little cross-national evidence that deflation is indeed strongly related to economic crises—at least when taking out the Great Depression from the sample, for which the relationship clearly holds.19 For Japan in particular, mild deflation of around or less than 1 percent p. a. and low growth have been co-evolving over many years, so establishing causation is difficult, as has even been acknowledged by the IMF.20 Other factors like Japan’s declining labor force or lack of reform may be just as or even more important.21 The economic argument whether deflation is truly harmful in the sense of causing Japan’s problems and not being simply a side-effect of other problems and co-evolving with them is quite complex. For instance, if Japan only manifests a small output gap, i.e. the difference between actual and potential output, inflationary pressure cannot be expected to raise economic growth considerably. The official statistics of the IMF and OECD actually point towards only a small output gap. Some authors have argued that the ‘true’ gap is actually larger,22 but the arguments involve indirect reasoning and further assumptions, so will not be able to convince each scholar. The case for 19  Smith, G.W. (2006). The Spectre of Deflation: A Review of Empirical Evidence, Queen´s Economics Department Working Paper No. 1086; Bordo, M. & Filardo, A. (2005). Deflation in a historical perspective, Bank for International Settlements Working Papers No 186, November. 20  Kumar, M.S. et al. (2003). Deflation: Determinants, Risks, and Policy Options—Findings of an Interdepartmental Task Force, Approved by Kenneth Rogoff, mimeo, 30 April. 21  Waldenberger; F. (2014). ‘Japan’s New Monetary Policy: Some Critical Questions’, in Roevekamp F. & Hilpert H.G. (eds.), Currency Cooperation in East Asia, Heidelberg et al., Springer: 43–55. 22  Hausman, J.K. and Wieland, J.F. (2014). Abenomics: Preliminary Analysis and Outlook, Final conference draft, Brooking Panel on Economic Activity, March 20–21, 2014, Download available from http://www.brookings.edu/about/projects/bpea/papers/2014/abenomicspreliminary-analysis-and-outlook, accessed 16 September 2014.

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overcoming the mild deflation through risky monetary stimulation is therefore much weaker than frequently perceived, but it is noteworthy that such academic controversies have played only a minor role in the public debate about glossy Abenomics and its simple but forceful messages. With respect to the debate on deflation Japan is lucky to fit the international debate, in which proponents of the financial markets, several important governments and media argue in favor of an extension of loose and unorthodox monetary expansion in weak economies, using the threat of deflation as a scarecrow. Whether or not the case for deflation being a major cause of Japan’s economic malaise can be convincingly made or not, the Japanese authorities can count on not being challenged on this view in the international public debate too much.

Interpreting the Recent European Experiences

Interpreting the case of the Euro area debt crisis poses quite a different challenge: Why have policy measures been introduced at such a slow pace, focusing on reforms and avoiding major demand-creating measures in the field of monetary and fiscal policies, despite evolving mini-crises? While in the Japanese case it was difficult to understand recent developments on the basis of the conventional economic policy of reform, the European case seems to fit quite well: The decision-making process within the EU, including the notorious complexities of the co-decision procedures, and between the EU and national institutions is very complex. Consequently, there are many de jure and de facto veto players that impede significant change. This problem does not only hold for decision-making, but has implications for the implementation and follow-up of approved policy packages as well. In the case of farreaching reform and stimulus or austerity packages, which to a considerable extent have to be executed on the level of member states or even below, the credibility of a faithful implementation is quite doubtful because of the institutional complexities. The basic problem can be formulated in the language of a game theoretic approach: while it may be sensible to enter a common agreement on major change, partners may easily have an incentive to opt out of such an agreement later (and count on others to hopefully honor the agreement). Because of the complexities of the implementation of EU measures and the difficulties of enforcing compliance, players may find it rather easy to defect. This will be taken into consideration when trying to reach decisions in the first place, and resolute action is therefore quite unlikely.

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Finally, some ad-hoc factors of the reform issue under consideration should be borne in mind. In a debt crisis like the European one, there is an ‘asymmetry of adjustment burden’, as creditors do not necessarily need to act, while debtors feel such a pressure, but will use political tools to avoid painful decisions and action.23 Such a constellation supports an extended war of attrition. Another specific factor in the field of macro-economic policy instruments available on the EU or Euro Group level are the existing formal institutional barriers: This holds in particular for the limitations of the ECB to act as a lender-of-last-resort to members, which makes it extremely difficult to agree on decisive stimulus measures in the field of monetary policy, as they would either have to involve a change of basic ECB rules or a willful disrespect for them. Another specific institutional factor is the tension between EU level and Euro group institutions when reaching decisions. Summing up, there are sufficient arguments based on the conventional political economy of reform to explain why the change processes after the European debt crisis have been rather slow and not involving an instrument like major stimulus measures in the monetary policy domain, similar to the first arrow of Abenomics. Referring to political entrepreneurship is not necessary for an explanation, so in the interest of academic parsimony one feels tempted to leave it unconsidered. However, in this case an extended discussion does support the conclusions from the conventional theory further. It is interesting, because it sheds an additional light on the circumstances and possibilities for major policy reform. Political entrepreneurship is particularly difficult in the given circumstances of the EU because of the complex interaction of actors and institutions involved. A political entrepreneur would have to relate to many audiences and organize their support. Compared to the case of Japan, opposition to such an entrepreneurial thrust is easier and more likely because of the availability of two additional mechanisms, beyond democratic decision-making procedures, that are much more limited in Japan: ‘Exit’ and ‘voice’. Mistrust in a far-reaching policy proposal can lead to a significant capital outflow from EU economies and create a serious situation. Even such an outflow from only a small number of member economies or even a single one could trigger such calamities. While the capital markets of the EU are very open in this respect, the Japanese market, particularly for Japanese government bonds, is much less responsive, as more than 95% of JGBs are held by domestic investors, many of them big institutional players, who share a strong interest with the ­government to avoid 23  Frieden, J. (2013). ‘How (not) to Lose a Decade’, Mimeo, January.

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a sudden drop in the value of their assets. In terms of voice, the Japanese media, including the TV networks and the major newspapers, are significantly more docile than in the case of the EU, so the government can count on a cushioned public reaction even if some quarters are dissatisfied with a new policy initiative. Another peculiar feature of the European environment in comparison to Japan is that fresh policy ideas are much more difficult to develop because of the divergent ‘mental landscapes’ within Europe, with which any new proposal has to resonate. The importance of this resonance is well known in the literature on political communication. For example, Westen24 argues that major proposals have to be based on a convincing ‘story’ in order to be well received. According to him, they should be consistent, memorable, full of vivid images or metaphors and simple. With respect to the reaction to the deflation of the Great Depression, for instance, Blyth25 shows that the various national approaches were much more diversified than could be expected and that they were based on ‘causal stories’ that were in line with ideas and convictions predominant in the various nationalities, including their academic traditions. With respect to today’s EU, such convictions or backgrounds for developing vivid images or stories are quite diverse. This shall be discussed with a few examples. First, the different forbearance of inflation and of debt among European countries: It has, for example, been often mentioned as a kind of folk wisdom that Germans are more inflation-averse than most other Europeans due to the experience of hyper-inflation in the 1920s. While a careful explanation involving collective memories and intergenerational transmission mechanisms is not easy and may at least be over-simplifying,26 various studies verify the presence of different policy preferences with respect to inflation (and debt). On a more basic institutional level, there are different attitudes to rules and pragmatism in the various countries. Again, there are several folk explanations for such differences. For instance, German preoccupation, if not obsession, with rule orientation is often interpreted in the context of the German philosophical tradition, particularly the role of Immanuel Kant. The intergenerational transmission of such dispositions may be questioned, but it is true 24  Westen, D. (2008). The Political Brain: The Role of Emotion in Deciding the Fate of the Nation, Paperback edition, New York, Public Affairs. 25  Blyth, M. (2007). ‘Powering, Puzzling, or Persuading? The Mechanisms of Building Institutional Orders’, International Studies Quarterly (51): 761–777. 26  Delaney, L. (2012). ‘German Inflation Aversion and Policy Preferences’, Stirling Behavioral Science Blog, posted 9 June 2012, http://economicspsychologypolicy.blogspot.de/2012/06/ german-inflation-aversion-and-policy.html.

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that there is a strong tradition in German economic circles based on ordo-liberalism, an early 20th century concept that argues in favor of rigid rules that cannot simply be overcome by democratic majority-based decision-making.27 We have argued that because of the difficulties to win voter support across the EU, it is difficult for political entrepreneurs to emerge and to succeed on the European level. However, there are other actors for whom the constraint of winning public elections may not be so stringent. As for important policy innovations on the European level, it has been argued that the Commission and the president of the Commission in particular can sometimes play the role of political entrepreneurship. Whereas the importance of major European founding fathers like Walter Hallstein, Commission president from 1958 to 1967, may be difficult to consider because of the unique historical circumstances for European integration during the 1950s, the role of Jacques Delors, Commission president from 1986 to 1994, in bringing about the European Monetary Union (EMU) and other important steps of the integration process is frequently mentioned in this context.28 While the role of Delors in bringing about the EMU or the earlier Common Market Project is certainly an extremely important one, two points should be kept in mind. First, earlier Commission presidents were rather appointed bureaucrats than elected politicians. In that sense, Delors was autonomous from public support, and the story of how he succeeded to push forward EMU is rather one of cleverly setting an agenda and circumstances for a deliberation process among the political elite.29 In that sense, second, he was rather a policy entrepreneur than a political entrepreneur, as the latter has to be willing to and has to push through change.30 Seen from that perspective, also a more recent case of ‘policy dynamism’ in the EU has very peculiar circumstances, namely ECB president Mario Draghi’s famous statement of July 2012 that the ECB will do whatever is needed to preserve the euro, which was later formalized as the Outright Monetary Transactions program. The OMT, which so far never had to be employed, was certainly very important for saving the integrity of the euro system, and Draghi’s role to bring this about was decisive. However, the introduction of OMT is a narrow technical move 27  Cohen-Setton, Jérémie (2013). ‘Ordoliberalism and Germany’s approach to the euro crisis’, Bruegel Blogs review, posted 16 September 2013, http://www.bruegel.org/nc/blog/detail/ article/1150-blogs-review-ordoliberalism-and-germanys-approach-to-the-euro-crisis/. 28  Assche, T. van (2005). ‘The Impact of Entrepreneurial Leadership on EU High Politics: A Case Study of Jacques Delors and the Creation of EMU’, Leadership 1(3): 279–298. 29  Ibid. 30  Hogan, J. & Feeney, S. (2012). ‘Crisis and Policy Change: The Role of the Political Entrepreneur’, Risk, Hazards & Crisis in Public Policy 3(2): 1–24.

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within a given institutional system, not a wider economic policy reform. It was introduced by the ECB Governing Council on the basis of the autonomy given to it by the policy sphere for monetary policy measures within its narrow mandate. In a way and somewhat paradoxically, the OMT had—and still has—to play such an important role exactly because politicians felt unable to make bold moves to overcome the European financial crisis on their own. Summing up, the complexities of EU decision-making and policy implementation, the threat of ‘exit’ and ‘voice’ as well as the diverse mental landscapes make it a formidable task for any political entrepreneur to develop compelling ‘stories’ that would be able to move European policy-making decisively. In addition to the factors from the conventional political economy of reform, this line of reasoning provides ample arguments why Japan is the place of arguably the most noteworthy macroeconomic policy experiment of our time, and not the EU. Conclusion This paper started out with the issue of the recent economic weakness in Japan and the EU, following severe problems associated with their financial systems and public finance. In Japan’s case, one finds a very pro-active policy package being implemented since 2012, frequently referred to as ‘Abenomics’, while the EU witnessed a series of smaller reforms, without a major element of stimulus. How to explain these differences? The conventional political economy of reform is quite appropriate to explain the cautious policy process in the EU, while it cannot handle the sudden outburst of activism in Japan. When the role of political entrepreneurship, the mobilization of support through political communication and the creation of ‘ideas’ that fit older storylines are taken into consideration, though, the emergence of Abenomics fits such an interpretation very well. Also the European experience makes sense, as there are several circumstances that obstruct the emergence of forceful political entrepreneurship on the union level. Two final thoughts are worthy of consideration. First, from the viewpoint of academic parsimony, under the threat of Occam’s Razor, a simpler story to explain the different advances of Japan and the EU may be considered. While the Japanese financial bubble already burst more than 20 years ago, the European calamities are of a much more recent date. Japanese activism after more than two decades may simply be considered to reflect the universal improbability of major reform movements anywhere and that Japan had more ‘chances’ to realize such an unlikely event in more than 20 years than the EU

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in less than five years. Even though this consideration cannot simply be dismissed, it still leaves the question under what circumstances unlikely events may emerge, so the analysis presented above is still relevant. Second, emphasizing the role of political entrepreneurship for an actorbased political economy reform does not necessary provide good news for the likelihood that major policy change truly leads to an improvement of wellbeing. Rather, even when conceiving a far-reaching welfare-improving policy package, political entrepreneurs will be tempted to include predatory measures in order to buy additional support or as an insurance scheme for the considerable risks involved. From that perspective, the windfall gain of Abenomics for stock market actors or for the construction industry may not be purely coincidental. While some of the recent literature seems to stress the positive elements of political entrepreneurship, because it points to an escape from the pessimism of the conventional political economy of reform with respect to the potential for significant change, such activism may sometimes come at a high price.

CHAPTER 3

The Sino-EU Economic Relationship under the Sovereign Debt Crisis Ding Chun and Li Junyang

Performance of the Sino-EU Economic Relationship under the Sovereign Debt Crisis

After the outbreak of the European sovereign debt crisis, Greece, Portugal, Ireland, Spain, Cyprus, and other peripheral EU countries had to seek foreign assistance one after another to get through bankruptcy and avoid default. However, because of inherent fiscal austerity and structural reform requirements—which were imposed on them in return for the rescue package by the ‘troika’ (European Central Bank, European Commission and IMF)— the ­economic situation of the rescue recipients deteriorated with an aggravated economic decline, a steep increase of the unemployment rate and manifestations of social unrest. Dragged by the worsening economic performance of the EU peripheral countries in 2009, overall EU economic growth decreased by 4.3%. As a consequence, a series of economic governance measures was adopted by the EU member states. However, although the EU economy has begun to show signs of slow recovery, unemployment is still rising, at the beginning of 2013, reaching a new record of 11%. At the same time, the European debt crisis also had great impact on China’s economy. A major challenge was posed by the reduction of China’s exports to the EU due to the latter’s shrinking demand. In 2009, Chinese imports and exports of goods fell by 13.9%. In 2010 and 2011, the situation slightly recovered, but the growth rate went down to 6.2%. Affected by such factors, China’s GDP decreased to 7.8% in 2012, and the country was unable to keep its double-digit growth rate for years. Under the impact of the European sovereign debt crisis, a new stage in bilateral trade and investment relations has become apparent, manifesting itself in the following ways:

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350 300 250 200 150 100 50 0

2003

2004

2005

2006 Deficit

2007

2008 Export

2009

2010

2011

2012

2013

Import

Figure 3.1 EU trade with China 2003–2013. Source: Eurostat, http://ec.europa.eu/eurostat/data/database, accessed 9 October 2014.



Growth Rates of the EU’s Trade Volume Begin to Decrease, and the Trade Structure Keeps Altering The Trade Deficit Starts to Shrink During the European debt crisis from 2009 to 2013, Sino-EU import and export trade volumes kept their growing momentum, increasing by nearly 50%, from 296.6 billion euro in 2009 up to 428.3 billion euro in 2013. However, compared to the high growth rate before the crisis, the impact of the crisis on Sino-EU trade cannot be neglected. First, before the crisis, from 2003 till 2008, the trade volume increased by 120%, but after the crisis, in 2009, the volume shrank by 9%. Second, after one year of retaliatory growth rebound in 2010, growth slowed again with a year-on-year rate of 33.5%, 8.6%, 0.9%, and –1.27% in the years 2010, 2011, 2012, and 2013 respectively. Regarding the EU trade deficit with China during the crisis, the volume maintained the scale of more than 100 billion euro. The year 2008 is an important cut-off point. As is clearly seen, the EU trade deficit with China kept increasing before 2008, but after that year, the gap was gradually shrinking, except for a temporary rebound in 2010.

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The Gap between Core and Peripheral EU Member States is Widening The EU member states’ trade situation with China differs a lot, and the differences widened during the European debt crisis. Before the crisis, both Chinese Customs and Eurostat data showed that there were uniform trade deficits between EU member states and China. But resulting from the debt crisis, regional divisions among EU member states became more apparent. According to Eurostat data, the German trade with China increased into a surplus in 2011, amounting to around 380 million euro. In 2012, the surplus further expanded to 5.46 billion euro. But most other EU countries still kept trade deficits with China. According to Chinese Customs’ data, which are slightly different from Eurostat, the widening trade gap with China between core EU countries and PIIGS1 is consistent. German trade with China improved substantially during the crisis. In 2008, Berlin still had a 3.42 billion euro trade deficit with China. But in 2009, it was converted into a surplus, which expanded to 22.69 billion USD in 2012. Sweden’s trade with China also increased into a surplus over the same period, and the French deficit was narrowed considerably. On the other hand, there are huge trade deficits between the European PIIGS and China, except for Ireland. In 2012, the deficit of Greece, Spain, Portugal, and Italy with China accounted for 79%, 48%, 25% and 23% of the respective countries’ total trade volume with China. Mutual Trade Structure is Optimizing For China, export goods have gradually evolved from low-end to high-end. At present, although the low-end labor-intensive goods production still enjoys comparative advantage, with China’s textiles and clothing exports to the EU accounting for 30% to 40% of EU’s similar product imports, the total volume of low-end goods exported by China is rather small, not more than 15% of Chinese exports to Europe. At the same time, China’s competitiveness in high technology products has enhanced greatly in recent years. In other words, China’s export product structure with regard to Europe gradually begins altering from traditional labor-intensive products to high-tech products (see table 3.2). For instance, before the crisis (in 2007), machinery and transport equipment accounted for 46.17% among all China’s export goods to the EU, but in 2012 the percentage has risen to 50.21%. Automatic data processing equipment and spare parts, chips, semiconductor devices, etc., constitute the main part of Chinese manufactured goods exported to Europe. At the same time, EU exports of similar products to China fell from 59.38% to 58.48% (2007). 1  Portugal, Ireland, Italy, Greece and Spain.

Sino-EU Economic Relationship under the Sovereign Debt Crisis Table 3.1

Germany France Sweden Portugal Ireland Italy Greece Spain

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The net value of the European countries trade with China from 2008–2012 2008

2009

2010

2011

2012

–34.2 –76.7 –0.8 –19.3 –15.8 –149.9 –38.9 –153.7

58.0 –84.6 13.0 –14.4 12.6 –92.3 –32.4 –97.7

62.1 –105.5 2.0 –17.6 14.2 –171.3 –35.7 –119.4

163.4 –79.4 5.5 –16.4 15.3 –161.2 –36.0 –121.7

226.9 –27.8 5.0 –9.9 17.0 –95.9 –31.7 –119.1

Unit: 100 million US dollar Source: National Bureau of Statistics of China, http://www.stats.gov.cn; China’s Ministry of Commerce, http://www.stats.gov.cn; and the China general administration of customs. http://www.customs.gov.cn, accessed 25 May 2013. Table 3.2 EU trade with China in goods by product by Standard International Trade Classification (SITC) sections 2009

Food and live animals Beverages and Tobacco Crude materials, inedible, except fuels Mineral fuels, lubricants and related materials

2012

Value

Share of Share of Value import from EU’s Total China (%) import of this product (%)

Share of import from China (%)

Share of EU’s Total import of this product (%)

3.20

1.49

4.76

4.17

1.44

4.88

0.11

0.05

1.71

0.16

0.06

2.12

1.90

0.89

4.54

2.85

0.98

3.97

0.28

0.13

0.09

0.32

0.11

0.06

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Table 3.2 EU trade with China in goods by product (cont.) 2009 Value

Animal and vegetable oils, fats and waxes Chemicals and related products Manufactured goods classified chiefly by material Machinery and transport equipment Miscellaneous manufactured articles Commodities and transactions not classified

2012 Share of Share of Value import from EU’s Total China (%) import of this product (%)

Share of import from China (%)

Share of EU’s Total import of this product (%)

0.04

0.02

0.64

0.07

0.03

0.80

7.93

3.70

7.05

12.95

4.46

7.94

24.61 11.49

21.30

36.01 12.40

21.39

101.53 47.39

28.78

145.79 50.20

32.23

73.71 34.41

40.73

86.95 29.94

39.57

0.70

0.33

1.32

0.75

0.26

1.03

Unit: Billion Euro

Source: Eurostat, http://ec.europa.eu/eurostat/data/database, accessed 25 May 2013.

From European perspective, the expansion of the EU service trade with China deserves the largest attention. Compared to the long-term deficit of trade in goods, service trade is one of the EU’s major strengths. According to Eurostat, EU trade in services further expanded during the debt crisis (see figure 3.2). From 2009 to 2012, the EU’s goods trade deficit increased by 11%, but, at the same time, its service trade surplus with China rose from around 5 billion to 10

39

Sino-EU Economic Relationship under the Sovereign Debt Crisis 60

10

50

8

40

6

30 4

20

2

10 0

2004

2005

2006

2007

2008

Trade Volume

2009

2010

2011

2012

Trade Balance

Figure 3.2 EU trade in services 2004–2012. Unit: Billion Euro. Source: Eurostat, http://ec.europa.eu/eurostat/data/database, accessed 25 May 2013.

billion euro. Currently, China is the third-largest export market of EU trade in services. However, Sino-EU bilateral service trade only accounts for a small proportion, 10.36% and 11.56% of the goods trade volume in 2011 and 2012 respectively, implying that there is still substantial room for future improvement.

Mutual Investment is Growing Rapidly, but the Overall Scale is Still Not Big Enough EU Investments in China EU investments in China presented a fast growth momentum after the crisis. According to statistics, from 2004 to 2007 (before the crisis), the EU’s annual investment flow rose from 3.868 billion to 7.144 billion euro, an increase of 85%. Impacted by the crisis, EU investments in China, after falling shortly in 2008, increased dramatically since 2009. In 2011, investment flows increased three times compared to 2008. But in 2012, according to the European Union statistics, growth was interrupted again, falling by 40 percent with a year-onyear rate. On the country level, Germany is one of the largest foreign investors in China. In 2011, its total amount was responsible for some 60% of overall EU investments in China. Other major investors in China include Britain, France,

0

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Other 9%

UK 9% Sweden 7%

Germany 60%

Italy 6% France 9%

Figure 3.3 EU members investment flows in China in 2011. Source: http://epp.eurostat.ec.europa.eu. Visit time: 20 May 2013.

Italy, the Netherlands, and Switzerland. By comparison, although in 2007 Germany was also the largest EU investor in China, its share amounted to just 30%. From 2007 to 2011, the total amount of EU investment in China increased by 10.365 billion RMB, among which 82% was contributed by Germany, about 8.457 billion RMB. Another fast-growing investor is Sweden. In 2007, the latter’s investments in China amounted to only 51 million euro, but in 2011 they surged to 1.147 billion euro, increased by 21.5 times. China’s Investments in the EU Compared to EU investments in China, Chinese investments in the EU have two main characteristics: one is the relatively small scale, the other is the fast growth. According to European statistics, in 2011 China’s investment flow in the EU amounted to only 3.19 billion euro, less than one-fifth of total EU investments in China. The stock of China’s Foreign Direct Investment (FDI) in the EU was 15.029 billion euro, just 15% of the stock of EU investment in China. As for the growth rate, from 2007 to 2011, China’s investments increased by 3.25 times, significantly higher than the growth rate of EU investments in China during the same period.

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According to Chinese statistics,2 the EU is more attractive as China’s investment destination than the United States. In 2011, China’s non-financial direct investments in the EU amounted 7.561 billion USD, far more than the scale of investment in the US, about 1.81 billion USD. By the end of 2011, the cumulative non-financial direct investment to Europe reached 20.291 billion USD, 2.26 times that of the US. The most appealing investment industries for China are manufacturing, finance, wholesale and retail, leasing and business services, transportation and warehousing, etc. Intensified Trade Frictions During the crisis, Europe faced the double pressure of debt crisis and trade deficit. To ease their economic woes, trade protectionism increased with a constant intensification of trade frictions, as well as a sharp increase of antidumping and anti-subsidy investigations against China. EU’s Intensified Trade Transactions against China In recent years, the EU continuously launched anti-dumping or anti-subsidy investigations, and China has become a major object hereof. This phenomenon can be illustrated by presenting the number of cases in recent history. From 1979 to 1988, there were only 23 anti-dumping or anti-subsidy investigations targeting China. From 1989 to 1998, there were 46 cases. From 1999 to 2010, the number reached 92,3 manifesting a tendency of doubling every 10 years. Of course, such a tendency was based on the rapid growth of China’s economic volume and trade surplus. Although China’s trade surplus with the EU shrunk after the outbreak of the crisis, the number of EU investigations from 2009 to 2012 was still considerable with 7, 10, 8 and 7 respectively,4 which definitely put China in a dominant position among all countries surveyed.

Trade Frictions Extend from Low-end Products to High-end Products Before the crisis, mutual trade frictions were more concentrated on low-end labor intensive industries, e.g. Sino-EU textile trade conflicts in 2005. But in 2  Foreign investment cooperation country (region) guidelines (2012): the European Union, International trade and economic cooperation research institute (the ministry of commerce), investment promotion bureau (the ministry of commerce), and China commercial counsellor. 3  Shen, X. & Zhou, L. (2012). ‘The prospect of Sino-EU Economic Relationship’, International Economic Cooperation, May 2012. 4  Source: http://ec.europa.eu/index_en.html, accessed 20 May 2013.

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Table 3.3 Anti-dumping and anti-subsidy investigations by EU

To China To World Ratio

2009

2010

2011

2012

2013

 7 21 30%

10 18 55%

 8 21 38%

 7 19 37%

 6  9 66.7%

Source: European Commission, http://ec.europa.eu/trade, accessed 20 May 2013.

recent years, with the industry upgrading and competitiveness enhancing, mutual trade frictions extended towards high-end industries. For instance, there were the anti-dumping duties on Chinese seamless steel pipes in 2009; the PV (Photovoltaic products) anti-dumping suit against China in 2012–2013; and the anti-dumping case against Huawei and ZTE in the telecommunication area in 2013.

The Initiation of EU Trade Sanctions against China and the Role of the European Commission are Changing How the investigations are initiated now differs largely from before. Years ago, anti-dumping investigations against the Chinese textile industry were only initiated when several European companies appealed to the European Commission, followed by the Commission providing support in the negotiations and with the final contract. As for the recent PV case, the European Commission filed lawsuits based on only one single company’s appeal (Solar World), and the EU made the preliminary verdict regardless the objections of two-thirds of the member states. For the anti-dumping and anti-subsidy case against Huawei and ZTE, the European Commission acted as an initiator and launched the investigation based on no appeal. The reasoning was that European companies—being concerned about their business development in China—would not make an appeal themselves. Widened Divisions of Opinion on How Trade Frictions are Settled Within the EU, there are widened divisions of opinion between Northern and Southern European states. For example, during the preliminary ruling of the PV antidumping suit, among the EU-15 countries, France, Italy and Portugal voted in favor, while Germany, UK, Sweden, the Netherlands, and most of the other Northern countries voted against. Between China and the EU, differences in attitude were reflected in bilateral positions and interests. Regarding the case processing, it now takes more

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time to negotiate than before, and offers are raised constantly, as is shown in many cases. For example, the Sino-EU PCA (Partnership and Cooperation Agreement)5 makes little progress; the Sino-EU BIT (Bilateral Investment Treaty) negotiations have just begun;6 and the Sino-EU FTA (Free Trade Area) negotiations have trouble to get started. The EU is Actively Trying to Establish Mutual Free Trade Zones with Various Countries and Regions, Except with China Since the financial crisis, especially since the end of 2008, the WTO Doha round negotiations about trade liberalization have stalled again and again. The EU gradually started to give up hopes to improve its trade situation through the WTO multilateral negotiation mechanism. Under the influence of the crisis, the EU was in urgent need to expand external demand. They then started to launch bilateral negotiations, such as the 2010 EU-South Korea free trade area and the 2012 EU-Singapore free trade area, to construct favorable trade systems. Moreover, EU-Japan, EU-India, EU-ASEAN and EU-USA free trade zones are all under negotiation. What is worth mentioning is that the EU’s bilateral initiatives seem to follow the ABC principle (Anyone but China) with no intention for FTA negotiations with China. Perhaps the EU wants to use this as a leverage to pressure the Chinese side to fulfill its obligations in the fields of market access, IPR, investment protection, etc.

Reasons for the Changing Sino-EU Economic Relationship During the Debt Crisis



Under the Influence of a Weak Domestic Demand, the Increasing EU Exports to China were the Primary Cause for the EU’s Decreasing Trade Deficit There are two main reasons for the end of the surging EU trade deficit with China. One is the EU’s increasing volume of exports to China. From 2008 to 2012 EU exports, benefiting from huge external demand of China’s economic growth and massive fiscal stimulus, have increased by 83.9%. The other reason is the shrinking of EU imports due to the EU member states’ fiscal austerity policies after the crisis. From 2008 to 2012, imports only increased by 5  Barker, G. & Hatt, A. (2013). ‘The knock-on effects of solar panel tariffs will be huge’, http:// www.telegraph.co.uk/finance/newsbysector/energy/10101487/The-knock-on-effects-ofsolar-panel-tariffs-will-be-huge.html, accessed 5 June 2013. 6  Zhang, J. (2011). ‘The EU-China Relationship Arriving at a Bottleneck—A look at the ongoing negotiation of the PCA’, EU-China Observer (4): 2–3.

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13.2%. This resulted in little change in China’s export shares, but a rising level of imports from the EU after 2008. We could conclude from this that China’s increasing imports from the EU played a major role in helping the EU to get out of the debt crisis. During the crisis, the trade deficit of Germany improved the most. The main reason is that, before the crisis, Germany had already undertaken painful reform measures, reaching a peak with the ‘agenda 2010’ of the Schröder government. Such reforms, aiming to cut overly generous social welfare provisions and enhance the vitality of the labor market, eventually turned the corner of the economic situation and made Germany perform impressively during the crisis. By contrast, at the beginning of this decade, southern European countries, such as Greece, lacked a similar sense of crisis. They focused more on enjoying the benefits of being a free rider within the Euro zone, and insensibly increased national welfare without taking adequate consideration of their own economic development, thereby ignoring or intentionally delaying the necessary economic and social reforms. As a result, Greece’s national competitiveness lowered rather than improved, finally leading to a financial crisis which forced the Greeks to squeeze government spending, while domestic demand and imports declined at the same time.

Different Economic Conditions in China and the EU Stimulate Mutual Investment, but Various Investment Barriers are the Soft Limits of Further Investment Growth Bilateral investment increased significantly after the European debt crisis. For the EU, the sharp contrast between the weak domestic economy and the rapid growth of emerging economies was the primary motivation for the growth of investment. There still exists the attraction of low labor costs in the emerging countries. In 2008, according to International Labor Organization data,7 the average monthly salary in the Chinese manufacturing industry was only 2016 RMB, about 12 RMB when converted to hourly wage. By comparison, in the same year, Germany’s labor cost was 19.5 euro per hour and Spain’s 12 euro per hour. As for China, the reasons for increasing investment can be summarized as follows: a. China pursues a ‘walk-out strategy’, and the government actively encourages enterprises to invest offshore; b. After Chinese enterprises have enhanced their strength, they have naked motives to expand worldwide, e.g. Geely’s acquisition of Volvo; c. Chinese companies try to make investments locally to bypass EU’s trade protection barriers; d. Under the European debt crisis, China’s EU investments, especially some of the more sensitive projects, were to a certain degree encouraged by EU governments in order to get through 7  http://www.stats.gov.cn/, accessed 25 May 2015.

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the crisis, such as Cosco’s investment in Piraeus, Greece; e. Euro depreciation is objectively conducive to Chinese investment to Europe. However, both sides still possess a bunch of investment barriers which limit a rapid and sustainable growth of bilateral investment. The EU believes that while Chinese enterprises enjoy National Treatment in Europe, EU enterprises in China are not treated fairly because of market discrimination, which prevents them from winning certain Chinese orders. Citing the OECD’s foreign direct investment rules and control index (comprising 55 OECD countries and G20 countries), the EU pointed out that China’s index reached 0.407 in 2012, implying strong government control and various investment limits. By comparison, Germany’s index was only 0.023, about one to twenty compared to that of China. For the specific restriction practices, European companies signal that barriers of market access in China have many forms, including: fully protected sectors: e.g. logistics; joint venture requirements, e.g. automobiles and financial services; licensing constraints, e.g. aviation, construction and energy; public procurement discrimination (the European Chamber of Commerce estimated some 20% of GDP, about 1.13 trillion euro); excessive national security provision, e.g. information; asymmetries in market access. On the other hand, many Chinese companies, especially state-owned enterprises, hold that also the EU fails to completely remove barriers for China’s investments in Europe. From an investigation by China’s EU Chamber of Commerce with 74 Chinese enterprises—most of them having more than 100 million yuan (2011) domestic annual sales in China—it turned out that twothirds of these enterprises have realized a successful investment in Western Europe and employ more than ten thousand employees. According to the investigation, 60% are state-owned enterprises, and 40% private enterprises. Results show that 32% of the respondents have difficulties to get a work permit in the EU; 29% encounter labor law obstacles, covering social security, labor unions and labor contracts; another 28% are involved in tax and accounting problems. Other difficulties include intellectual property rights (14%), banking system and regulations (13%), lack of support and difficulties in communication with local authorities, etc.8 Nearly half of the respondents (48%) operating in the EU are confronted with governmental barriers, such as government investment examination and legal differences among all levels of government. In addition, the EU has not yet established a unified foreign investment approval process, a sound investment

8  The European Union Chamber of Commerce in China (2013). The overseas investment of China to the EU report, January: 17–21.

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Residence and work permit Labour law(social security, unions, contracts) Tax regulation and accounting

32% 29% 28% 14%

Intellectual property

13%

Banking system and regulations Lack of support and difficulties in communication with local… Others

10%

Access to financing

10%

Company law, competition

10%

Bureaucracy Unequal treatment compared to local companies

11%

8% 7%

0% 5% 10% 15% 20% 25% 30% 35% Figure 3.4 Barriers for China’s investment in EU. Source: EU Chamber of Commerce, http://www.europeanchamber .com.cn/en/home, accessed 20 May 2013.

Government approvals at local level

18%

Role of EU law compared to national country law

15%

Government approvals at EU level

8%

Access to incentives

7%

National security concerns

7%

Government approvals at national level

7%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Figure 3.5 Governmental barriers for China’s investment in EU. Source: EU Chamber of Commerce, http://www.europeanchamber .com.cn/en/home, accessed 20 May 2013.

20%

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47

guidance system and a detailed investment licensing directory. Instead, it still allows each member state to act in its own way. The actual investment data also support the above investigation. From January to October 2012, according to China’s commerce ministry,9 China’s investments in the United States, Japan, Russia, and ASEAN all show a strong momentum of more than 10% year-on-year growth, but in the case of the EU, China’s largest trading partner, Chinese investments fell by 21% year-on-year. The main reason is the increasing economic uncertainty against the background of the European debt crisis, but also EU restrictions on China’s investments belong to the factors to be blamed.

Since Economic Competitiveness Will Not be Enhanced Within Short Notice, the EU Member States Tend to Resort to the Shelter of Trade Protectionism Economic and trade disputes between China and the EU are mainly the result of serious trade imbalances. Because of China’s competitive advantage in lowend products, there are large numbers of existing or potential competitors. At the same time, the rapid development of China also makes Chinese companies more competitive in some high-end products, which has a negative impact on European companies. Many EU countries have failed to solve their structural problems, such as high labor costs and a relatively small R&D input, under the trend of globalization. The impaired international competitive power alerted the EU to treat China as an equal partner and to put more weight on the core trade policy challenges of how to deal with China’s increased competitiveness and how to realize ‘fair’ trade negotiations within the next decade.10 During the crisis, some EU member states suffered from domestic political instability due to rising unemployment. China, with a giant trade surplus, became an attractive target for populist politicians in Europe. They argued that products from China undermined domestic employment opportunities. These voices not only existed in Greece or Spain, but also in many other EU member states. Under the triple pressure of domestic protest, a desperate demand to reverse trade disadvantages, and strong appeals to expand the market share in China, the EU recognized that at short notice the own internal problems were impossible to be tackled through the enhancement of internal competitiveness. Coupled with the motivation of modeling a less unfavorable trade 9  http://www.gov.cn/xwfb/2012-11/20/content_2270969.htm, accessed 23 May 2013. 10  Commission of the European Communities (2005). ‘EU-China: Closer partners, growing responsibilities’, Brussels, 24 October: 2.

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system, the EU began to pursue some—rather irrational—trade sanctions against China. As early as in 2010, the EU’s new trade strategy ‘Trade, growth and global affairs’ reflected such a tough stance. Although the EU still adheres to the p ­ rinciple of opening up to the world, it no longer wants to be called ‘naive’. Instead, the Union seeks to protect European interests and European employment and fight resolutely against unfair trade practices.11 As for the modes of dispute resolution, the southern European countries, with a large trade deficit with China, resort to tariff protection to maintain their domestic competitiveness. During the crisis, facing a sharp decline of domestic demand and the problem of high unemployment, these southern countries looked for opportunities to protect trade and even took trade friction as a possible way to solve matters. Northern European countries, on the other hand, with their elevated industrial structure, no longer focus on labor-intensive products. The broad masses of consumers and retailers in these countries are looking for the cheap and fine Chinese products to meet consumer demand and legitimate trade interests. Moreover, during the crisis, demand within the EU contracted sharply, with the Northern countries—such as Germany—relying more on emerging markets’ external demand to realize the fast economic recovery. In 2010, for instance, Germany’s exports to Asia were higher than in 2008, by an amount of 28 billion euro, compared to a decline (of the same amount) in exports to the euro zone.12 With China, Germany also has a trade surplus, which makes it sound to resolve the trade dispute through mutual dialog rather than sanctions.

Rebuilding a Favorable Trade System is the Main Motive for Those Who are Keen on Establishing a Mutual Free Trade Zone In this round of globalization, European manufacturing industries are widely challenged by emerging economies, and their competitive advantages in new energy, high-tech, and service trade are not yet played out effectively. Facing such difficulties and crisis, EU states are eager to break through the existing system and establish a new trade growth system to boost the European economy out of the trouble. After the Doha negotiations stalled, the EU is actively setting up all kinds of bilateral Free Trade Areas (FTAs), which, to a certain extent, promote the development of global free trade, but their side effects are also very obvious. 11  European Commission for Trade (2010). ‘Trade, Growth and World Affairs: Trade Policy as A Core Component of The EU’s 2020 Strategy’, COM: 4. 12  Deutsche Bundesbank (2011). ‘Zahlungsbilanz Nach Regionen—Juli 2011’, Statistische Sonderveröffentlichung 11: 8–33.

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The most direct effect is the avoidance of Sino-EU free trade negotiations due to the big deficit with China. As The Economist has commented, the ‘EU almost turned a circle around China to set up dozens of free trade zones but only to bypass China’.13 More importantly, this is a new trade system led by developed countries. In the present situation, the EU can leverage its great influence in the current international economic order and its huge market advantages to reshape the rules, to set new industry standards, and to strengthen its own advantages in service trade. Only after this international order has become established as mainstream, China is forced to join it and, as a newcomer, has to accept unfavorable negotiation conditions.

Prospects for the Sino-EU Economic Relationship

Since the debt crisis, Sino-EU trade disputes have become more frequent and there are even signs that they could trigger a trade war. For instance, in September 2012, the EU decided to initiate anti-dumping investigations into China’s Photovoltaic products. In November of the same year, China also launched the European Union polysilicon double negative survey. Simultaneously, at the preliminary stage of EU sanctions against China’s PV products, China began to launch an anti-dumping and anti-subsidy survey for wine imports from EU countries. Moreover, some Chinese domestic experts suggested to impose sanctions on EU core export commodities to China, such as agricultural products, trade and automotive products. Looking into the future, it is safe to say that China-EU trade and investment will continue to develop. By doing that, mutual benefits and win-win situations will be achieved. Of course, trade frictions may become more frequent, but resolving these problems through negotiations, bargaining and mutual compromise will finally be the right path to follow. China-EU Trade and Investment Will Continue to Expand and Move Forward Sustainable development of the Sino-EU trade and economic relationship represents a fundamental interest of both sides, which relies on three factors, covering the short, medium, and long term. First, in the short term, due to the debt crisis and its side effect of fiscal austerity, the EU’s domestic demand is still quite weak. Therefore, external 13   The Economist (2013). ‘World trade: Fresh Blood’: 79.

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demand would be the best way to pull the EU out of depression. To attain this goal, the EU needs to open up its trade environment. Although China has also been impacted by the crisis, it is still an energetic emerging market with huge demand. And the proportion of China’s GDP divvied by the global amount from 2008 to 2011 increased by 3.07%. This trend was also reflected in the total amount of imports and exports over the same period. From 2005 to 2008 China’s import and export proportion increased by 1.19%, and from 2008 to 2015, the proportion added to 2.53%. In the meantime, the rapid growth of EU exports to China since the European debt crisis, also made it clear that China’s development was an important opportunity for Europe to expand its exports. Second, in the medium term, China-EU cooperation is conducive to the full play of complementary advantages and to the realization of a stable economic development. Actually, both sides are in a critical period of economic transformation. China is now remodeling its growth by way of promoting industrialization, informatization, urbanization, and agricultural modernization. To achieve its goals, China needs to import advanced technologies and ideas, and Europe is the world leader in quite a number of these fields, including energy saving, environmental protection, and development of new energies and biological medicines. The EU also ranks top in the world in social-humanitarian areas such as social insurance and labor protection. For the EU, the Chinese market will be the most ideal outlet for Europe’s advanced technologies and ideas. In the five years to come, China will import commodities totaling 10 trillion USD in value and channel out a total investment of around USD 500 billion. Third, in the long term, there is no fundamental conflict of interest between China and the EU, which is an important foundation for enduring economic and trade cooperation. There are human rights and other disputes between China and the EU, but compared to the United States and Japan, the European stance on China is relatively more objective and fair. As there are no geopolitical or military conflicts, the EU and China’s economic relationship is more credible, which is clearly manifested with regard to the island disputes between China and Japan, the sovereignty of the South China Sea disputes, etc. Based on such foundations, the climate is quite favorable for a wider range of business investment activities, as well as future European participation in China’s government procurement. For example, a report of the EU Chamber of Commerce stated that, while Chinese communication equipment manufacturing giant Huawei was formally blacklisted in the United States, Huawei has received 1.3 billion USD from the Italian Wind mobile communication company. In the future, China and the EU must become more capable in handling sensitive issues, which would make the prospects for cooperation between the two sides even more broad and bright.

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Frictions Will Become Intensified and More Frequent Judging from the current economic development, it is hard to get the European economy out of the plight of the debt crisis, at least in the short run. In addition, except for a handful of countries, most EU member states undergo a painful period of fiscal deficit and debt. So it is doomed that European countries will revert to certain fiscal stimulus in the future, but the budget will be quite limited. Thus, Europe, under the pressure of a rise of domestic unemployment and economic depression, is likely to initiate trade frictions with China to reduce the deficit. In addition to trade defense measures, the EU is also actively opening up new channels to improve trade with China. These measures aim to promote high standards of environmental protection, to urge China to obey the rules of intellectual property rights protection, to put pressure on China’s open government procurement market, etc. These proactive measures sometimes become a justification for the frequently erupting trade frictions. Government procurement is one of the issues which create divisions of opinion between China and the EU. The EU holds that China after its WTO accession has promised to join the GPA (Government Procurement Agreement) as soon as possible, but so far China has not yet fully opened up its market. The EU feels that, in addition to the central government, local government and stateowned enterprises should also be included, which would greatly expand the scale of government procurement in China and which would provide the EU with growing market opportunities. As the European Chamber of Commerce estimated, China’s government procurement market accounts for about 20% of China’s gross domestic product. The size of the government procurement market is about 10.5 trillion euro (2011).14 However, according to China’s ‘government procurement law’ regulation, government procurement by all levels of government organs, institutions and organizations, not including stateowned enterprises, is only 1.13 trillion euro. China actually has made many efforts to enlarge the procurement scope. In November 2011, it delivered the third government procurement bid list to WTO. The list includes three municipalities (Beijing, Tianjin, and Shanghai) and 171 economically developed entities in Jiangsu and Zhejiang provinces, equaling 30% of the total local procurement market. The next year, in December 2012, China submitted the fourth batch of price lists to expand the scope of local government to Fujian, Shandong and Guangdong provinces, and to further reduce the threshold value of the project. The EU, although expressing a welcoming 14  The European Union Chamber of Commerce in China (2012). ‘EU companies in China for 2012/13’: 8.

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attitude, was not satisfied and emphasized that China’s state-owned enterprises procurement was still excluded from the list. In 2012, the EU put forward a plan for ‘tit for tat’ legislation on public procurement, which secretly has the purpose of punishing China, and of course, also Japan and other countries.

Settlement of Disputes through Negotiation and Compromise is the Right Way First, the EU should recognize that the result of a trade war is a ‘lose-lose’ situation. Once a trade war is triggered, it would not only hurt the EU exports to China, but also have a negative impact on EU’s downstream industries. Imports from China are closely related to downstream industries within the EU, which would suffer heavy losses. For example, according to the Swiss private advisory body Prognose’s survey on PV disputes, a 20% punitive rate would result in PV product price hiking in the EU and an inevitable drop in demand, which would result in a loss of 242 thousand jobs in the EU in the coming three years.15 Secondly, the EU needs to admit that China’s EU investments since the outbreak of the crisis have a positive effect on the European economic recovery and employment. EU trade commissioner Karel de Gucht also welcomed investments from China, by saying: ‘We need the money.’16 Recently, Geely merged with Volvo, and Sany Heavy Industries acquired Putzmeister, which are excellent examples of China’s investment policy. In the case of Volvo, Geely saved 16.000 jobs in Europe only in the year 2010. According to the Chinese Ministry of Commerce,17 there are now more than 1600 Chinese companies in Europe, employing a total of 50.000 local staff. Besides trade and investment, China’s huge foreign exchange reserves are also very attractive for the new EU members in Central and Eastern Europe, which are trapped in the debt crisis. Thirdly, negotiations between China and the EU leading to compromise and cooperation will set a good example to other countries, which is constructive to the establishment of a new system of global governance and crisis prevention. The outbreak of this financial crisis exposed the intrinsic defects of the current global economic governance and financial system: the economic imbalances caused by globalization, regulatory problems caused by large-scale 15  Chaffin, J. (2013). ‘Some EU companies fear a showdown with China over solar equipment imports’, Financial Times Website, 9 May. 16  Ebels, P. (2012). ‘EU sees dramatic surge in investment from China’, http://euobserver .com/china/116537. 17  http://www.mofcom.gov.cn/article/i/jshz/zn/201303/20130300042284.shtml, accessed 25 May 2013.

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cross-border capital flows, fights between developed countries and emerging economies, etc. Serious reform of the existing systems of China, the EU, and the rest of the world would be of great significance for further development. In order to achieve these goals, all countries around the world, especially the world’s top three important economies, and international organizations, such as IMF, WTO and G20, need to work together to push forward the reform of the existing—sometimes unreasonable—global economic system and decide on the future of global governance. For China and the EU, the premise of mutual cooperation is a proper way to deal with bilateral economic relations and trade cooperation rather than fighting each other and fiercely opposing each other. We should recognize that cooperation will be the blueprint for the construction of a new system of global governance, which would be more effective than a system constrained by trade disputes. Finally, since China’s new leadership took office (in March 2013), economic and trade relations between China and the EU, as well as between China and individual EU member states, have been actively promoted, which is wellreceived by the EU side. Sino-EU relations are now in their best period ever since the establishment of bilateral diplomatic ties. This is helped by a couple of factors. First, President Xi Jinping and Prime Minister Li Keqiang visited the EU headquarters and several EU member states, including some Central and Eastern countries, in March to April and June to July 2014. The frequent visits and reception of EU leaders well illustrate the active, innovative, and pragmatic diplomatic strategy advocated and practiced by China’s new leadership. ‘Peace, growth, reform and civilization’, the four new slogans, make clear the connotation of the Sino-EU comprehensive strategic partnership and unveils the second guiding document for China’s EU policy. Moreover, the China-EU 2020 Strategic Agenda for Cooperation well specifies future goals and provides a roadmap for Sino-EU bilateral cooperation in the coming period. Also, the initiatives of promoting One Belt One Road (OBOR) and building an Asian Infrastructure Investment Bank (AIIB) provide the EU and other European countries with multilateral cooperation opportunities, giving them an important grasp on the matter. These initiatives have been well received by the EU, fully exemplified by the inclusion of 14 EU member states in AIIB as founding members. The adherence to the comprehensive cooperation strategy provides a fundamental guarantee for sustainable development. From the perspective of Sino-EU economic and trade cooperation—the anchor of bilateral cooperation—the trade volume exceeded 610 billion USD last year, with year-on-year growth of more than 9%, while Chinese investment to Europe hit a new high, reaching more than 9.8 billion USD. Moreover, Europe has secured its position

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as China’s main technical source. In addition, new economic fields of cooperation, including finance, energy, urbanization, environmental protection, infrastructure, etc., are expanded continuously. From the mutual endeavor to properly solve the Sino-EU PV conflict to launching bilateral investment treaty negotiations, from the initiatives of promoting OBOR and building AIIB to China’s participation in EU’s strategic investment plan, China is pushing all the way to enhance EU’s prosperity and unity and secure a stable and strong euro, striving for a win-win situation for both. In the post-crisis era, the EU is still struggling for economic recovery. Faced with deflationary risks, sluggish economic growth, as well as the threat of a Greek and British exit, the EU, including the European Fund for Strategic Investments, needs China’s demand dynamics. Meanwhile, the Chinese economy, shifting and speeding down to a new normal, needs EU’s technologies and experiences of industry transformation and economic development. Thus, closer innovative cooperation accords with mutual benefit. In recent years, Sino-EU multi-dimensional cooperation under three major mechanisms— high-level strategic dialog, high level economic and trade dialog and high-level cultural dialog—has been advanced substantially. In the sphere of international peace and security, climate, energy, global governance and innovation, etc., pragmatic cooperation has been carried out. When cooperating with European countries, China’s new leadership works together both with individual EU member states and the EU as a whole. China not only endeavors to strengthen bilateral relations with Germany, France, UK, the Netherlands, Belgium, Central and Eastern European countries, and other members in accordance to national characteristics, but also tries to put off the EU’s doubts and apprehensions and achieve a ‘two-wheel drive’ effect by bilateral visits and meetings of the leaders. Conclusion Admittedly, even though Sino-EU bilateral relations are at their best currently, there is no doubt that certain differences also exist. At the same time, there is sufficient reason to believe that China and the EU—with no strategic conflict and no geopolitical issues but with mutual win-win expectations and a comprehensive cooperation basis—will further implement their own strategic partnership, pragmatically advancing the established strategy, and planning all-round cooperation in the new period. It is expected that the EU as a union of member states can play a more active role in specific Sino-EU cooperative projects, and become the leader in future Sino-EU cooperation.

CHAPTER 4

Trade and Economic Relationships in East Asia: Does Globalization Lead to Higher Legalization? Herman Voogsgeerd Introduction Miles Kahler argued in 2000 that the region of East Asia is characterized by a low degree of legalization and formality.1 Nevertheless, an increasing number of bilateral, trilateral and multilateral agreements have been concluded by most of the East Asian states in the period between 1995 and 2015. An example is the so-called Economic Partnership Agreement (EPA). This kind of agreement, as well as China’s WTO accession in 2001 and the negotiations by groups of countries for a Transpacific Trade Partnership and/or a Regional Comprehensive Economic Partnership in Asia and the Pacific, will gradually invite East Asian countries to make their national domestic law more transparent and in conformity with the rules of the international trade regime(s). Law students from China and South Korea study abroad in the US or in Europe, because a second foreign law degree seems to be necessary in order to get a good job in these countries. Developments like these might indirectly lead to some kind of adaptation to a modern international trade regime. The main question to be asked in this chapter is therefore: What are the consequences of all this for the degree and nature of legalization in East Asia, and especially China? This contribution is about the effects of globalization, especially in the field of economic development, modernization and trade. Does this development have consequences for the fundamental dislike of legalization in East and South-East Asia, as Kahler claimed some fifteen years ago?2 As possible explanations for such dislike Kahler at that time referred to the sovereignty costs of increased legalization and the phenomenon of legal pluralism with separate layers of laws existing together.3 Another explanation is the existence of a distinctive Asian style of legal culture and institutions as opposed 1  Kahler, M. (2000). ‘Legalization as Strategy: The Asia-Pacific Case’, International Organization, 54(3): 165–187. 2  Ibid. 3  Ibid.: 175–178.

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to Western-style law. Especially in the area of human rights this Asian specificity comes to the fore. The Western concept of the ‘rule of law’ is certainly not familiar in East Asia. Katzenstein tellingly contrasts this concept with the Asian rule by law.4 The main difference between these two concepts is, of course, that where Western governments are bound themselves by the rule of law, in East Asia this is not always the case. China with its distinct form of state capitalism may be in need of a different kind of rule of law. Transparency may not figure high in Chinese preferences and a high degree of flexibility may be welcome, as well as broader standards instead of formal law and situation-specific standards instead of general norms.5 Ji Li gives us a recent example of an area of huge interest to the Chinese government and the country’s Communist Party where an enacted piece of legislation did not have an independent effect on the behavior of the actors in the field.6 Law simply seems not to matter enough. For this chapter, three case studies in the field of trade and economy have been chosen. First, the area of dispute settlement in the WTO, of which the People’s Republic of China (PRC) is a member now. Much research has already been done on China’s attitudes towards the dispute settlement procedure.7 Another area is competition law, where major cases against European and American companies have been decided on in the PRC recently. The third and last area is fundamental labor rights of the International Labor Organization (ILO), an area which is closely tied to economic modernization and to the avoidance of social unrest. Do the degree and nature of legalization and adaptation by China (and other East Asian countries) differ in each of the three fields? And in case they differ, could this be explained by the nature of the matter at hand? This study will mainly focus on China, but relevant information on other East Asian countries will be used as well. The first section will deal with the concepts of legalization and system friction. The other sections deal with the three case studies. The focus will be on cases in 2013 and 2014. 4  Katzenstein, P.J. (1997). ‘Introduction’, in Katzenstein P.J. & Shiraishi, T. (eds.), Network Power: Japan and Asia, Ithaca, Cornell University Press. 5  Jayasuriya, K. & Neuman, F. (1996). ‘The rule of law and capitalism: the East Asian case’, Journal of the Asia Pacific Economy 2(3): 357–377. 6  Li, J. (2013). ‘Does Law Matter in China? An Empirical Study of a Limiting Case’, The George Washington International Law Review 46(1): 128. The example concerns legislation on the protection of oil and natural gas pipelines within the PRC. This is an area of vital interest to the PRC and is enforced by some of the country’s most powerful government agencies. Nevertheless, there is not much practical effect, according to Ji Li. 7  See for example the work of Scott, J. & Wilkinson, R. (2013). ‘China Threat? Evidence from the WTO’, Journal of World Trade 46(4): 761–782; and Webster, T. (2014). ‘Paper Compliance: How China Implements WTO Decisions’, Michigan Journal of International Law 35(3): 533, 540.

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System Friction and Legalization

In this section two main concepts of this chapter will be introduced and linked: the concept of system friction known from the work of Sylvia Ostry and, secondly, legalization as put forward by Goldstein, Kahler, Keohane and Slaughter. An increased globalization through international trade and investments will help to integrate new upcoming countries including the largest ones. Some of these upcoming countries have a divergent national system, e.g. China with its ‘socialist patriotic system’. Increased globalization will inevitably lead to some kind of ‘system friction’. I borrow this notion from Sylvia Ostry in order to make a selection of substantive areas in which higher legalization is probable.8 Her research, focusing on the Triad (US, EU and Japan), dates from the 1990s, the period that witnessed the Europe 1992 process and the successful trend towards multilateralization in the Uruguay round of 1994. Although the context in 2015 is somewhat different, this research is still relevant today. System friction is defined by Ostry as an impediment to effectively accessing a certain country’s market because of domestic policies, legal and institutional arrangements.9 The real struggle on the road to deeper economic integration is the domestic arena. The distinction traditionally made between international and domestic trade is increasingly obsolete and customs duties are no longer the dominant focus of trade negotiations. Legal standards and issues have become the main bone of contention. Ostry’s observation that the role of government in these regulatory arenas will diminish while that of business will increase, fits well in the context of the 1990s, when neo-liberalism was strong and the ‘the retreat of the state’ high on the agenda.10 Whether this is the case in East Asia in the 2010s remains to be seen. It may also be that, notwithstanding a kind of convergence in names, a divergence in substance is more likely to happen. For the sectors to be selected, Ostry first mentions the trade regime. In her eyes, this regime is first and foremost a ‘common law regime’ of the Anglo-American type with its focus on transparency, due process and constraints on the role of government.11 Other areas where convergence is most 8  Ostry, S. (1992). ‘The domestic domain: the new international policy arena’, Transnational Corporation 1(I): 7–26. 9  Ostry, S. (1996). ‘Globalization and the Nation State’, in Courchene, T.J. (ed.), The Bell Canada Papers on Economics and Public Policy: Bell 5. The nation state in a global/information era: Policy challenges: 57–65. 10  Strange, S. (1996). The Retreat of the State, Cambridge University Press. 11  Ostry, S. (1996). ‘Globalization and the Nation State’, in Courchene, T.J. (ed.) The Bell Canada Papers on Economics and Public Policy: Bell 5. The nation state in a global/information era: Policy challenges: 62–63.

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likely, according to Ostry, are those in which domestic rules ‘significantly affect enterprise performance (competitiveness) and market access’. This is valid for goods, services, foreign investment and technology flows.12 Competition law is certainly a relevant policy area in this respect. Vertical arrangements between companies and different enforcement procedures are important here.13 The third topic chosen in this chapter, the issue of labor standards, was put on the agenda of the WTO Ministerial Agenda in Singapore (1996), at the request of US and EU, but the developing countries have been able to keep this topic off the agenda. Nevertheless, the fundamental labor rights of the ILO are interesting in the sense that there is a relation with economic modernization and the avoidance of social unrest. The second concept, that of legalization, was introduced by Goldstein, Kahler, Keohane and Slaughter in 2000, and is by now an established concept, not so much in the legal discipline but especially in the field of International Relations. Generally, legalization is defined as ‘a set of characteristics that institutions may or may not possess’.14 In order to elaborate on the role of legalization in world politics, the mentioned authors introduced three dimensions, each representing a continuum. First, there is obligation with the continuum of a non-legal norm to a binding rule. In what degree are the states bound? Is it the rule by law or the rule of law? Second, precision is about the degree of unambiguity of the language of the rule in question. And, third, delegation concerns the continuum between diplomacy and delegation to a court-like organization or an ‘independent’ authority, e.g. a competition law authority or a labor inspectorate. In this chapter I will focus on the relation between the state and the law. Even in China there is now a tendency of introducing stricter laws: recent meetings of the Central Committee of the Communist Party addressed reforms in the legal system and advocated ‘an impartial and authoritative socialist judicial system’. This is somewhat different from ‘an independent judiciary’, the use of this term is still a taboo in the PRC. The role of law, however, has changed in comparison to what it was ten years ago. Major fines have been imposed on companies, including Western ones, for violation of the Chinese competition law and anti-corruption law.15 There is a selective but increasing interest in compliance in China. Precision, on the other hand, is more difficult 12  Ostry, S. (1992). ‘The domestic domain: the new international policy arena’, Transnational Corporation 1(I): 15. 13  Ibid.: 17. 14  Abbott, K.W., Keohane, R.O., Moravcsik, A., Slaughter, A. & Snidal, D. (2000). ‘The Concept of Legalization’, International Organization 54(3): 17–35. 15  A case involving GlaxoKlineWelcome.

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in this respect. The general assumption is that authoritarian countries want a large degree of administrative discretion, which implies a preference for vague standards instead of precise rules. Delegation is interesting in the WTO context, trade rules and their interpretation by the DSB (dispute settlement body) and AB (appellate body) are indispensable features of the international trade system under the WTO. This will have consequences for the application and enforcement of domestic law as well. This brings us to the first area, experience within the WTO dispute settlement procedure. The WTO Dispute Settlement Procedure and Legalization It is argued that accession to the WTO is of high importance even for a large country such as the PRC and that a higher form of legalization is therefore inevitable. Non-discriminatory access to developed Western markets has been a dominant goal in the policies of the government and Communist Party. At least some selective form of higher legalization will be the price to pay in this respect. The transformation from GATT to WTO in the first half of the 1990s has led to a change of institutional character. The organizations’ dispute settlement procedure has become more rule-based: this development is also qualified as a leap from results-based to rule-based dispute settlement.16 Diplomatic freedom to change the procedure’s outcomes has become more difficult: only in case of unanimity between the states the outcome of the procedure in the form of the report of the dispute settlement body can be set aside. Nevertheless, there is still a large amount of flexibility for states in the implementation and enforcement of the ‘sanctions’ that have been decided on by the dispute settlement body. Notwithstanding the rule-based system, the WTO is still first of all a member state driven organization. In the multilateral trade talks it is up to the member states to make concessions. The secretariat of the WTO is rather small in comparison with other major international organizations, and also in relation to the dispute settlement system there is still some flexibility. Before a report is due, both parties in the dispute may opt for a mutually agreed solution. An adopted report may require no further action. In case action by the respondent party in the direction of the complainant is required, the action may be subject to a new compliance proceeding. The respondent party may 16  See William, J.D. (2014). ‘The WTO and Rule-Based Dispute Settlement: Historical Evolution, Operational Success, and Future Challenges’, Journal of International Economic Law 17(4): 1–22, also for information on the flexibility of the settlement system.

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also refuse to implement the adopted report and the complainant will then be authorized to withdraw earlier concessions to the first party. For upcoming countries such as China, WTO membership is of great importance. Market access to the US and European countries is essential in export-led growth plans that have characterized China’s development policy. In order to accede to the WTO China had to pay a price in the accession negotiations. Other member states demanded concessions that the country was not always willing to grant, still considering itself a developing nation. China’s recent behavior with respect to the dispute settlement procedure has been researched already quite extensively. At first it had difficulty in judging other member states’ intentions concerning starting a dispute against China, it reacted in those first years of its WTO membership with a sort of ‘tit-for-tat’ strategy.17 In case a member state started a procedure against the PRC, the PRC would start a procedure against the complainant. China’s general policy with respect to the dispute settlement procedure of the WTO could, however, not be qualified as ‘aggressive legalism’, as Japan’s position has been qualified earlier.18 After a period of institutional learning the country adapted itself quite well to the organization’s rules and standards. Webster is critical in this respect. He coins the term ‘paper compliance’ and points to large selectivity in the compliance by the PRC. He speaks of adaptation by China and not of institutional learning, because the last term would imply internalization of the WTO goals.19 In this contribution only main developments in the period after 2011 will be studied, with a focus on the years 2013 and 2014. In its report during the Trade Policy Review of 27 May 2014, describing its own attitude towards the WTO dispute settlement system, the Chinese government stressed that it ‘earnestly and actively participated in the daily operation of the WTO and respected the decisions of the dispute settlement body concerning the trade disputes between China and its trading partners’.20 Its prime purpose is combatting ‘protectionism’ from Western countries, which is understandable as China is regularly subject to anti-dumping and countervailing duties imposed by US and EU. 17  Scott, J. & Wilkinson, R. (2013). ‘China Threat? Evidence from the WTO’, Journal of World Trade 46(4): 761–782. 18  See the famous article by Pekkanen, S.M. (2001). ‘Aggressive Legalism: The Rules of the WTO and Japan’s Emerging Trade Strategy’, World Economy 24: 707–737; and Gao, H. (2005). ‘Aggressive Legalism: The East Asian Experience and Lessons for China’, in Gao, H. & Lewis, D. (eds.), China’s Participation in the WTO, London, Cameron May (chapter 18). 19  Webster, T. (2014). ‘Paper Compliance: How China Implements WTO Decisions’, Michigan Journal of International Law 35(3): 533, 540. 20   W TO, WT/TPR/G/300, China: 23.

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Also, transparency and predictability in trade policies are high on China’s list of objectives, at least in words. Chinese officials regularly highlight their constructive role within the WTO. But it also seems that the country combats Western protectionism and companies with their own weapons developed during the years of WTO membership. In three capacities China is involved in the WTO dispute settlement system. As a respondent, a complainant and a third party. The last status has been the favored one. As a complainant it complains mostly against the US. The EU and Japan are second and third. What have been the most interesting recent cases in this respect? First, the cases where China has been a respondent. The EU protested against anti-dumping duties imposed by China on X-Ray Security Inspection Equipment from the EU (DS 425). The topic ‘security’ as such is interesting. Together with Japan the EU complained against China after the latter had imposed anti-dumping duties on High-Performance Stainless Steel Seamless Tubes from both Japan (DS 454) and the EU (DS 460). This imposition is an example of the PRC’s tit-for-tat strategy, because these anti-dumping duties were a reaction to the protest of Japan, the US and the EU against Chinese export restrictions of Rare Earths, Tungsten and Molybdenum (DS 431, DS 432 and DS 433).21 The Chinese argument was that it needed a higher percentage of its own materials for the growing domestic industry, and based that argument on the commitments made during the accession stage. The Panel and the Appellate Body, however, deemed these measures to be in violation of the duties under the WTO and did not pay attention to the legal status of the accession commitments. These measures were not justified under article XX of the GATT Treaty, administered by the WTO, that allows trade restrictions for reasons of public security, natural resources conservation and environmental protection. The arguments of the Chinese government were not sufficiently related to these grounds. Concerning the cases where the PRC has been a complainant, one case against the EU and some member states is worth our attention: China filed a dispute against domestic content restrictions in ‘certain measures affecting the renewable energy generation sector relating to the feed-in tariff programs’ (DS 452). These restrictions included favors such as premiums for e.g. solar installations, that use components made within the EU and the European Economic Area. A remarkable development is also the request from China to establish a compliance panel on EU anti-dumping duties on steel fasteners (DS 397). China was not satisfied with the implementation measures the EU 21  Scott, J. & Wilkinson, R. (2013). ‘China Threat? Evidence from the WTO’, Journal of World Trade 46: 780.

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proposed. Although a certain degree of flexibility is an inherent part of the WTO system, this development concerning compliance is an interesting one. If parties need a certain amount of time to implement the panels’ recommendations, as the US requested in the case on countervailing and anti-dumping measures on certain products from China (DS 449), China is willing to discuss this with the US in a reasonable period of time. What do these developments between 2013 and 2015 indicate with respect to the degree and nature of legalization? Abbott and others mentioned the WTO as an example of high obligation and high delegation.22 With respect to precision they differentiate between the TRIPS, the trade related agreement on intellectual property rights (high precision) and the general duty of national treatment (low precision). This general qualification hides the large degree of flexibility with which the WTO standards are implemented and complied with. It is hardly possible to work with such types of qualification in the light of above-mentioned specific disputes. Nevertheless, it is possible to see some general trends. Delegation is high, because the reports of the dispute settlement body and the appellate body are long and detailed. This also has implications for the degree of precision, which is high. Compliance panels are an additional means to get specific enforcement from the trade partners within WTO. Obligation is the most difficult one of the three dimensions of legalization. There is at least some element of obligation present in every reciprocal relationship within the WTO. The concept in the WTO framework is problematic as member states may choose not to comply and accept countermeasures within the limitations the dispute settlement bodies have set. The US and the EU are prime examples in this respect and flexibility is high in the memberstate driven international organization that the WTO is. Webster’s critique concerning China’s refusal to internalize WTO norms in its domestic order is a bit easy in the light of the record of the US and EU. Interesting is the different treatment of international and cross-border trade on the one hand and domestic situations on the other in reaction to the report in DS 413. This report was about the treatment by China of electronic payment and money transmission services from companies from other countries such as the US. China imposed requirements indicating that bank cards issued in China shall bear a certain logo and that issuers shall become member of a Chinese network, bank cards issued in China shall meet certain uniform business standards. These requirements violated the General Agreement on Trade in Services (GATS) in that services and services suppliers form other WTO members would not get the same 22  Abbott, K.W., Keohane, R.O., Moravcsik, A., Slaughter, A. & Snidal, D. (2000). ‘The Concept of Legalization’, International Organization 54(3): 22.

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national treatment as Chinese services and service suppliers. In case compliance with the reports of the dispute settlement bodies is not possible for whatever reason China can choose to apply the report in international trade only. Domestic trade is not covered then.

Competition Authorities and Legalization

Accession to the WTO has indirect implications. One of them is the modernization of competition law. There is a causal link between the increasing relevance of competition rules and the post-war success of the GATT/WTO system. As tariffs and non-tariff barriers are increasingly abolished and reduced, competition policies become more visible and therefore important. One of the established Working Groups during the WTO Ministerial Conference in Singapore in 1996 was on the relation between trade and competition policy. The developing countries and the US did not want any binding obligations in this respect. The EU, Japan, Australia and Canada were on the opposing side. As the ‘Singapore issues’ had to become a part of the so-called Doha development round, the developing countries had a say as well. The Working Group therefore did not go further than identifying areas that might need further consideration within the WTO in the future. Further action was deemed to be necessary concerning cartels and capacity building for developing countries so that their competition institutions would become strengthened.23 Like other developing countries the PRC is a latecomer in the field of competition law. A major Chinese law in this area dates from 2008 only, the AntiMonopoly Law, which states in article 1 that there is a need to promote ‘the healthy development of the socialist market economy’. Furse submits that this piece of legislation is a response to a ‘perceived unfairness of conduct engaged in by international companies’.24 This is very different from the situation in South Korea where the public seemed to have supported a strong competition law regime in light of the dominant position of the home-grown conglomerates, the chaebŏl (재벌).25 Nakagawa points to a problem: there is no harmonization of competition law in the world because the main Western 23   W TO, Doha Ministerial Declaration, WT/MIN (01)/DEC/1, adopted 14 November 2001: 25. 24  See Furse, M. (2009). Antitrust Law in China, Korea and Vietnam, Oxford, Oxford University Press: 9. 25  Nikomborirak, D. (2013). ‘The political economy of the competition regimes in Thailand and South Korea: a comparison’, in Lewis, D. (ed.), Building New Competition Law Regimes. Selected Essays, Cheltenham, Edward Elgar: 129.

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countries have diverging approaches. The EU and US do not agree on further harmonization.26 That is why higher legalization has to come from a more bottom-up approach. More flexible best practices from dominant economic countries might work as an effective example. The most important actor in matters of international competition law is not the WTO but the International Competition Network (ICN) set up in 2011 under the auspices of the US. Nölke and Taylor hold that government protection of national champions and interfirm linkages in upcoming economies in order to strengthen domestic industries in global competition will lead to a resistance to some restrictive aspects of competition law as preferred by the ICN.27 This implies that there will only be a selective adaptation in this area and for China this may be true, as its authorities are not even a member of the ICN. Only the Hongkong Competition Commission joined the ICN. Having a proper competition law framework and an ‘independent’ regulator in the field is seen as a prerequisite for becoming a modern and developed economy.28 For China there is a huge incentive here, it simply needs adequate and reliable institutions, if not necessarily independent from politics. At least according to Dowdle, Gillespie and Maher global competition law is a ‘promising lens’ not only for the Western world.29 The analysis of Gerber in the same volume is, however, more nuanced: the introduction of competition law in Asia is at best ‘recent, limited, wary and ambiguous’.30 Some high profile examples from 2013 and 2014 are the following. In August 2013 nine companies producing and trading infant milk powder, among which Chinese and non-Chinese companies such as Fonterra, Meiji and Friesland Campina, had to pay the largest fine ever for resale price maintenance. Three others did not, because they cooperated with the National Development and Reform Commission (NDRC), the authority competent for competition on price and abuse of market dominance. The companies 26  Nakagawa, J. (2011). International Harmonization of Economic Regulation, Oxford, Oxford University Press: 211. 27  Nölke, A & Taylor, H. (2010). ‘Non-Triad Multinationals and Global Governance: Still a North South Conflict?’, in Ougaard, M. & Leander, A. (eds.), Business and Global Governance, London, Routledge: 72. 28  Nakagawa, J. (2011). International Harmonization of Economic Regulation, Oxford, Oxford University Press: 200, quoting many other authors with similar opinions. 29  Dowdle, M.W., Gillespie, J. & Maher, I. (eds.) (2013). Asian Capitalism and the Regulation of Competition. Towards a Regulatory Geography of Global Competition Law, Cambridge, Cambridge University Press. 30  Gerber, D.J. (2013). ‘Asia and global competition law convergence’, in Dowdle, Gillespie & Maher (eds.), Asian Capitalism and the Regulation of Competition: 38.

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admitted fixing the prices, although some companies thought that this was permissible in China as there is still a lack of clarity concerning the question whether resale price maintenance is illegal per se or not. That the fines are large is normal under US and EU competition law, but new for China. A report of the US Chamber of Commerce questions whether this case is related to market abuse or on the other hand, concerns ‘legitimate price increases in response to market conditions’.31 Predictability is another important element in the rule of law. In May 2014 foreign car companies were the subject of several resale price maintenance cases initiated by the NDRC. US, EU and Japanese firms were the target. The European Chamber of Commerce publicly criticized this part of the enforcement of antitrust regulations in the PRC and especially administrative intimidation, lack of full hearings and the disproportionate targeting of foreign companies.32 The behavior looked as forcing price reductions because profits made in China by these car makers were deemed to be high enough. On 17 June 2014, the Chinese authorities, in this case the Ministry of Commerce (MOFCOM), competent for mergers, decided to turn down an alliance between the so-called P-3 Network of merchant container ship companies between the Danish Maersk Line, the Swiss MSC and the French CMA CGM. The alliance would have become too dominant on the shipping lines between Europe, the US and Asia as it would have almost half of the world market of sea transport. Large Chinese state owned companies, which were already doing badly economically, Cosco and China Shipping Container Lines, would become threatened by this P-3 Network. Domestic pressure may have been essential in this decision.33 There is indeed a tougher compliance of national competition laws in the PRC as these three high profile cases indicate. International ICN norms are important for global convergence,34 but the Chinese competition authorities are not a member of the ICN. So, most of the dimensions remain low although introduction of competition law in China is self-evident and inevitable for the 31   U S Chamber of Commerce (2014), ‘Competing Interests in China’s Competition Law Enforcement. China’s Anti-Monopoly Law Application and the Role of Industrial Policy’: 60. 32  European Union Chamber of Commerce in China (2014). ‘European Chamber releases statement on China AML-related investigations’, Press Release, 13 August. 33   Financial Times (2014). ‘Domestic factors key in China’s shipping rejection’, by Mitchell, T., 18 June. 34  See a statement by the chair of the ICN, Mundt, A. (2013). ‘Focus, inclusiveness and implementation—The ICN as a key factor for global convergence in competition law’, see www .internationalcompetitionnetwork.org.

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development of a modern economy. There is high precision as the ICN offers abundant examples in this respect, but China is not obliged to follow these. The cause of this may be that Chinese competition authorities prefer to develop first their own standards, as competition law is a rather new phenomenon in the PRC. There may also be distrust of bottom-up standardization because Western economies have had more experience in this respect. Wong mentions that the PRC wants to prevent adopting those standards that are reflective of the dominance by foreign professional intellectuals.35 Regulatory summits are planned between the US, China and the EU in 2015 in order to deal with some of the system frictions. Michael Best has given an interesting example of a (cultural) clash between American inspired anti-trust and the Japanese traditional preference for industrial policy.36 The creation of the Japanese FTC (Fair Trade Commission) in 1947 has clearly been inspired by American antitrust policy but within two years a new FTC was introduced with less powers, and a new institution, the Ministry of International Trade and Industry (MITI), was created with strong competences to run the economy.37 The aim to build a powerful domestic industry for (subsequent) global competition with other (Western) companies will not be illogical to the PRC either.

Fundamental Labor Rights and Legalization

A different field and nonetheless an important one for further development of society are the fundamental labor rights proclaimed by the International Labour Organization (ILO) in 1998 in the unanimously supported Declaration on Fundamental Principles and Rights at Work. Four topics concretized in eight conventions are since then put at center stage. According to Nölke and Taylor low labor costs are a competitive advantage and this low-cost strategy will lead to resistance to ILO’s industrial relations norms, especially where it concerns labor costs.38

35  See Wong, S. (2013). ‘Varieties of the Regulatory State and Global Companies’, in Global Policy 4(1): 179. 36  Best, M. (1990). The New Competition: Institutions of Industrial Restructuring. Cambridge, Harvard University Press. 37  Ibid.: 175. 38  Nölke, A & Taylor, H. (2010). ‘Non-Triad Multinationals and Global Governance: Still a North South Conflict?’, in Ougaard, M. & Leander, A. (eds.) Business and Global Governance. London, Routledge: 171.

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Freedom of association and collective bargaining are still extremely sensitive topics in China. The core conventions on Freedom of Association and Protection of the Right to Organize (No. 87) and the Right to Organize and Collective Bargaining (No. 98) have both not been ratified. There are problems with the All-China Federation of Trade Unions (ACFTU), the umbrella organization of trade unions in China, which is deemed lacking in independence, because it implements decisions from the ruling Communist Party. Ratification of these conventions is therefore not probable in the near future. This may seem more problematic than it is, because even the US did not ratify these treaties. Non-ratification does not imply that there are no developments on the ground in (many provinces in) China, especially concerning the topic of collective bargaining. The last term as such is not preferred, as harmony instead of conflict is the dominant mode, therefore one tends to speak of collective ‘consultation’.39 The number of labor disputes in China has increased dramatically during the last decade and this (domestic) factor is definitely also a reason for increased PRC attention for ILO standards and norms. That these norms are promotional and that technical assistance has been provided by the ILO are helpful factors as well. China grudgingly accepted the reporting procedure of the ILO. The complaints procedure of the Committee on Freedom of Association has been used six times against the PRC—the first very sensitive Case no. 1500 being initiated by the International Confederation of Free Trade Unions (ICTU) concerning human rights abuses after the Tiananmen incidents in 198940 and the last one in 2002, Case no. 2189 concerning a complaint against violent police intervention in two factories against demonstrations of independent labor activists and members of independent workers’ organizations. The reporting procedure is dealt with mainly by the Committee of Experts on the Application of Conventions and Recommendations (CEACR), and consists of questions and requests and a formal compliance can be sufficient. Kent holds that China learned ‘how’ to use the standards, but this is not the same as an internalization of the standards in the country’s own system.41 On the other hand, the ILO has a long experience in standard-setting dating from 1919, the tripartite system reminds the country of its socialist history and the modernization of China and its economic development lead inevitably 39  Zhou, M. (2014). ‘The Evolution of Collective Labour Law with “Chinese Characteristics”? Crossing the River by Feeling the Stones?’, in Liukkunen, U. & Chen Y. (eds.), China and ILO Fundamental Principles at Work, Wolters Kluwer, Alphen aan den Rijn: 81. 40  Kent, A. (1997). ‘China, International Organizations and Regimes: The ILO as a Case Study in Organizational Learning’, Pacific Affairs 70(4): 527. 41  Ibid.: 528.

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to more labor-related disputes. The importance of international standards even for the PRC’s domestic development must not be underestimated. ‘Social peace’ is an essential topic for the PRC. In the other three areas under the scope of the core conventions, forced labor, child labor and equal treatment and equal pay, there is some progress. The continued use of forced labor and labor camps for prisoners is now under discussion in the higher echelons of the communist party. The conventions 100 and 111 have been ratified by China in 1990 and 2006 respectively. The minimum age convention 138 and the worst forms of child labor convention 182 have been ratified in 1999 and 2002. In all these areas there is progress, although the problems are huge and the country is large. The CEACR can do little else than ask for more information on data and on compliance. The most recent requests from the CEACR are from 2010 and 2012. The one from 2010 concerns the Worst Forms of Labor Convention and the CEACR asks for information on measures taken to protect domestic workers under the age of 18 from socalled hazardous work, work that endangers their health. The government is asked to give the numbers and statistics: sufficient data should be made available on the number of prosecution cases in this area. There are two requests in 2012 and the first one is with respect to the Discrimination (Employment and Occupation) Convention (No. 111) and here the request is more related to compliance. China is asked not only to forbid direct but also indirect discrimination. The scope is often not well described in national legislation, neither are the grounds on which discrimination is not allowed. The CEACR asks for a definition of sexual harassment and asks whether this protection is also given to male workers. It wants information on the ‘specific measures’ in order to ensure effective enforcement of the Employment Promotion Law, more specifically section 31 thereof concerning discrimination based on social origin. This provision is interesting with respect to the Chinese household or hùkǒu (户口) system that discriminates internal migrant workers according to where they are registered, in rural or in urban areas. The consequence of this system is that migrants from rural areas who move to the cities do not enjoy the same school, social security and health-related benefits as citizens who have been born in the cities. Concerning the Law on Regional Ethnic Autonomy the CEACR wants more information concerning its practical application. Moreover, it asks for translation of several government reports. The second one is with respect to the Equal Remuneration Convention (No. 100) on equal pay between men and women. Here there are the requests of the same kind, although there is a more critical remark concerning the method described by the government in its report on wage setting. The CEACR requests whether this method takes the principle of equal pay for work of equal value into full account. China seems

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to follow the principle of equal pay for equal work, work of equal value is not taken into account. Requests for information on the training of labor inspectors is also asked for. In 2015 the CEACR asked the government for more statistical information on numbers of infringements for children doing ‘hazardous work’ and the Committee asked China to strengthen the labor inspectorate. With interest it commented on China’s decision of 28 December 2013 to abolish re-education through labor camps for children under 18 years of age. In the years 2014 and 2015 there are no requests concerning the core conventions. The ILO system is of a promotional nature and is therefore not threatening for the sovereignty of a country. On the other hand, ILO’s best practices as applied by the ILO supervisory committees are consistent and touch upon sensitive issues like the Tiananmen incident, the hùkǒu system and the degree of independence of the national umbrella of trade unions. In terms of legalization this implies a medium obligation, a medium precision and a medium delegation. There is obligation even in case a member state does not ratify one of the eight core conventions, since the Declaration of 1998 membership of the ILO implies honoring these eight treaties. Precision is medium because the consistent reports of the supervisory committees add pressure on some countries. Precision is certainly not high as ILO core conventions give standards instead of rules, standards that are adaptable in very diverse parts of the world. Delegation is medium because the reporting (and complaints) procedure of the ILO are implemented by supervisory committees with members from all corners of the world. China’s participation in the ILO’s reporting procedure began hesitantly, but the country now participates in the procedure. This is somewhat different from ratifying all ILO core conventions, although also here there has been some progress.

Main Findings

International law has been introduced in East Asia by the West, especially by European countries, in the 19th century. In that century China became acquainted with unfair and unequal treaties with the Western trading powers. It is therefore not self-evident that international law and other economically oriented branches of the law are taken over and internalized by East Asian countries. Will globalization and the increase in trade relations function as push factors in this respect? In general it can be confirmed that this has been the case, even for such a large country as the PRC. Many new laws have been developed in China, especially in the period between 2005 and 2010. Legalization is on the rise. However, in the PRC there is still a preference for a

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low degree of obligation, e.g. vague standards or principles rather than precise rules, and some delegation but without immediate domestic application and enforcement. All three areas under scrutiny in this contribution, obligation, precision and delegation, have increased somewhat. China is indeed complying, at least formally, with the reports of the WTO’s dispute settlement body because it needs access to the markets of the Western states and asks for compliance panels against the US and the EU as well. In sensitive cases it can still decide to only partially implement reports or implement them only concerning cross-border trade and not in domestic arena’s. The WTO system, although created under US hegemony, is still diplomatic and flexible enough for sensitive policy matters to be handled differently. In the area of competition law there is no large international organization responsible but a network of scholars and competition authorities meant to be entirely voluntary without a bureaucracy. This implies a huge flexibility and the three competition authorities in China proper are not even a member. Obligation, precision and delegation are low. Nevertheless, the PRC has built a modern competition law system that imposes huge fines on Western companies and bans mergers between Western companies when these mergers become too dominant in relation to important Chinese companies. Specifically because of the flexibility and voluntariness of the ICN the internalization of global competition norms in China may improve. These definitely fulfill a role in the country’s modernization as well. The same can be said of some fundamental labor norms of the ILO, although this is only partly the case. Some of these norms, such as freedom of association, are still too sensitive to be ratified and implemented in the PRC. Other norms concerning pay and equal treatment are important for the country’s economic modernization and social stability. As (Western) economic actors prefer predictability and transparency, the system friction between the PRC on the one hand and the US and EU on the other is likely to be continued for some time. Sovereignty matters in China, more than globalization of the economy. At the same time, the PRC is a huge testing laboratory and the provinces often use different approaches in order to see which one works best. But these overlapping categories of law with differing implementation and enforcement do not bode well for transparency. In sum, the legalization concept is a useful tool to address the role of law in China.

Part 2 Politics

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CHAPTER 5

Weak Politics—Depoliticization as Strategic Choice: An Analysis of Chinese Priorities in Sino-EU Relations Daniel R. Hammond and Jing Jing Introduction The relationship between the European Union (EU hereafter) and the People’s Republic of China (PRC or China hereafter) go back to the early days of both the regional organization and the state. When relations between China and other states were complicated by the aftermath of colonialism, the Cold War, and revolutionary misadventures it is worth noting that the EU and the PRC managed, albeit with some difficulty, to begin laying the foundations to what has become one of the fundamental relationships in global politics.1 Today, despite differences such as the events of June 4th 1989 and its aftermath, the relationship is important for both parties. Economically they are increasingly tied through trade, investment and mutual support and development; politically the EU and China are key parties in global politics. There are, however, problems within the relationship between the EU and China—the theme of this book highlights this and it is this troublesome aspect of the relationship that this chapter seeks to engage. The problems within the Sino-EU relationship are significant precisely because of the points raised above; both are important actors in the global economy and global politics. The ongoing crises in the Ukraine illustrate this clearly. Whilst both might have roles which are secondary to the US and Russia, nevertheless they are important. The challenge for China and the EU is to ensure that their relationship continues to develop in a positive direction so both can benefit from economic, cultural, and political exchanges and developments.

1  Caira, M. (2010). ‘The EU-China Relationship: From Cooperation to Strategic Partnership’, in Bindi, F. (ed.), The Foreign Policy of the European Union-Assessing Europe’s Role in The World, Washington, DC, Brookings Institution press: 263–270. Wilson, D. (1973). ‘China and the European Community’, The China Quarterly 53 (March): 647–666.

© koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_006

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This chapter starts from an assumption that in the relationship between China and the EU politics is weak and economics is strong. Rather than seeking to illustrate this or argue around this dichotomy it will ask why this is the case? This chapter argues that the problem of weak politics between China and the EU is due to a misunderstanding of the starting position of the PRC when it comes to international relations. In a sense the EU is seeking outcomes through the relationship with China which China has both no interest in developing and also actively seeks to avoid. The weak politics of the relationship between China and the EU is a consequence of this. There are three features which characterize China’s engagement with the EU and explain the issue of weak politics. We identify them as: de-politicization, bilateral distinctions, and red-lines, all operating under the current new line of General Secretary of the Chinese Communist Party and President of the People’s Republic of China Xi Jinping and Premier Li Keqiang (Xi-Li new line hereafter). We argue that these tendencies manifest in China’s international relations based on a reading of recent Chinese official articulations on Sino-EU relationship in the run up to and under Xi and Li’s leadership. We conclude that in order for the EU to see more success in its political relations with China, the EU needs to re-orient how it conducts business with the PRC. This would prove challenging and in the short term even damaging but it is the only way to counter the strategic decisions made by the government of the PRC. The EU may adopt a strategy of ‘rewards delay’ which means that it needs to play down its ambitions to seek deeper political interactions with China and a better political environment in China for now and reserve it later for a better effect. Alternatively, as suggested in the chapter by Gaenssmantel and Liu the deliberate politicization of problematic areas by the EU may prove an effective albeit painful method to move the Sino-EU relationship beyond economics. To this end the chapter is structured as follows. First, the problem of weak politics between China and the EU will be examined and defined. This will be followed by a discussion of the four rationales which underpin China’s international engagement and how they differ from the EU’s expectations on political interactions with China. Third, the chapter will analyze recent speeches, newspaper coverage and other documentary evidence in English and Chinese to highlight how these underlying rationales manifest in China’s engagement with the EU. Fourth, a comparison is made with China’s relationship to ASEAN, highlighting similarities in recent developments. Finally, the chapter will conclude, bringing together the argument and suggesting how, in the future, the EU and other regional organizations might more successfully engage with China both economically and politically.

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Does Weak Politics Exist?

There are three main points related to whether understanding the political relationship between the EU and China as weak is a fair assessment. First and foremost, the assessment is based on the assertion that it is in the economic arena that China and the EU have made the most progress. Dialogs on political issues have stalled both at the EU and member state levels.2 The Comprehensive Strategic Partnership between the PRC and the EU is at its most successful when it is dealing with areas of cooperation which are economic in nature.3 Trade is another area where the EU and China have been successful in spite of differences and difficulties over the years. In 2013 China was the second largest trading partner with the EU (after the US), the leading source of EU imports and the third largest destination for EU exports (after the US and Switzerland).4 It is also significant because the EU runs its largest deficit with China as well, totaling Euro 132 billion in 2013.5 The political dialogs and exchanges do appear weak against such significant economic cooperation and trade. Second, on the political aspects of the Sino-EU relationship the literature is generally negative suggesting that the EU has not been successful in forging an effective political relationship with China.6 Rather it is implied that while the EU has tried, primarily through a strategy of dialog, to engage China with issues such as human rights, this has not achieved any significant progress.7 By implication politics is viewed as ‘weak’ because it is limited when compared to the relative success of the economic relationship between China and the EU. It is also worth noting that the EU as an international actor has been met 2  Holslag, J. (2010). ‘Europe’s Normative Disconnect with the Emerging Powers’, BICCS Asian Paper (5): 1–21. 3  Godement, J. & Fox, F. (2009). A Power Audit of EU-China Relations, London, European Council on Foreign Relations. 4  E CDGT (2014). ‘Top Trading Partners’, EC Directorate General for Trade, http://trade .ec.europa.eu/doclib/docs/2006/september/tradoc_122530.pdf, 1 May. 5  Ibid. 6  Caira, M. (2010). ‘The EU-China Relationship: From Cooperation to Strategic Partnership’, in Bindi, F. (ed.), The Foreign Policy of the European Union-Assessing Europe’s Role in The World, Washington DC, Brookings Institution press; Crookes, P.I. (2013). ‘Resetting EU-China relations from a value-based to an interest-based engagement’, International Politics 50(5): 639–663. 7  Holslag, J. (2010). ‘Europe’s Normative Disconnect with the Emerging Powers’, BICCS Asian Paper (5): 1–21.

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with some skepticism by China in the past although the extent to which this is the EU’s own doing is open to question. The fallout from the financial crisis in Europe saw a mixed response from China. More recently developments in the Ukraine have suggested that the EU is still incapable of developing, articulating and putting into action a coherent foreign policy and China cannot help but be aware of this. Third, another theme identified in the literature is how the EU is perceived by states outside of the organization. In discussion of the EU as a normative power it is pointed out that how the EU is perceived is highly dependent on where in the world we are referring to.8 Certain regions, therefore, tend to view the EU as a normative power whereas others do not.9 While some may argue that weak politics has little to do with perceptions of normative power we would suggest otherwise. The EU, in order to have power internationally and therefore political influence, needs to embrace and embody all manifestations of power and this includes normative power. The EU will not be able to forge strong political relationships if it is perceived as incoherent in any way and this includes its normative power. Put another way, if China perceives the EU as weak normatively, why would it need to engage with the EU on these norms, such as human rights? It is interesting to note that on human rights the PRC regularly engages with the US through an annual exchange of human rights reports, both highly critical of each other. This suggests that China feels the need to counter or balance the US’ articulation of what is acceptable internationally. In the case of the EU there is no similar articulation. The next section will begin to address this through a discussion of the underlying rationales in China’s engagement with the EU.

Strategies of China’s International Engagement

It is obvious that there is a discrepancy between the extent of China’s engagement economically with the EU and the relatively weak political developments in the relationship. Rather than suggesting that this is a result of particular problems with the EU one of the key points in this chapter is that there are a number of underlying or core rationales or strategies adopted by the PRC when it comes to engaging internationally and these help explain why the political relationship between the EU and China has been particularly challenging over 8  Larsen, H. (2013). ‘The EU as a Normative Power and the Research on External Perceptions: The Missing Link’, Journal of Common Market Studies Early View: 1–15. 9  Ibid.: 8–9.

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the years. A number of these rationales are deep rooted and have historical origins beyond the dynamic of the Sino-EU relationship; whereas others are more recent developments tied to the election and bedding in of the current leadership of Xi Jinping and Li Keqiang. For the sake of clarity they will each be dealt with in turn. De-politicization The practice or process of de-politicization is not unique to China or to economic or political systems in transition. For example there is an extensive scholarly discussion of de-politicization in British politics during Tony Blair and New Labour’s period in office.10 One area of common ground is the recognition that de-politicization tends to occur in systems where neo-liberal principles are being put into practice. The ins and outs of whether China is a capitalist society let alone a neo-liberal one is not something that this chapter will be drawn into; what is apparent in reviewing the current Chinese approach to international relations is that there is a strong tendency to try and depoliticize the dealings of the PRC with other nations and international organizations. De-politicization is the deliberate or unintentional practice or process of removing politics from an area where it was previously significant. Burnham’s definition works well across cases, suggesting that de-politicization is: ‘the process of placing at one remove the political character of decision making’.11 In the case of China the main proponent of de-politicization has been the critical intellectual Wang Hui.12 The key element to Wang’s argument is that the leadership in China has, since the end of the Cultural Revolution, consciously depoliticized government in China. This has been part of a process to undermine the revolutionary aspects of the Maoist period and to establish the ground for economic reform and the continuation of one party, or rather elite, rule.13 The main consequence Wang is concerned with is that this has closed off opportunities for effective and consequential debate regarding the direction China takes politically, socially and economically.14 China has stopped being a place where struggles between competing ideas and revolutionary ambition determined the direction of policy and has instead become 10  Burnham, P. (2001). ‘New Labour and the Politics of Depoliticisation’, British Journal of Politics and International Relations 3(2): 127–149. 11  Ibid.: 128 (emphasis in the original). 12  Wang, H. (2006). ‘Depoliticized politics, multiple components of hegemony, and the eclipse of the Sixties’, Inter-Asia Cultural Studies 7(4): 683–700. 13  Ibid. 14  Ibid.

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a political and ideological wasteland where there is only one way forward, the market, opening, further reform, the further incorporation of neo-liberal principles and, most significantly, the fortification of particular vested interests at the very top of government.15 While Wang takes a particular critical approach when engaging with the process of de-politicization and economic reform the tendency to divorce politics from economic and other decisions of government is identifiable in China’s engagement with the world and it is in this sense that de-­politicization is ­significant for Sino-EU relations. The potential for de-politicization to manifest takes two forms. First, there is China’s willingness to shelve political issues if they are deemed problematic. As Deng pointed out, China should, when it serves its interests: ‘bide its time, hide its brightness, not seek leadership, but do some things’.16 While the statement has been subject to different i­nterpretations it does suggest that China has adopted a position where problematic political issues can be shelved in order that the PRC can achieve economic development and stability. The second form is when China consciously attempts to decouple the political from the economic when it engages with other nations or regional organizations. This stands in marked contrast to the years under Mao where Beijing’s intentions internationally merged political and economic considerations under broader ideological revolutionary intentions. In terms of Sino-EU relations it would be expected that the de-politicization of Chinese government, a process arguably underway from the 1970s and accelerated during the 1980s and 1990s, would manifest in the relationship. This does not mean that politics has no place in the relationship but that it is either not for discussion in certain circumstances (as will be discussed below), downplayed, or secondary to Chinese concerns and would be part of the explanation as to why the political appears weaker than the economic in the Sino-EU relationship. Bilateral Distinctions A second strategy arguably adopted by the PRC and also a feature of Chinese analysis of Sino-EU relations is to consciously and sub-consciously separate out and deal with member states bilaterally on particular issues while excluding these issues when engaging with regional and multilateral organizations. This can be viewed as partly a manifestation of confusion or muddling of 15  Ibid. 16  Shambaugh, D. (2013). China Goes Global: The Partial Power, New York, Oxford University Press.

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where Europe and European states end and the EU beings. It is not uncommon to come across different terms used when referring to the relationship between China and Europe or the EU. For example the Chinese for Europe (Ōu, 欧 or Ōuzhōu, 欧洲) and European Union (Ōuméng, 欧盟) are used interchangeably. This is important as it can be unclear what China is referring to and to whom a particular message is being directed. It is also not uncommon to find policy and news articles targeting member countries in order to achieve EU level outcomes. In the case of China’s relations with the EU this means that there is a tendency to both muddle and also treat the EU and member states as separate fields of engagement depending on who is speaking and what policy area is being discussed. Within these separate fields there are realms which will or will not be discussed. In this distinction bilateral relations are typically the realm of both politics and economics. Multilateral relations or relations with regional organizations are the realm of economics only. Politics has no place in discussions and relations at the regional or multilateral level. China would be expected, when putting this strategy into practice to work on EU member states own tendencies to play into PRC hands as atoms of selfinterest. It would also strongly resist particular political decisions which are pushed or made at the regional level. An area where this might be expected to play out would be human rights dialogs at different levels or China’s efforts to have the post-1989 arms embargo lifted. Red Lines of Discussion The issues where China is open to engagement with international actors is another area where the lack of political engagement with the EU might find an explanation. China like many states has certain red lines which are open to only limited discussion if any at all. A frequent example of this would be issues relating to territorial integrity. As Figure 5.1 illustrates there are various different elements composing the realms of possible engagement between China and the EU. In the green area are the current realms of existing Sino-EU cooperation. The lighter green section highlights current political interactions. The red area is what China reserves in interactions with the EU. Within the red area, the dark red section contains the ‘forbidden’ topics. This means that the EU should not touch upon issues relating to China’s fundamental political system and territorial unity in order to continue cooperating with China. The light red area, although currently in the reserved hemisphere, are subject to limited cooperation. This includes exchanges on human rights, social welfare, anti-corruption and the legal system. These topics are political topics of significant sensitivity to China but are not as sensitive as those covered in the forbidden zone.

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China’s political system Territorial Unity

Human rights issues Social welfare Anti-corruption Legislative Revision

Economic and Trade Cultural exchanges

Political dialogues Global governance

The EU:

China:

Figure 5.1 Red lines of Sino-EU engagement (adapted from Chen, 2014).

While China sticks to a policy of non-interference, one of the effects of globalization is that the governance of a nation will inevitably be influenced by the international environment and other nation’s experiences. Some of China’s internal governance issues including social welfare, anti-corruption, and improvements to the legal system might benefit from external experience. The EU and its member states are experienced in these areas. This light red area therefore offers space for political interactions between China and the EU. The challenge for the EU’s is to navigate the ‘red lines’ in political interactions with China. An inability to engage with China on sensitive subjects renders the relationship increasingly irrelevant to observers but the potential damage to the wider economic relationship from taking a more challenging

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attitude is compounded by the tendency of member states to break ranks in order to chase investment and trade deals with China. The real potential of further political interactions between China and the EU lies in sensitive but not forbidden areas. A possible goal for the EU should be deeper cooperation on the green topics and more exchanges on the light red topics, while at the same time managing expectations. The forbidden zone would remain and so this would not resolve the problem, however, lowered expectations in this area would mean less criticism for the EU. Context: Xi-Li’s New Line on International Politics Since 2013, the new leadership of General Secretary and President Xi Jinping and Premier Li Keqiang’s foreign policy has been formed and this reflects the points made above. There are three dimensions to this new line which have been articulated in the Chinese media and by some Chinese academics: ‘top design’, strategic-manoeuvring and the ‘bottom line logic.’17 Of these the ‘top design’ and the ‘bottom line’ are crucial elements to understand if the EU would like to deepen political relations with China during the Xi-Li administration. The ‘top design’ (dǐngcéng shèjì, 顶层设计, lit. top level design) of Chinese foreign policies can be understood from the destinations of Xi Jinping and Li Keqiang’s first foreign visits in 2013. In terms of destination Xi Jinping’s first foreign visit was to Russia and Li Keqiang’s first visit was to India. The major shifts of China’s foreign policies under the administration of Xi Jinping and Li Keqiang shows potential changes in two aspects: first, the move of China’s domestic economic focus towards the geographic western provinces of the PRC since the economic cooperation between China and India is likely to boost the economy in these western regions; second, the emphasis on diplomatic relations with peripheral countries, in terms of their geography, with high potential for economic cooperation.18 Zhao argues that the visit to Russia indicates China’s strategic focus and India indicates China’s economic focus respectively.19 Arguably they can be viewed as covering both these new priorities as Russia and India are both increasingly strategically and economically significant for China.

17  Chen, X. (2014). ‘China’s Foreign Diplomacy 2013—Retrospect and Prospect’ (‘Zhongguo Waijiao Zongjie Yu Weilai Zhanwang’), Leadership Science [Lingdao Kexue] 1: 48–50. 18  Zhao, K. (2013). ‘China’s Foreign Economic Stragegy Focusing on the Periphery’ [‘Jīng lüè zhōubiān chéng zhōngguó wàijiāo zhòngxīn’], Qilu Evening News [Qilu Wanbao], 21 May. 19  Ibid.

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The ‘bottom line’ policy (liàngchū hóngxiàn, 亮出红线, lit. flashing red line) means that China will defend its national core interests by all means.20 This includes the unity of China’s territory and China’s political system. This policy means that the respect of the bottom line issues is the precondition of any further development of foreign relations with China. Essentially this is an articulation of the idea of red lines discussed in the preceding section. There are certain topics which China will not discuss and/ or will treat as core issues. This presents a challenge for actors who desire to engage with China on topics which touch on anything captured by the bottom line policy. Taken together this puts Sino-EU relations in an interesting position. On the one hand political relations might be expected to remain stalled as the new line adopts a firm position on defending core issues (the red lines). On the other hand the EU is also well positioned to benefit as a potential focus for further developments in economic relations. While it is not a peripheral area in either China’s economic relations or global politics, arguably neither are Russia or India. The top level focus on developing further mutually beneficial relations, grounded in economic partnership is an area the EU is well positioned to exploit. Manifestations Fu Ying’s 2011 Speech Former vice Minister of Foreign Affairs of China Fu Ying, in a speech on the Lanting Forum, maintained that the economic cooperation between China and the Europe is healthy and beneficial for both sides. Negative political interpretations, or by a more literal translation ‘putting on political caps’, regarding economic activities should be avoided.21 She argued that ‘China has no intention to seek power through financial means’ and ‘stereotyping can do nothing but disrupt decision-making on the Chinese side and deny bilateral cooperation its true potential’.22 20  Chen, X. (2014). ‘China’s Foreign Diplomacy 2013—Retrospect and Prospect’ (‘Zhongguo Waijiao Zongjie Yu Weilai Zhanwang’), Leadership Science [Lingdao Kexue] 1: 48–50. 21  Fu, Y. (2014). ‘China-Europe Partnership in Progress-Speech by Vice Foreign Minister Fu Ying at the Lanting Forum’ [‘Waijiaobu Fu Buzhang Fu Ying Zai Lanting Luntan Shang Fabiao Zhuzhi Yanjiang’], Xinhuanet, http://news.xinhuanet.com/world/201112/02/c_111212659.htm. 22  Fu, Y. (2014). ‘Consulate-General of the People’s Republic of China in San Francisco’, FMPRC, http://www.fmprc.gov.cn/ce/cgsf/eng/xw/t883763.htm.

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According to the Xinhua News report, Fu Ying, in answering the questions on Sino-European economic cooperation, contended that China maintained the stance that Sino-European economic activities should be ‘depoliticized’. Excessive interpretations of China’s political intentions in carrying out economic cooperation with the EU should be avoided. The principles of the market economy should remain the guiding principle in Sino-European economic interactions.23 Although de-politicization was not officially applied in the speech, the Chinese government’s preference on Sino-European relations is clearly indicated: the focus of this relationship should be on the economy rather than politics. This illustrates the current strong economics but weak politics in Sino-EU relations: it is one of China’s strategies to shelve the political disputes between China and the EU and maintain economic cooperation between the two. This strategy of de-politicization indicates that China is seeking common interests in spite of differences between China and Europe. It is also suggestive of what would emerge as the Xi-Li new line with China viewing relations with Europe as economic and seeking to remove potentially sensitive political discussions from the agenda completely. Red Lines and Compromised Policy The EU’s approach can be significantly compromised by China’s approach toward individual countries, the bilateral tendency identified above. The United Kingdom (UK) has adopted a more benefit-oriented approach in recent years. Interesting shifts can be seen from United Kingdom Prime Minister Cameron’s visit to China at the end of last year. He avoided talking about political issues and focused only on the economy and trade. This fits neatly with the Chinese government’s intention to focus on economic cooperation. Cameron’s new attitude did not receive a warm welcome by some of the Chinese media and this can, in part, be explained by the change in position by the UK Government and Cameron. Having previously upset Beijing on issues such as Tibet Cameron changed tack after being frozen out and it is unsurprising that the reaction of some of the Chinese media reflected on this about turn, as well as taking the opportunity to highlight the UK’s perceived decline in global significance. For example it was suggested that the UK was a country whose position could be ‘easily substituted’ by China in seeking relations with 23  Xinhuanet (2014). ‘Vice Foreign Minister Fu Ying on China-EU relations: Economic activity ought to be “depoliticized” ’ [‘Wàijiāo bù fù bùzhǎng fu yíng tán zhōng’ōu guānxì: Jīngjì huódòng yīng “qù zhèngzhì huà” ’], Xinhua, http://news.xinhuanet.com/world/201112/02/c_122370112.htm.

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Europe. It was also pointed out that the ‘UK is no longer a “big power” ’ and was only suitable ‘for studying and travelling’. In addition to mentioning the UK’s football teams this particular article finished off with a reference to the UK paying China ‘respect’ and this leading to better relations in the future.24 Cameron’s approach, though seeking to curry China’s favor on economic cooperation, neglected the potential room for enhancing political interactions. In a sense both China and EU member states are guilty of depoliticizing their relationship. The case of Cameron’s visits shows that China requires mutual respect but that it is on its own terms. The European side needs to respect the interior political affairs of China and avoid crossing any red lines. This should not mean, however, that an EU member state or the EU should sacrifice all its demands. The room for political interactions between China and UK as well as the EU is still spacious if the precondition that China’s red line is not crossed is met. The initial British approach of engaging with China politically and economically failed. Cameron was frozen out by China for adopting a political position regarding the PRC on certain issues like Tibet and this punishment had the desired effect. In order to secure a visit to China and the possible economic benefits which went with such an event Cameron backed down. As noted above this was not received as genuine by the Chinese press but it did mean that a state visit took place. The human rights dialog with the UK secured as part of this visit and held up by the British government as a success has subsequently been postponed by China.25 This indicates an inability of the UK leadership to engage with the PRC politically as they have effectively played into the Chinese strategy. In contrast the UK parliament has adopted a strong stance regarding the position of Hong Kong and it will be interesting to see how this plays out.26 Similar arguments could be made in terms of China’s past pursuit of ending the arms embargo, something which is viewed by the Chinese as overtly political, unfair and damaging to relations.27 In these instances it is interesting 24  Huanqiu-Shibao (2013). ‘Chinese Media Can Hardly be Welcoming and Friendly towards UK Prime Minister Cameron’ [‘Huánqíushíibào, Guójiì Luǹtán: Zhōngguó Yúlùn Hěn Nán Dùi Kǎméilóng Rèqíng Qǐlái’], http://www.ckxxbao.com/huanqiushibaodianziban/ 1203D362013_14.html, accessed 3 December 2013, issue no. 3187, 2 April. 25  Branigan, T. (2014). ‘China cancels human rights dialog with Britain’, The Guardian, 14 April. 26  Agence France Presse (2014). ‘China condemns British inquiry into progress of Hong Kong democracy’, The Guardian, 2 September. 27  Brown, S. (2011). ‘Anything But Arms? Perceptions, the European Union and the Arms Embargo on China’, Journal of Contemporary European Research 7(1): 23–40.

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to note that the hope for a change in EU policy on China is channeled through the leaders of individual member states. In the past this has included the leaders of France and Germany during state visits.28 The Chinese strategy is that of reserving politics at the bilateral level where it can more effectively play to national weaknesses, political egos, and Beijing hopes ultimately undermine the embargo and other affronts to China’s emerging status on the world stage. Reporting Xi and Li’s Spring 2014 Visit Xi Jinping’s visit to Europe in spring 2014, comprising time spent in the Netherlands, Belgium, France, and Germany, provides another opportunity to examine how the Sino-EU relationship is articulated by the Chinese government and media. As an initial point of departure articles in the English language China Daily European Weekly will be discussed here. The reason being that this newspaper, closely tied to the Chinese state but distributed for a European audience, is a good starting point in seeking to understand how China currently thinks about and how it wants to be perceived by Europe and the EU. In the March 28/April 3 edition of the China Daily Xi’s visit dominated with articles related to either the visit or the relationship between China and the visited states comprising 13 of 32 pages. With the exception of two articles discussing the implications of Xi’s ‘Chinese dream’ concept for both Chinese citizens, Sino-Belgian relations and as a more general indicator of Xi’s good leadership29 every other article discussed China’s relationship with Europe or the member states from the perspective of economics. This included the significance of discussions between China and Germany in Berlin, articulated from an entirely economic perspective, with even the potentially politically sensitive issue of visas for visiting Chinese was articulated as an economic issue.30 Other stories covering the visit included the attractiveness of particular regions for investment;31 trade;32 investment agreements between China and the EU;33 and specific stories discussing details of China’s relationship with 28  Ibid. 29  Fu, Y. & Li, X. (2014). ‘Decoding the Chinese dream’, China Daily, 28 March; Yannan, T. (2014). ‘President’s visit a blast of fresh air’, China Daily, 28 March. 30  Zhang, C. (2014). ‘Good Fit—When China’s and Germany’s Leaders meet in Berlin there is much to discuss’, China Daily, 28 March. 31  Zhang, C. (2014). ‘First Choice for Investment’, China Daily, 28 March; Chunyan, Z. (2014). ‘A Relationship Worth its Weight’, China Daily, 28 March. 32  Tan, Y. & Luo, W. (2014). ‘New trade center to support China-Euro rail line’, China Daily, 28 March. 33  Fu, Y. (2014). ‘Pact making good progress’, China Daily, 28 March.

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particular member states.34 One story addressed Xi’s visit from the perspective of China’s relationship with the EU.35 In this story the relationship with the EU was focused on the Comprehensive Strategic Partnership but again it was articulated as almost exclusively economic. Particular attention was put on pursuing the investment agreement between the two as well as emphasizing long term agreements on ‘cooperation and communication on finance, industry and information, agriculture, transport and infrastructure, science, technology and innovation, space and aerospace, energy, urbanization, culture, education, youth affairs and facilitation of people-to-people exchanges’.36 It is striking that similar symbolism was projected during the visit of Premier Li Keqiang to the UK in the summer of 2014. The front cover of China Report, a magazine targeting English speakers interested in China, included the image of Li meeting the Queen with the tagline ‘NIHAO, MA’A M— Politics pushed aside as Britain and China get down to business’.37 The image projected makes exactly the same point as the coverage of Xi’s visit to Europe albeit with less actual coverage, the story being a short article of two pages within the ­magazine.38 Interestingly the article does, in one paragraph, discuss recent political difficulties in Sino-UK relations before moving on to discuss the relationship in purely economic terms. The symbolism and message being projected are clearly that China views the relationship with the UK in an apolitical, economic manner, similar to the coverage which accompanied Xi’s earlier tour of Europe. This snapshot of the visit of Xi to Europe and Li to the UK suggests that the overarching message coming from China is that the relationship is economic and that there is little significance in the political. Stories related to anything political were notable by either their absence or, in the instance of the two stories which might be classed as politics related, by their reference to and lauding of Xi’s initial effort to contribute to the Chinese Communist Party’s ideological canon in the ‘Chinese dream’. Unsurprising but significantly no stories mentioned efforts to engage with China on anything that might be viewed as political. In this sense Xi’s visit and the coverage of the visit supports the argument that China consciously depoliticizes relations internationally and when it comes to the EU focuses on developing the economic. 34  Banks, M. (2014). ‘Xi’s visit smoothes the way ahead’, China Daily, 28 March 2014: 9; Li, X., ‘New chapter in bilateral ties’, China Daily, 28 March. 35  Tuo, Y. (2014). ‘Visit to boost ties with Europe’, China Daily, 28 March. 36  Ibid. 37  Anon. (2014). ‘China Report Front Cover’, China Report. 38  Zhou, C. (2014). ‘China and Britain: Driving Forces’, China Report: 40–41.

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Xi Jinping’s Speech Notably Xi did give a widely reported speech on April 1st 2014 which did touch on the political but with the overwhelming message that this was not an area open for any discussion. The speech, made to the College of Europe in Bruges, noted that China had experimented with different political systems in the past and they had all failed: ‘Constitutional monarchy, imperial restoration, parliamentarism, a multi-party system and a presidential system, we considered them, tried them, but none worked.’39 Xi noted that there were risks in China experimenting with new political systems because of its historical and cultural circumstances ‘because it would not fit us and it might even lead to catastrophic consequences’ and ‘the fruit may look the same, but the taste is quite different’.40 The articulation of change being inherently dangerous and a threat to the Chinese government objective of social stability is nothing new. It is something that has been consistently articulated since Mao and Deng ruled China, although the underlying reasons have changed. The speech was followed by an article in Qiúshì (Truth) which made the familiar point that China’s development path is both unique and a matter of choice for China and no one else. Both the speech and the article were linked together in the international media.41 This is a clear articulation of China’s perceived interests and countering the unwanted challenge presented by areas like Europe. The Party is paramount and must remain. This is both a red line but arguably a basic interest of the regime. What is interesting is that Xi chose to make these points when visiting the heart of Europe. Combined with the brief analysis above of the China Daily it is clear that China is articulating its strategic approach to the European audience that is not politics but economics as key to the relationship.

Alternative Engagement: Asean and the PRC

It is clear from the points made above that China’s relationship with the EU is determined to an extent by strategic decisions made by Beijing regarding how it will engage with the organization. It is a depoliticized relationship focused on economics, defending specific national interests (not least stability), and dominated by clear articulation of red lines when it comes to discussions. Is this unique to Europe and the EU or does it manifests in China’s relations with 39  Reuters (2014). ‘Xi Jinping says multi-party systems didn’t work for China’, 1 May, http:// in.reuters.com/article/2014/04/02/china-politics-xi-jinping-idINDEEA3101U20140402. 40  Ibid. 41  Ibid.

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other equivalent organizations? The following section will briefly outline that the EU is not unique in how it is approached and that China’s strategic decisions are a challenge without a simple answer. In order to do this attention is directed to Sino-ASEAN relations. ASEAN presents an interesting case of comparison because it has consciously tried to enmesh China in a relationship which goes beyond economics and counters the depoliticized, bilateral tendencies, and red lines.42 The two clearest articulations of this effort are the 2003 Treaty of Amity and Cooperation and the 2002 Code of Conduct for the South China Sea which the PRC has agreed to. In both instances this indicated that China was willing to sign agreements which meant it bought into the normative and political values of ASEAN as an organization, in particular agreeing not to use threats or force, consensus building as a means to resolve differences and the respect of territorial integrity. These agreements were signed separately from China’s integration into the Southeast Asia (SEA) economy through bilateral and multilateral agreements, including the China ASEAN Free Trade Agreement which is currently being implemented. It therefore appears possible for China to engage in both politics and economics with a regional organization. What might explain this? First, arguably China needs the SEA region to be friendly and stable. The region provides a host of security concerns for China and needs to be kept friendly and if that is not possible at least neutral. Due to the complications of land borders, food resources (fish), energy security, and maritime trade lanes it would be a disaster for China if the region either destabilized, became hostile, or became open to another power such as the US or India. China’s agreement on certain political agreements makes sense when these objectives are sought. Second, the agreements China has signed up to do not fundamentally challenge its political system or outlook in any way. This is markedly different from agreement with the EU on human rights where there is substantial distance between the parties. In SEA there is close agreement in some political and normative areas which has facilitated consensus. In this respect China’s behavior makes sense because it can protect its interests, articulated above, through political agreements while remaining true to the strategies outlined above. What is interesting is that under Xi and Li, and arguably in the run up to their accession, this situation is now unravelling. China is perceived as increasingly aggressive in the region and has undermined the good will established between 1997 and roughly 2008. In a sense China is beginning to behave in a manner familiar to observers of Sino-EU relations in that it is pursuing a 42  Ba, A. (2003). ‘China and ASEAN: Renavigating Relations for a 21st Century Asia’, Asian Survey 43(4): 622–647.

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political agenda which is focused on bilateral ties and treating regional and multilateral organizations as politically neutral economic arenas. Two brief examples illustrate this. First, China’s response to the Philippines move for arbitration on maritime disputes in the South China Sea was to charge that the Filipino government had reneged on a commitment to resolving issues bilaterally, bizarrely through reference to the 2002 Code of Conduct.43 In this case China is illustrating its refusal to resolve political differences in any space other than the bilateral one. Second, China’s response to difficult relations with ASEAN articulated through Li Keqiang’s speech was a five point action plan. It is notable that this plan was entirely economic in nature with no political aspects or space for resolving the pressing political problems emerging in the South China Sea.44 Conclusion This chapter has argued that China’s international engagement can be understood as embodying three strategies: de-politicization, bilateral tendencies, and red lines and articulated by the so-called Xi-Li new line. These strategies influence how China engages with organizations like the EU and ASEAN and they go some way to explaining why politics might be perceived as weak and economics as strong. It has been demonstrated through analysis of speeches and newspaper articles that these three strategies have a significant impact in how China behaves and how it wishes to be perceived. This is not just the case in Sino-EU relations but also Sino-ASEAN relations in spite of ASEAN’s efforts to comprehensively enmesh China in ASEAN norms. Based on this conclusion, that the foundation of weak politics is as much a result of China’s foreign policy articulation as anything the EU does, the question changes from what explains weak politics to what can be done about it? ASEAN provides a troubling case because in spite of strong reasons for China to maintain good relations in the region it has reverted to maintaining its three strategies and as a consequence finds itself facing an increasing hostile environment. The EU is hamstrung to a degree by being significant to China economically but not politically, for example Europe does not hold the same security concerns for China as SEA. Therefore one avenue of possible 43  China-Forum (2014). ‘Manila’s scheme abuses law’, China Daily, 1 May, http://europe .chinadaily.com.cn/opinion/2014-04/01/content_17394014_3.htm. 44  Li, K. (2013). ‘Premier Li Keqiang’s keynote speech at 10th China-ASEAN expo’, Xinhua, http://news.xinhuanet.com/english/china/2013-09/04/c_132688764.htm, 1 May.

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engagement is closed off, that is tying China’s political engagement to resolving security concerns. For the EU a possible alternative would be to focus on what China prioritizes, the development of economic relations, and tie these to specific political developments. Elsewhere in this volume Gaenssmantel and Liu argue that the politicization of issues appears to provide the impetus for breakthroughs in areas where the EU and China are facing an impasse. Given China’s successful management of member states tendency to depoliticize to curry economic favor, such as the UK, the EU faces a tough choice. As has been shown politicizing the relationship can be difficult to achieve both at bilateral and regional levels and it would require a strength of will in the EU’s foreign policy which has not been seen before. In the short term it may also be painful as China will likely try to freeze out the EU and play off the economic concerns of member states. However, if this option is not pursued then the EU will remain playing catch up against China’s clearer strategic articulation in the relationship.

CHAPTER 6

Same Name, Different Substance? Exploring the Impact of Issue Perceptions on China-EU Relations Frank Gaenssmantel and Liu Feng Introduction It has become common place that despite the lofty rhetoric of a ‘comprehensive strategic partnership’ relations between the European Union (EU) and China are fraught with tensions and misunderstandings. Academic literature has identified various types of reasons for the difficulties in cooperation. Some scholars argue that a lack of common interests and diverging expectations have impeded agreement on a variety of issues, such as regional crises, commercial relations or human rights,1 others emphasize institutional intricacies in the EU, in China, or on both sides and how they complicate bilateral engagement.2 Differences in the respective regional security environments and related security constraints have been pinpointed as causes of problems in China-EU relations,3 but also their respective relations with third actors, especially 1  Holslag, J. (2011). ‘The Elusive Axis: Assessing the EU-China Strategic Partnership’, Journal of Common Market Studies 49(2): 293–313; Kinzelbach, K. & Thelle, H. (2011). ‘Taking Human Rights to China: an Assessment of the EU’s Approach’, The China Quarterly (205): 60–79; Heron, T. (2007). ‘European Trade Diplomacy and the Politics of Global Development: Reflections on the EU–China “Bra Wars” Dispute’, Government and Opposition 42(2): 190–214. 2  Carbone, M. (2011). ‘The European Union and China’s Rise in Africa: Competing Visions, External Coherence and Trilateral Cooperation’, Journal of Contemporary African Studies 29(2): 203–221; Torney, D. (2014). ‘Challenges of European Union Climate Diplomacy: The Case of China’, European Foreign Affairs Review 19: 119–134; Gaenssmantel, F. (2010). ‘Chinese Diplomacy towards the EU: Grand Vision but Hard to Manage’, The Hague Journal of Diplomacy 5(4): 379–403; Gaenssmantel, F. (2012). ‘The EU and Foreign Policy Initiatives from China: Missed Opportunities for an Aspiring International Actor?’ in Harst, J. van der & Swieringa, P. (eds.), China and the European Union—Concord or Conflict? Maastricht, Shaker Publishing; Gaenssmantel, F. (2012). ‘EU-China Relations and Market Economy Status: EU Foreign Policy in the Technical Trap’, Journal of European Integration History 18(1): 51–64. 3  Kerr, D. (2012). ‘Problems of Grand Strategy in EU-China Relations’, Harst, J. van der & Swieringa, P. (eds.), China and the European Union—Concord or Conflict? Maastricht, Shaker Publishing.

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the US,4 as well as contradictory preferences in terms of global governance.5 At the ideational level researchers have claimed that cultural differences and related conceptual gaps,6 distorted perceptions of each other or simply lack of trust have contributed to create tensions or prevent closer alignment.7 One factor that has remained underexplored in the research on China-EU relations, and in international relations literature in general, is the compatibility of each side’s perceptions about the nature of the issues on their common diplomatic agenda and the resulting approaches to those issues. Beyond the larger questions of actors’ grand strategies, their interests, their position in the international system, their respective identities, values, normative beliefs, and so on, it is on very concrete matters that preferences may clash, solutions need to be found, and myriads of domestic and possibly transnational interest groups will need to be accommodated. How diplomats approach such issues depends crucially on the perceptions about their nature. If, for instance, an issue is considered commercial in its substance, diplomats tend to place it in the context of the rules of the World Trade Organization (WTO) and other international trade norms, while a problem with, say, changes in a neighbor’s military posture is less likely to be connected to externally institutionalized norms and may instead invite a pure bargaining approach. This opens the question as to whether the perceptions about the nature of a certain issue, and hence the approach to it, are shared among all the parties involved or not, and how this affects their ability to cooperate. Intuitively, one might expect that similar perceptions and approaches promote understanding while a mismatch may make it more difficult to find an agreement. 4  Vennesson, P. (2007). ‘Lifting the EU Arms Embargo on China: Symbols and Strategy’, EurAmerica 37(3): 417–444. 5  Odgaard L. & Biscop, S. (2008). ‘The EU and China: Partners in Effective Multilateralism?’ in Kerr, D. & Fei, L. (eds.) The International Politics of EU-China Relations, Oxford, Oxford University Press. 6  Pan, Z. (ed.) (2012). Conceptual Gaps in China-EU Relations: Global Governance, Human Rights and Strategic Partnerships, Basingstoke, Palgrave Macmillan; Stumbaum, M.U. (2013). ‘Apples and Oranges? Comparing Chinese and European Perspectives on the EU as a Security Actor’, European Foreign Affairs Review 18(3): 355–372. 7  Shambaugh, D. (2008).‘China Eyes Europe in the World: Real Convergence or Cognitive Dissonance?’ in Shambaugh, D., Sandschneider, E. & Zhou, H. (eds.) China-Europe Relations— Perceptions, Policies and Prospects, Oxford, Routledge: 127–147; d’Hooghe, I. (2011). ‘The Limits of China’s Soft Power in Europe: Beijing’s Public Diplomacy Puzzle’, in Melissen, J. & Jong Lee, S. (eds.) Public Diplomacy and Soft Power in East Asia, New York, Palgrave Macmillan: 163–190; Holzer, C. & Zhang, H. (2008). ‘The Potentials and Limits of China-EU Cooperation on Climate Change and Energy Security’, Asia-Europe Journal 6(2): 217–227.

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For example, in the case of China-EU tensions over the EU’s anti-dumping duties on Chinese solar panels, which will be presented in more detail below, differing approaches to the matter clearly impeded agreement at the outset, when the European Commission took the road of its formal anti-dumping procedure while China adopted a bargaining approach with threats of retaliation and a preference for a negotiated arrangement. In this chapter we will attempt to add a new facet to understanding cooperation between China and the EU, or its absence, by looking at each side’s perceptions about the nature of issues on the agenda, the related approaches to developing solutions, and their impact on China-EU agreement and disagreement. We will first propose a new analytical framework, and then use two case studies to assess its analytical strength. The first case concerns the Chinese attempts in the first half of the 2000s to convince the EU to lift its arms embargo, the second the solar panel crisis already mentioned above. As issue perceptions and their impact on interactive dynamics have received hardly any scholarly attention so far this study should be considered an exploratory effort with the goal to promote conceptual innovation and to open new paths for future research.

Existing Literature

In the process of international interaction, each side’s perceptions about the nature of a specific issue at hand play a crucial role in determining how it will deal with this issue in the further contact with its counterparts. What kind of logic do diplomats follow in analyzing the issue? How do they develop policy options? What are the rules or constraints they identify? Various branches of literature on international relations have analyzed why and how policy-makers interpret and manage international affairs the way they do. On the one hand, scholars have studied the belief systems, ‘operational codes’ and worldviews of leaders, top officials, or influential political or administrative groups.8 On the other hand, efforts from the institutionalist and social constructivist perspectives have helped to understand the emergence of organizational frames in 8  Leites, N. (1953). A Study of Bolshevism, Glencoe, Free Press; George, A. (1969). ‘The “Operational Code”: A Neglected Approach to the Study of Political Leaders and DecisionMaking’, International Studies Quarterly 13(2): 190–222; Walker, S.G. (1990). ‘The Evolution of Operational Code Analysis’, Political Psychology 11(2): 403–418; Vennesson, P. (2007). European Worldviews: Ideas and the European Union in World Politics, EUI RSCAS Working Paper 2007/07.

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foreign and security policy which shape ‘what counts as a problem, how problems are represented, the strategies to be used to solve those problems, and the constraints and requirements placed on possible solutions’.9 Rather than looking at deep-seated belief systems or institutionally grown frameworks, we propose to shift our attention towards the perceptions about concrete characteristics of issues on the agenda and their influence on international interaction. This may recall the literature on problem representation and its endeavor to use tools of political psychology to understand how policy-makers arrive at the sets of options on the basis of which they make final decisions.10 But while it has been acknowledged that ‘the initial problem representation strongly constrains subsequent behavior’, the nature of these constraints and their impact on interactive dynamics have not been studied.11 This research places the focus on decision-makers and their dominant role in the process of international interaction. This means that their perceptions about the nature of issues are decisive in shaping international behavior. Preferences are not the core theme of this research, but we are fully aware of their importance. Whether or not cooperation can be achieved on a certain issue depends partly on the degree of difference between the preferences of the international actors involved. At an extreme, one can even conceive of fundamentally irreconcilable preferences. However, skilled negotiators, diplomats or politicians have often been able to bridge even considerable contradictions in the course of bilateral (or multilateral) consultations and negotiations. The interactive process that leads from initial divergence to cooperation is contingent upon a myriad of factors: the skill of the involved officials, the trust between them, their perceptions of each other, the differences or similarities in their respective worldviews, and, as the focus of this chapter, the perceptions about the nature of issues on their diplomatic agenda. Yet what is an issue? According to Duncan Snidal issues can be understood as ‘particular items over which states negotiate’, and whose definition depends ‘on agreement among the states involved’ rather than their intrinsic nature.12 This is a flexible, pragmatic approach which we adopted for the purposes of 9  Eden, L. (2005). Whole World on Fire, Ithaca, Cornell University Press: 50. 10  Sylvan, D.A. & Voss, J.F. (eds.) (1998). Problem Representation in Foreign Policy Decision Making, Cambridge, Cambridge University Press. 11  Taber, C.S. (1998). ‘The Interpretation of Foreign Policy Events: A Cognitive Process History’, in Sylvan, D.A. & Voss, J.F. (eds.), Problem Representation in Foreign Policy Decision Making, Cambridge, Cambridge University Press: 29. 12   Snidal, D.J. (1981). Interdependence, Regimes and International Cooperation, PhD Dissertation, Yale: 35–36.

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this research, with two caveats: First, the focus will not only be on negotiations, in the sense of structured, purposeful interactions, as issues may remain on the agenda between two (or more) international actors even without a specific negotiation process. Second, since our focus is on the relations between a state and an international organization, we obviously cannot limit the definition to the interaction between states, but will include non-state actors as well. One might also add that the agreement that a certain theme, or complex of themes, constitutes an issue on the agenda, is itself oftentimes rooted in disagreement on the substance of this issue, as this creates the need for consultations in the first place. However, unlike rationalist theorists, who view the nature of a specific issue as something objectively given and thus unchangeable in interaction, we focus on perceptions or subjective knowledge of decision-makers about the nature of an issue. That does not mean a specific issue has no objective dimension, but simply that any objectivity is filtered or adapted by a cognitive process that leads to perceptions, which, in turn, constitute the effective input on the basis of which a decision-making process unfolds. A crucial step for this research is to develop an ideal-typical categorization of issues which will allow us to elaborate how they can be linked to idealtypical approaches to the analysis and development of policy options. Such categories can be understood as ‘issue-areas’, a concept of which there is a number of theoretical treatments in International Relations literature. Before introducing our own typology, we will quickly go through some of the more influential analyzes of issue-areas in existing literature. The first systematic effort at classifying issue-areas was developed by James Rosenau in his seminal piece on pre-theories and theories of foreign policy.13 He distinguishes on the one hand between the means and the ends of the involved actors, and on the other between the degrees of tangibility. This means that ‘the more tangible were the means employed in interaction, the clearer the costs would be in allocation, and hence more strongly motivated and persistently active the participant actors’, and the more tangible the ends, the more specific the group of actors concerned.14 After Rosenau, some other scholars have proposed different categorizations of issue-areas. William Zimmerman, for example, combined Rosenau’s idea of tangibility of the political goods related to the issue

13  See Rosenau, J.N. (1966). ‘Pre-theories and Theories of Foreign Policy’, in Farrell, R.B. (ed.), Approaches to Comparative and International Politics, Evanston, Ill, Northwestern University Press: 27–92. 14  Mansbach, R.W. & Vasquez, J.A. (1981). In Search of Theory: A New Paradigm for Global Politics, New York, Columbia University Press: 31.

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with the type of domestic impact to identify different constraints on foreign policy makers.15 Michael Brecher has introduced a descriptive set of policy issue-areas: military-security, political-diplomatic, economic-developmental, and culturalstatus.16 Despite some theoretical concerns about the mutual exclusiveness of these categories, they have the advantage of matching common-sense descriptors of policy-fields.17 This may make it easier to identify them empirically in the discourse of policy makers. The distinction between high-politics and lowpolitics could have a similar advantage, with the former referring to military affairs and political issues concerning national survival and security and the latter to welfare-related themes, such as economic relations, environment protection, and social exchanges. As a hierarchy of issue-areas, dominated by high politics, this is generally associated with realism, in particular Kenneth Waltz’ structural realism, and has been criticized by scholars in the complex interdependence tradition.18 In fact, in Power and Interdependence Robert Keohane and Joseph Nye take the absence of any hierarchy among issues as one of their most important assumptions.19 From this perspective, economic prosperity, social welfare, and national security have increasingly become intertwined in the contemporary world, rendering the traditional distinction between high and low politics obsolete.20 From a rigorous theory building perspective, the 15  Zimmerman, W. (1981). ‘Issue Area and Foreign Policy Process: A Research Note in Search of a General Theory’, American Political Science Review 67(4): 1204–1212; see also Mansbach, R.W. & Vasquez, J.A. (1981), In Search of Theory: A New Paradigm for Global Politics, New York, Columbia University Press: 32–35. 16  Brecher, M., Steinberg, B. & Stein, J. (1969). ‘A Framework for Research on Foreign Policy Behavior’, The Journal of Conflict Resolution 13(1): 75–101. 17  Mansbach, R.W. & Vasquez, J.A. (1981). In Search of Theory: A New Paradigm for Global Politics, New York, Columbia University Press: 35. 18  For the sake of completeness it should be added that towards the end of his career Waltz himself has refuted this view by pointing out that ‘the distinction between high politics and low politics—with high politics being military and diplomacy, and low politics being economic—is entirely misplaced. In the near term, and probably for quite some time, economic competition will often be more prominent than military competition’. See Halliday, F. & Rosenberg, J. (1998). ‘Interview with Ken Waltz’, Review of International Studies 24(3): 382–383. 19  Keohane, R. & Nye, J.S. (2011). Power and Interdependence, 4th edition, New York, Pearson: 20–21. 20  Critiques on the high-politics versus low-politics dichotomy can also be found in the following writings: Barnett, M. (1990). ‘High Politics is Low Politics: The Domestic and Systemic Sources of Israeli Security Policy, 1967–1977’, World Politics 42(4): 529–562; Ripsman, N.M. (2005). ‘False Dichotomy: Why Economics Has Always Been High Politics’,

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most important weakness of the dichotomy is that there are no general patterns or regularities of behavior in these two categories. A last group of scholars has proposed a classification on the basis of the importance of issues and coined terms such as issue importance, issue relevance or issue salience. Recently, this latter concept has attracted much scholarly attention.21 Issue salience has been defined as ‘the significance and importance that an actor ascribes to a certain issue on the political agenda in relation to other political issues’.22 Researchers have attempted to capture domestic actors’ attitudes toward specific foreign policy issues and shown that public opinion determines the salience of foreign affairs issues.23 It is surprising though that these efforts remain exclusively focused on public opinion, although in international interaction most decisions are made by leaders and/ or professional diplomats with limited or no exposure to the public. As a result, the elites’ perceptions of the stakes involved in an issue usually play a more important role than the public’s perception in determining a government’s preference and strategy in international negotiation.

Towards a New Framework

Building on some of these earlier attempts, this chapter proposes to classify issues, or rather their perceptions on the part of policy makers, on the basis of two simple dimensions: first, what could be called the primary content and is basically a simplification of Brecher’s descriptive categories; and second, picking up from Rosenau and Zimmerman, the degree of intangible meaning attached to the issue. With regard to the primary content of the issue at stake we suggest a simple distinction between issues perceived as technical and those considered of a political nature. This distinction can be read loosely along the lines of ‘stake in Dombrowski, P. (ed.), Guns and Butter: The Political Economy of International Security, Boulder, Lynne Rienner: 15–31. 21  Oppermann, K. & Viehrig, H. (eds.) (2011). Issue Salience in International Politics, New York, Routledge. 22  Oppermann, K. & Viehrig, H. (eds.) (2008). ‘Issue Salience and the Domestic Legitimacy Demands of European Integration: The Cases of Britain and Germany’, European Integration online Papers 12(2): 4. 23  See the respective chapters in Oppermann, K. & Viehrig, H. (eds.) (2011). Issue Salience in International Politics, New York, Routledge. On the problems of measuring salience, see Wlezien, C. (2005). ‘On the Salience of Political Issues: The Problem with ‘Most Important Problem’, Electoral Studies 24(4): 555–579.

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dimension’ vs. ‘actor dimension’ in the attempt by Richard Mansbach and John Vasquez to construct a coherent theory of International Relations based on issues. For technical issues the focus is on the inherent quality of what is at stake and on the interdependence of all actors involved in a specific policy field, while in the case of political issues the emphasis shifts to the competition for certain goods among the actors.24 Obviously these two categories are subject to the same criticism mentioned above on Brecher’s typology, namely that they are not necessarily mutually exclusive and both technical and political aspects may be found contemporaneously in the issue perceptions of a group of policy-makers. We do not see this as a major problem in that technical vs. political nature should be understood as ideal-types, extrapolated but separate from real-world examples. What does each of these ideal-typical issue perceptions entail in terms of policy-makers’ approach to analyzing an issue and proposing policy options? In the case of the technical ideal-type, we assume that the strong stake dimension encourages the reference to expert knowledge in order to define solutions in line with the intrinsic character of the issue. This means that external parameters, perceived as more or less objective constraints, become paramount in working towards proposals to solve the issue. Such external constraints may be the input from experts or existing sets of internationally agreed rules. For the sake of simplicity this approach will be called ‘rules-based.’ Examples could be questions of scientific cooperation, where experts in the concerned field are consulted, or also certain trade issues for which all sides accept the binding rules of the WTO. By contrast, for the ideal-typical political issue, the strong actor dimension will push towards more competitive approaches where in order to come to an agreement a ‘give-and-take’ with the other party is essential. Instead of external references, solutions will be developed in view of international bargaining, on the basis of how one can make pressure on the opposite side or what one can offer in exchange, i.e. in the logic of threats and side-payments, pun-

24  Mansbach, R.W. & Vasquez, J.A. (1981). In Search of Theory: A New Paradigm for Global Politics: 197–203. We should add though that while Mansbach and Vasquez emphasize the stake dimension of territorial disputes due to the common milieu, we see them as typical examples of a strong actor dimension due to their competitive nature. This does not mean that in certain cases more rules-based approaches have not been successfully employed, as visible in the involvement of the International Court of Justice in several cases concerning territorial delimitation.

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ishments and rewards or carrots and sticks.25 An example would be issues of military deployment, where the perceived risk for national security severely reduces the readiness to accept any external constraints. If the distinction between technical and political issues already suggests a considerable difference in how solutions will be approached, the question of intangible meaning further differentiates the picture. This basically refers to the symbolic connotations of an issue, for example when a trade deal is linked to political prestige of the government or even national status, or when territorial disputes are embedded in a strong discourse of sovereignty.26 For the approach to solutions, regardless of whether the primary content is seen as technical or political, the greater the symbolic connotations, the less an actor will be inclined to abandon original positions in view of a compromise with the other side. An example of a technical issue that gained a strong symbolic dimension is China’s market economy status: although it is largely related to WTO rules on anti-dumping, from the Chinese side the ‘status’-dimension has become more important over time, thus rendering cooperation difficult.27 In the realm of political issues, one could argue that from the Iranian perspective the nuclear program is less about energy and/or security than about national prestige. Therefore it has been particularly challenging to find agreement with the permanent members of the United Nations Security Council and Germany as virtually any compromise was likely to miss the real point for Iran. Putting together the two dimensions of technical vs. political nature with regard to primary content and symbolic connotations, four ideal-typical approaches become evident (see figure 6.1). Firstly, an issue may be seen as technical in nature with low symbolic connotations. In this case, the actor in question is likely to propose solutions based on expert input, or possibly even to include technical experts directly in the interaction with the international counterparts. At the same time, one should expect considerable readiness to take into consideration proposals from the other side that deviate from the 25  For a theoretical treatment on these two categories of strategies, see Davis Jr., J.W. (2000). Threats and Promises: The Pursuit of International Influence, Baltimore Maryland, The Johns Hopkins University Press. 26  Territorial disputes are always related to questions of sovereignty, but the strength of the symbolism may vary. In the case of China, the more recent approaches to territories in the South China Sea and the Diaoyu/Senkaku islands are more symbol-laden than was the case for the territorial adjustments with Kazakhstan in the 1990s. For a discussion of China’s position on these territorial disputes, see Fravel, M.T. (2012). ‘The Dangerous Math of Chinese Island Disputes’, Wall Street Journal, 28 October. 27  Gaenssmantel, F. (2012). ‘EU-China Relations and Market Economy Status: EU Foreign Policy in the Technical Trap’, Journal of European Integration History 18(1): 63–64.

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Rules-based approach No flexibility

Bargaining No Flexibility

Rules-based approach Pragmatic flexibility

Bargaining Pragmatic flexibility

Mostly technical

Mostly political

Figure 6.1 Issue perceptions and approaches to solutions.

actor’s initial position. Secondly, in the case of a technical issue with a strong symbolic dimension, again expert input will play an important role in the elaboration of solutions, but the availability for compromise will be significantly reduced. Thirdly, an issue may be perceived as of political nature but without much symbolic meaning. This means that diplomats will develop a bargaining strategy and tend to be flexible with regard to their initially preferred position. Fourthly, for a symbolically charged political issue, the same bargaining approach will be deployed, yet with a substantial reduction of flexibility.

Issue Perceptions and Dynamics of Bilateral Interaction

The interaction process that will lead to cooperation or non-cooperation between China and the EU (or in general two international actors) depends on the issue perceptions and related approaches to solutions not only from one but from two sides. In principle this model could also be enlarged to the interaction of more than two actors, but for the sake of simplicity, and in view

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Technical

Political

Technical

Scenario 1: Ruled-based interaction

Scenario 3: Asymmetrical approaches

Political

Actor B

Actor A

Scenario 3: Asymmetrical approaches

Scenario 2: Bargaining

Figure 6.2 Ideal-types of interaction based on perceptions about primary issue content.

of the application to China-EU relations, this discussion will only consider the bilateral situation, and avoid any excessive modeling. After all, the goal is to develop an approach that can help to understand specific situations of inter­ action among international actors rather than a comprehensive theory. Also, in a first step we will leave aside the intangible dimension and focus on perceptions about the primary content of the issue. This leaves us with four idealtypical situations of interactions (see Figure 6.2). Obviously, the scenarios in which issue perceptions are symmetrical are most straightforward, although the outcome of the interaction cannot be taken for granted. In scenario 1, in which both sides perceive the issue to be of technical nature, the focus will be on the inherent qualities of the issue with strong reference to expert knowledge. This is likely to lead to result-oriented interactions in an objective if not scientific tone. Shared identities of experts, as part of the same epistemic community, may further enhance this tendency. Nevertheless, one should not assume that agreement is assured under this scenario. Experts may share the same language, basic knowledge in their field and intellectual culture, but there may still be significant disagreements on how to interpret and solve specific problems. This can be seen for example in the case of international efforts to manage climate change, where disagreement among experts emerges from different understandings of the problem at hand. Of course, in the climate change case as well as in other examples, asymmetric distributional consequences for the involved actors may also play a role. In theoretical terms all this could be seen as a variant of the ‘battle-of-sexes’

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game. While there is agreement on the set of possible interpretations and solutions on the basis of the shared expertise, each side has a clear preference for one specific outcome.28 In scenario 2 both sides perceive the issue as of political nature, meaning that expert input is of secondary importance and the main determinant will be the skill of negotiators on both sides to engage in classical bargaining, including threats and side-payments. However, this does not mean that this is necessarily the more conflictual scenario, nor that the process is based on a zero-sum logic. In terms of the literature on negotiation, it will be possible for the involved diplomats to move from a bargaining to a problem solving process.29 This will depend on their diplomatic skill and whether they manage to enlarge the total benefits at stake (for example by sub-dividing issues or through issue-linkage), create a positive-sum process and come to a solution that creates absolute gains for both sides. The dynamics in case of asymmetrical approaches (scenario 3) are most difficult to predict. If one side argues in terms of external parameters like scholarly expertise or international rules while the other engages in bargaining behavior, this may easily result in a ‘dialog of the deaf’. Therefore, ceteris paribus, one should expect that asymmetrical approaches create misunderstandings between the parties and render it considerably more difficult to find an agreement. Nevertheless, it is not necessarily impossible, especially if other facilitating factors are in place, like for example compatible preferences or strong external pressure to cooperate. A possible way out of the asymmetry impasse is that one side adapts its approach. In principle, this may happen both ways, either from rules-based to bargaining or vice versa. Since recognition of the inherent characteristics and complexities of an issue typically presupposes a learning period, we expect that shifting from a bargaining to a rules-based approach in the course of an interaction on a specific issue will be rare. By contrast, the decision to shift consciously from a rules-based to a bargaining approach may be easier, especially in the face of threats and/or offers of side-payments from the other side. What is the effect of the intangible dimension in situations of interaction? In order to keep the basic model simple, we refrain from an elaborate discussion of the many options and possible interactive dynamics. Suffice it to say that, in any of the scenarios above, the more actors attach symbolic value to 28  Martin, L.L. (1992). ‘Interests, Power, and Multilateralism’, International Organization 46(4): 775–777. 29  See Hopmann, P.P.T. (1995). ‘Two Paradigms of Negotiation: Bargaining and Problem Solving’, Annals of the American Academy of Political and Social Science 542: 24–47.

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the issue in question, the more difficult it will become to achieve an agreement. Change over time is also possible with regard to the intangible dimension, as the history of interaction may both create or deflate symbolic meaning.

Evaluating the Framework: Case Studies

After having outlined a new framework to evaluate bilateral cooperation on specific issues, we will now turn to recent case studies from China-EU relations that will allow us to assess the usefulness of the proposed framework and whether any adjustments or elaboration are necessary. In presenting the cases, our focus will be on the variables of the framework, namely: a) the perceptions about the nature of issues as they emerge from public statements of involved officials or from comments of authoritative observers; b) the approach adopted by each side as visible in their behavior, for example the reference to experts or established rules vs. issuing threats or offering side-payments; c) the interactive process across time, whether it led to agreement or not, whether approaches were adjusted, and so on. Since this is an exploratory study we will flesh out the analysis with observations that do not strictly fall within the perimeter of the framework whenever we think they are crucial and should be taken into account in view of the evaluation and development of the framework. Complex Bargaining and Symbolism: The Case of the Arms Embargo The EU’s arms embargo against China was imposed, along with other restrictive measures, in the aftermath of the violent events on Tiananmen Square in June 1989. Throughout the 1990s rumors about a potential lifting of the measure appeared repeatedly. In the years between 2002 and 2005 China made sustained efforts at pushing the EU in this direction, and within the EU a dynamic consultation process on this issue unfolded. In the end, however, no agreement on a lifting could be reached, and the embargo remains in place until the present.30 In the following paragraphs, we will attempt to see how perceptions of and approaches to the arms embargo on both the Chinese and the EU side developed between 2002 and 2005, and how they can be linked to the evolution of China-EU cooperation on this issue. While promoting a lifting, how did the Chinese side perceive and approach the arms embargo issue? First of all it is noteworthy that China never referred to any objective rules or scientific expertise when talking about the arms 30  Gaenssmantel, F. (2010). ‘Chinese Diplomacy towards the EU: Grand Vision but Hard to Manage’: 390–392.

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embargo. This stands in stark contrast to China’s quest for market economy status, where the Chinese demands were embedded, from the very beginning, in references to WTO rules.31 In our framework this suggests that the issue is perceived as of political rather than technical nature, and our expectation would then be to see a bargaining approach. The evidence from public statements and documents points precisely in this direction, though rather than classical bargaining with threats and side-payments, we see a focus on joint benefits, i.e. an effort to avoid a zero-sum logic and to emphasize absolute rather than relative gains. This is visible already when China for the first time openly placed the arms embargo issue on the diplomatic agenda during the visit of Chinese Prime Minister Zhu Rongji to France in September 2002. Zhu explicitly linked his call for a lifting of the embargo to the prospect of substantially increasing volumes of commercial exchange between France and China.32 Zhu also pointed out that, while past cooperation on armament and defense between China and France had already been good, there was great future potential.33 About one year later, China’s EU Policy Paper of October 2003 reproduced the same approach with regard to the EU as a whole, in stating that ‘[t]he EU should lift its ban on arms sales to China at an early date so as to remove barriers to greater bilateral cooperation on defense industry and technologies’.34 While proposing this pragmatic emphasis on mutual gains in the years 2002 and 2003, China did not show any indications of intangible meaning it attached to the arms embargo. But this changed from 2004 onwards, when China started to link the issue to questions of its status, both in the bilateral relationship with the EU and in international relations in general. On the one hand, Chinese policy makers pointed out that the continuation of the embargo did not match the new idea of a ‘comprehensive strategic partnership’ between China and 31  See comments by Prime Minister Zhu Rongji in 2002; Zhang Y. & Liu Z. (2002). ‘Diwuci Zhong-Ou lingdaoren huiwu juxing; Zhu Rongji Zongli yu Lasimuseng Shouxiang he Puluodi zhuxi chuxi’ [‘Fifth China-EU summit is being held; Prime Minister Zhu Rongji and Prime Minister Rasmussen attend together with President Prodi’], Renmin Ribao, 25 September. 32  ‘Ventes d’armes; le meilleur moyen de développer les échanges franco-chinois selon Pékin’, Les Echos, 30 September 2002; Defouloy, E. (2002). ‘Zhu Rongji demande la levée de l’embargo européen sur les armes’, Agence France Presse, 27 September. 33  ‘France: visite du premier minister chinois, Zhu Rongji demande la levée de l’embargo européen sur les armes’, SDA—Service de base français, 27 September 2002; Chemineau, L. (2002). ‘Zhu Rongji pose ses conditions à une amélioration des échanges franco-chinois’, La Tribune, 30 September. 34  Ministry of Foreign Affairs of the People’s Republic of China (2003). China’s EU Policy Paper: 9.

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the EU.35 On the other, they began to emphasize that the embargo constituted ‘political discrimination’, in particular because it put China into the same category as a number of outright ‘rogue states’ like Zimbabwe or Myanmar.36 Due to the complex nature of the EU’s policy processes, it is close to impossible to identify a single shared perception of or approach to the arms embargo. Instead, as for all foreign policy issues, one has to look at several influential actors to understand dynamics and trends within the EU. In the years 2002 and 2003, the actors within the EU reacted slowly to China’s request to lift the arms embargo, and the first statements indicate, as on the Chinese side, a political perception about the nature of the issue with no reference to external rules. In fact French Prime Minister Jean-Pierre Raffarin and Defense Minister Michèle Alliot-Marie expressed their desire to work towards a lifting and also to make efforts to convince their EU partners.37 After the 6th EU-China Summit in October 2003, in a public statement Commission President Romano Prodi referred to the arms embargo as ‘political difficulties’ and expressed the desire of the EU to work towards a ‘shared position’ with China on the issue.38 In early December German Chancellor Gerhard Schröder also adopted a position in favor of lifting the weapons ban,39 and later the same month the European

35  Interview with Chinese policy consultant, Beijing, 2007; see also quotes from Chinese premier Wen Jiabao in ‘Chinese premier comments on ties with Germany, EU arms embargo’, BBC Monitoring International Reports, 29 April 2004; and in ‘Focus—China will upgrade weapons technology if EU lifts arms embargo’, AFX—Asia, 15 December 2004. 36  See, for example, Vice-Foreign Minister Zhang Yesui as quoted in ‘Arms embargo a “sign of inequality”; Beijing says EU ban will affect ties but denies holding up Airbus order in retaliation’, South China Morning Post, 4 December 2004; or Chinese MFA spokeswoman Zhang Qiyue in ‘Analysis: EU-China ties strained over arms’, United Press International, 7 December 2004; unnamed Chinese MFA officials are quoted as complaining about China’s being part of a list of ‘true pariahs’ in ‘The EU’s ban on selling military equipment to Beijing lacks credibility but Washington believes any change would be irresponsible’, Financial Times, 10 February 2005. 37  Rodier, A., Bohineust, A. & Denuit, D. (2003). ‘Jean-Pierre Raffarin en visite officielle à Pékin’, Le Figaro, 23 April; Merchet, J.D. (2003). ‘Péking veut son satellite-espion’, La Libération, 27 June; ‘Frankreich will China wieder Waffen liefern’, DPA—AFX, 30 June 2003. 38  ‘Roundup: EU, China agree to address trade problems, seek economic partnership’, AFX.com, 30 October 2003. 39  ‘Grüne murren über Schröder’, Spiegel Online, 1 December 2003; ‘Schröder in Peking. Deutschland will Aufhebung des EU-Waffenembargos gegen China’, SDA—Basisdienst Deutsch, 1 December 2003; ‘Kanzler Schröder will Aufhebung des EU-Waffenembargos gegen China’, DPA—AFX, 1 December 2003.

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Council, upon a request by French President Jacques Chirac,40 requested the foreign ministers of EU member states ‘to re-examine the question of the embargo on the sale of arms to China’.41 However, once the arms embargo had become an issue for the EU as a whole, other voices started to be heard which witness different perceptions and approaches. Already right after Schröder’s advance, the office of External Relations Commissioner Chris Patten pointed out that a significant improvement of the Chinese human rights situation was a precondition for a lifting, and the High Representative for the Common Foreign and Security Policy, Javier Solana, also mentioned human rights concerns.42 Scandinavian governments also tended to be far more skeptical as to the conditions under which the ban should be ended.43 In May 2004 Belgian Prime Minister Guy Verhofstadt was one of the first who explicitly linked the lifting of the arms embargo to a Chinese step ahead in the field of human rights, namely the ratification of the United Nations Covenant on Civil and Political Rights.44 In terms of our framework these comments reflect more technical perceptions about the nature of the arms embargo issue in that it is understood in the context of legal principles that are considered to be universally valid. By implication this means that it is legitimate to sanction their massive violation and that a reconsideration of the sanctions presupposes objective steps towards respecting those principles. If perception of and approach to the arms embargo were not the same for all actors within the EU, then how did this affect interaction with China? As our framework would lead to expect, the clear match of perceptions and approaches in the years 2002 and 2003 allowed for a better understanding on the issue and, more generally, contributed to a marked upturn in China-EU relations. By contrast, when some EU actors showed more technical perceptions and promoted a rules-based approach, cooperation turned more difficult and Chinese leaders started to denounce any link to human rights.45 The 40  ‘EU will Aufhebung des Waffenembargos gegen China prüfen’, Agence France Press— German, 12 December 2003. 41  Brussels European Council, 12–13 December 2003, Presidency Conclusions, 5381/04, par.72. 42  ‘EU reagiert verhalten auf Schröder’s Forderung’, Associated Press Worldstream—German, 2 December 2003; ‘Das deutsche Versprechen verärgert den Kommissar; Brüssel über ein mögliches Ende der China-Sanktionen uneins’, Stuttgarter Zeitung, 5 December 2003; ‘Solana says entire EU must decide on lifting of arms embargo against China’, BBC Monitoring International Reports, quoting from Bild am Sonntag, 10 December 2003. 43  Jucca, L. (2004). ‘EU may lift arms ban’, The Sunday Times (Perth, Australia), 14 December. 44  ‘Wen confiant sur l’embargo mais récuse un lien avec les droits de l’homme’, Agence France Presse, 5 May 2004. 45  See fn. 35.

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very fact that China was asked to do certain things before a lifting could be considered was seen as an illegitimate request in the bargaining process, and the Chinese tendency to underline more and more the symbolic dimension of the issue since 2004 can be seen as a reaction to this. Within the EU, the year 2004 and the first months of 2005 were marked by a slow convergence towards the position initially championed by France and Germany, i.e. a lifting. However, the intra-EU compromise implied concessions to the sceptics, namely a continuing emphasis on a positive signal on the part of China in the realm of human rights and the need to adapt the EU’s arms export rules in such a way as to avoid any increase in the quantity or quality of European military exports to China.46 Considering the growing symbolic charge of the issue for the Chinese side and its refusal to accept any linkage to the human rights domain, this meant that the mismatch in approaches to the issue was strengthening rather than being bridged and did not bode well for further cooperation. Indeed, as is well-known, the arms embargo was never lifted, but aside from the mismatch in approaches to the issue, other factors also played a role. Since 2004 the United States had been exercising increasing pressure on its European partners to prevent a lifting.47 Given the strong transatlantic security link this was a weighty factor in European considerations, but it had not prevented the Europeans from the progressive development of a common position in favor of a lifting. However, the Chinese passage of the Anti-Secession Law in March 2005 changed the balance in the intra-EU discussion on the arms embargo, in that it strengthened the positions of those who doubted the intentions of the Chinese leadership and of those concerned about transatlantic relations. In conclusion, it appears that in an initial phase a matching pragmatic bargaining approach from both the Chinese side and the most vocal European actors promoted cooperation on the arms embargo issue. When other actors within the EU expressed a more legal, i.e. in our framework technical, view and pressed for a rules-based approach in which a lifting would presuppose certain actions on the part of China, this created a first mismatch in approaches, which was then further enhanced by the growing symbolic charge for China. This means that our framework would lead us to expect that no agreement on the arms embargo should be achieved between the EU and China, and this is 46   2622nd Council Meeting, external relations, 22–23 November 2004, Press release 14724/04 (Presse 325): 13; Brussels European Council, 16–17 December 2004, Presidency Conclusions, 16238/1/04, par. 57. 47  Gaenssmantel, F. (2012). ‘The EU and Foreign Policy Initiatives from China: Missed Opportunities for an Aspiring International Actor?’, in Harst, J. van der & Swieringa, P. (eds.), China and the European Union—Concord or Conflict? Maastricht, Shaker Publishing: 62.

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precisely how the issue further evolved. At the same time, we have to point to factors outside our framework that very obviously had a strong impact on this outcome as well, namely the pressure from the United States on the EU as well as the passage of the Anti-Secession Law in China which played in the hands of those in Europe who had remained reluctant to support a lifting. From Asymmetry to Bargaining: The Solar Panel Case On 25 July 2012, the European solar industry association EU ProSun handed in a complaint that solar panels imported from China benefitted from government subsidies in China. Following this claim, the European Commission launched a 15-month anti-dumping investigation on 6 September 2012. As a procedure, the Commission can impose preliminary duties without member state approval if it finds preliminary evidence of subsidization. However, the final duties need to be imposed by the Council of the EU, which requires member states’ assent, within 13 months of the initiation.48 The disagreement between the EU and China over solar panels was the biggest-ever trade dispute in EU-China history in terms of the trade volume concerned. In 2011, Chinese exports of solar panels and components to the EU were worth about 21 billion Euros, representing more than 6 percent of China’s overall exports to the EU. Obviously, the solar panel trade dispute was different from previous antidumping cases, and had generated much public recrimination between the EU and China. And yet the European Commission, the primary EU institution involved in the anti-dumping investigation, treated it as other cases of trade frictions and adopted a legal rhetoric: ‘The Commission is legally obliged to open an anti-dumping investigation if it receives a valid complaint from a Union industry which provides evidence that exporting producers from one or more countries are dumping a particular product into the EU and causing injury to the Union industry. [. . .] Hence, the Commission has found that there is sufficient prima facie evidence to warrant the opening of an investigation.’49 In the terms of our framework, this means that the Commission perceived the issue as of technical nature and accordingly adopted a rules-based approach, whereby the normative context was provided by the WTO’s anti-dumping rules and related EU procedures concerning trade remedy. In fact, from the point of view of Brussels, it was the Chinese side that tried to politicize a fundamentally technical issue.50 48  ‘How the European Commission investigates subsidised imports’, http://trade.ec.europa .eu/doclib/docs/2012/october/tradoc_149951.pdf. 49  European Commission, MEMO 12/647, 6 September 2012 (original emphasis). 50  Interview with EU policy maker, Brussels, 2014.

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From the Chinese side, by contrast, the perception of the issue was different. For China, the dispute was a sign of EU trade protectionism, which undermined the EU’s image and ‘weakened the confidence of Chinese companies in doing business with Europe’.51 Policy-makers in Beijing were aware that the EU accusations were not entirely groundless, as overproduction due to overinvestment, especially on the part of local government, was a pervasive problem in the Chinese solar panel industry.52 Still they felt treated unfairly. This was a pillar industry in China’s economic development plan, but it had not led to much innovation and was largely based on the processing of semi-finished products, imported in part from EU firms. Therefore the solar panel case was linked to the overall China-EU relationship and whether the EU would deal with China as a partner and take care of Chinese interests. This meant that for China this was a political rather than a technical issue, and as a result it could not accept the Commission’s rules-based approach. Instead, China called for ‘consultation and cooperation’,53 and it became clear early on that it would be ready to retaliate on products that could inflict pain on European producers.54 This points towards a classical bargaining approach, and in combination with the rules-based approach on the part of the EU, an asymmetric scenario, in which we expect cooperation to be difficult. In fact, the frictions continued for almost an entire year, with a ping-pong of retaliatory measures. However, the Commission’s position changed radically about a year after the initial complaint, when it decided to impose only a fraction of the duties it could have on the basis of its investigations, in a ‘phased approach’ that created a threat scenario for China and thus significantly enhanced the EU’s bargaining position.55 If as late as 28 May 2013 Trade Commissioner Karel de Gucht defiantly defended the plans to impose antidumping duties, even in the face of Chinese retaliatory measures,56 the same 51  Wu, H. (2013). ‘Lessons from the solar-panel dispute’, http://www.europeanvoice.com/ article/2013/september/lessons-from-the-solar-panel-dispute/78089.aspx. 52  Interview with Chinese policy consultants, Beijing, 2014. 53  Vaudin d’Imécourt, L. (2012). ‘EU/China: EU Probes Chinese Solar Panel Imports’, Europolitics, 7 September. 54  Falletti, S. & Vaudin d’Imécourt, L. (2012). ‘EU/China: Fresh Trade Frictions ahead of Summit’, Europolitics, 4 September; ‘1st LD-China Focus: Solar Product Tariffs May Hurt EU Industry: China’, Xinhua General News Service, 27 July. 55  ‘EU Imposes Provisional Anti-Dumping Tariffs on Chinese Solar Panels’, Targeted News Service, 4 June 2013; ‘EU to Impose Levies on China later Tuesday: EU Source’, Agence France Press, 4 June 2013. 56  ‘EU Trade Chief Unfazed by China Muscle-Flexing in Solar Row’, Deutsche Welle Business, 28 May 2013.

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Commissioner stated three weeks later that, ‘[a]s I have stated time and time again [sic] during the course of the investigation, the EU has only one wish: to find a negotiated settlement as quickly as possible on the basis of ‘under­ takings’ that can remove the injury caused by the dumping on our market’.57 Putting these comments once again back into our framework, this means that by shifting from a technical to a political perception of the issue, and as a result from a rules-based to a bargaining approach, the Commission changed an asymmetric scenario into a situation with matching approaches, and therefore, we would expect, a higher probability of finding an agreement. As a matter of fact, the two sides did manage to negotiate a compromise. On 27 July 2013 de Gucht announced that a deal had been reached with China, which involved setting a minimum price for sales of Chinese solar panels, covering exports from 90 of about 140 Chinese exporters that were examined during the antidumping investigation.58 What is behind this shift in the Commission’s approach? Once again, the complexities of EU policy-making may provide part of the explanation of what happened. In fact, while de Gucht was willing to disregard Chinese complaints over EU protectionism, with strong support from France, Italy and Spain, most other member states tended to be more sensitive to Chinese threats.59 This had become visible already in September 2012, when German Chancellor Angela Merkel, while visiting China, called on the Commission to ‘find a solution through talks’.60 De Gucht failed to convince the skeptical member states, and their opposition remained a problem for the Commission throughout the investigation.61 Given the EU’s anti-dumping rules, this implied for de Gucht that the imposition of definitive duties would be at risk, and with this perspective the negotiation of an agreement from a position of strength became a more attractive option. In sum, the initial scenario of asymmetric approaches led to the beginning of a tit-for-tat trade war, thus confirming the expected difficulty of cooperat57  European Commission, MEMO 13/599, 21 June 2013. 58  ‘Commissioner De Gucht: ‘We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices’,’ European Commission—MEMO/13/729, 26/07/2013, http://europa.eu/rapid/press-release_MEMO13-729_en.htm; ‘EU imposes definitive measures on Chinese solar panels, confirms undertaking with Chinese solar panel exporters’, European Commission—IP/13/1190, 02/12/2013, http://europa.eu/rapid/press-release_IP-13-1190_en.htm. 59  Interview with EU policy maker, Brussels, 2014. 60  Falletti, S. & Vaudin d’Imécourt, L. (2012). ‘EU/China: Fresh Trade Frictions ahead of Summit’, Europolitics, 4 September. 61  ‘EU Trade Chief Unfazed by China Muscle-Flexing in Solar Row’, Deutsche Welle Business, 28 May 2013; EurActive, ‘Merkel, Li Want to End Solar Trade Row’, 27 May 2013.

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ing without matching approaches to the issue at stake. The shift towards a symmetric setting then allowed for a negotiated settlement, and that within a relatively short-time period. This is again in line with the expectation that the same approach, in this case classical bargaining, facilitates the finding of an agreement. At the same time, the shift itself is conform to the expectation that politicization is more likely than technicization. However, just as in the arms embargo case, factors outside the framework need to be taken into consideration for a complete picture, most notably the complex structures and processes of EU policy making. With regard to EU positions, this case reconfirms their strong impact on the approach the EU adopts to issues on its foreign policy agenda. Concerning the shifting approach, one has to acknowledge that in this case an acceptance of anti-dumping rules by China, i.e. a conversion to a rules-based approach, was virtually impossible as China has a history of strong criticism against this practice of which it is a prime target. Conclusion The purpose of this chapter was to propose a new way of explaining cooperation and conflict in China-EU relations. Our ambition was to look at how the two sides perceive and approach issues on their common diplomatic agenda. We started off by proposing a new conceptual framework which distinguishes between technical and political perceptions about the nature of an issue and rules-based and bargaining approaches to dealing with it. This framework can in principle be applied to any situation of interaction, but our goal was to use two cases from China-EU relations to explore its usefulness. On the basis of the case studies we see both strengths and weaknesses in the framework. In terms of strengths, the expectations derived from the framework were fulfilled in both cases and on all occasions. In the case of the arms embargo, the congruence of approaches in the initial phase (when only a limited number of member states were involved) strengthened cooperation, while the introduction of a different approach from the EU side (when other EU actors started to contribute to the matter) considerably complicated cooperation. The solar panel case has demonstrated the opposite development, in that China and the EU started with different perceptions and different approaches, and the asymmetric situation not only hindered cooperation but even allowed for growing trade tensions. As soon as the shift on the part of the Commission had brought the interaction back to a symmetric scenario, where both engage in classical bargaining, an agreement could be reached. In addition, the shift itself was conform to the expectation that a change from technical to political perceptions is more likely than vice versa.

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With regard to weaknesses, we have to take note of the fact that many other factors, which are not taken into account in the framework, also contributed to the outcomes. First and foremost, the complexities of EU policy-making are of primary importance. Of course this is not necessarily a weakness of the framework, but rather related to the choice of the international actors to which we applied it. But it is a reminder that the reality of political structures and processes is oftentimes in tension with the clarity of a simple framework. Secondly, the arms embargo has recalled that third actors and their influence on either China or the EU (or any other actor if the framework is applied more widely) may have a significant impact on the process and outcome of interaction. It is impossible to say to what exact extent it was the influence of the United States that buried the arms embargo as a China-EU issue, as opposed to disagreements within the EU or simply irremediably different approaches, but it is obvious that for a complete account of interaction and the role of perceptions and approaches, relevant third states have to be taken into consideration. More generally, one should wonder how perceptions and approaches emerge and change. In the case of the arms embargo, what were the factors that led France and Germany to a pragmatic, pro-lifting approach, while other member states emphasized human rights? What made then possible a convergence of positions, and why was it not completed? Material or normative interests certainly play a role in this, and that would merit further investigation. The case of a growing symbolic charge of the arms embargo for China also brings up the issue of history, or the ‘burden of the past’. If the EU’s link of the issue to human rights constituted an adversity for China that only strengthened the significance of its claim for affirmation, then one should conclude that concrete episodes of interaction do not simply pass but build a backdrop against which cooperation may become more difficult, or also easier, but which are likely to take long to disappear from the diplomatic memory. Concretely, for China-EU relations, what does all this mean? If we accept for now that the framework can give at least some insights about bilateral cooperation, then one should conclude that the different histories, cultures and interests constantly bear the risk of creating asymmetric interaction scenarios. At the same time, however, the fact that China-EU relations have been brought to the thematic breadth and institutional density that we observe today, it actually shows a great skill among the diplomats on both sides to define issues on which symmetric approaches are possible. In the end issues may simply be what diplomats make of them.

CHAPTER 7

Misunderstanding and Convergence in Sino-Italian Relations During the Cold War: Implications for the Present Enrico Fardella Introduction The magnetic attraction of the superpowers, fueled by their economic and military gigantism, has often drawn the attention of historians on the bipolar dimension of the Cold War system. Since the 1990s, historical research has moved toward a more articulated dimension of the Cold War system, in which the role of third actors has been increasingly seen as complementary to that of the superpowers. Since the beginning of the 21st century, the return of China to the center of the international system and the progressive consolidation of its relations with European countries has led some scholars to investigate into the historical roots of the relationship between the People’s Republic of China and Europe, in particular during the Cold War. Indeed, Europe and China were undoubtedly the most important ‘third actors’ in the Cold War system. Being both territorial entities as well as political and economic spaces located at the crossroads of the mutual spheres of action of the two superpowers, they played a key role in the evolution and reshaping of the bipolar system. The Cold War defined the outlines of these two spaces. On the one hand, it accelerated the decline of Europe as a central player—a process already started during World War II and intensified by the dismantling of the colonial system—and, on the other, favored the shift of the center of gravity of the international system toward Asia and hence an Asianization of the international system, which is still in progress today. Thanks to the progressive opening of the diplomatic archives in both Europe and China, many sources on Sino-European relations during the Cold War have emerged in recent years.1 Only a few of them, however, have thus far 1  See Fardella, E., Ostermann, C.F. & Kraus, C. (2015). Sino-European Relations During the Cold War and the Rise of a Multipolar World. A Critical Oral History, Washington, Woodrow Wilson International Centers for Scholars.

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been translated into historiography and, consequently, no sources of this kind have been so far used for an empirical analysis on the mutual perception and structural misperceptions existing between these actors during the Cold War. This is particularly true for Italy. The historical account of Sino-Italian relations over the last sixty years is still far from complete.2 The history of SinoItalian diplomatic relations has not drawn the same attention of other more crucial relationships, as is the case of Sino-French relations: diplomatic recognition by De Gaulle’s France in 1964 was a real turning point for Beijing’s proud search for independence in international relations, whose effects had a deep influence on negotiations with Italy. Also, Italy’s international role has lacked the breadth of France’s—especially in Asia—and the scarcity of primary and secondary sources on this issue—especially on the Chinese side—is both proof and the consequence of this. In China, for example, the only in-depth account concerning relations with Italy is limited to a chapter on the history of Sino-Italian negotiations for diplomatic recognition, held in Paris between 1969 and 1970, in a book on the history of Sino-French relations written by the former Chinese ambassador to Paris, Cai Fangbo.3 Therefore, this chapter aims to open a new path, and to identify and analyze some of the structural elements that favored misunderstanding and misperceptions in Sino-Italian relations during the Cold War in order to track down some important lessons for Sino-Italian relations today. Obviously, this attempt stems from the insight gained in recent years by the author from the diplomatic sources kept in the archives of the Italian Ministry of Foreign Affairs (ASMAE) and of the Chinese Ministry of Foreign Affairs (CMFA).4 Both archives are subject to the rule that sets the period of 2  Three quite recently published books in Italian marked an important step in this direction: Giorgi, L. De & Samarani, G. (2011). Lontane, vicine: le relazioni fra Cina e Italia nel Novecento [Far away, nearby: relations between China and Italy in the twentieth century], Roma, Carocci; Meneguzzi Rostagni, C. & Samarani, G. (eds.) (2014). La Cina di Mao, l’Italia e l’Europa negli anni della Guerra fredda, Bologna, Il Mulino; Pini, M.F. (2011). Italia e Cina, 60 anni tra passato e futuro [Italy and China, 60 years between past and future], Roma, L’Asino d’oro edizioni. 3  For an account of the key Italian players, see: Gaja, R. (1995). L’Italia nel mondo bipolare, Bologna, il Mulino; Nenni, P. (1974). I nodi della politica estera italiana (ed. by Zucaro, D.), Milan, Sugarco; Ortona, E. (1989). Anni d’America. La cooperazione, 1967–1975, Bologna, Il Mulino. For an account of the key Chinese players, see Cai, F. (2007). Cong Daigaole dao Sakeqi [From De Gaulle to Sarkozy], Shanghai, Shanghai Shiji Chubanshe; Zhou, H., (2000). Huang Zhen Biography, Beijing, Chubanshe, R.R.; Xiong, X. (1992). ‘The Prelude to the Opening of Sino-American Relations’, Zhonggong dangshi ziliao 42(61). 4  A first study on the findings of this research has been published in Fardella, E. (2013). ‘The normalization of relations between Italy and the People’s Republic of China’, in Andornino,

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fifty years as the limit for the consultation of sources: CMFA documents until 1965 are open to the public with major restrictions on the quantity and quality of the sources,5 while Italian documents on China will be made fully available by the archive in fall 2014 for the period of time spanning from 1949 to 1963. A special declassification, favored by the Italian Senate in 2010 for the 40th anniversary of Sino-Italian normalization of diplomatic relations, led to the publication of the Italian documents on bilateral negotiations in 1968–1970, including the private papers of former Italian foreign ministers Pietro Nenni and Aldo Moro.6 This study relies on ASMAE sources available until 2013 for the 1949–1956 and 1968–1970 periods and a series of documents—amounting to about 300 in all—selected from those available at the CMFA. In addition to these, there are also the few testimonies of some of the key figures of that important diplomatic phase, such as those of the Chinese Ambassador to France, Cai Fangbo, of the official of the Ministry of Foreign Affairs in China, Mario Pini, and of the Italian Ambassador to Washington during the years of the talks for normalization with Beijing, Egidio Ortona.7 .



Misunderstanding and Misperception

A major scholarly effort to systematically order the majority of the primary sources available on Sino-European relations during the Cold War is a very recent endeavor;8 due to this lack of sources, until today there have been no

G. & Marinelli, M. (eds.), Italy’s encounters with modern China. Civilizational exchanges, imperial dreams, strategic ambitions, Basingstoke, Palgrave Macmillan: 117–146. 5  http://www.universityworldnews.com/article.php?story=20140311231740373, accessed 23 March 2014. 6  Senate Historical Archive (2010). ‘La normalizzazione delle relazioni diplomatiche tra la Repubblica italiana e la Repubblica popolare cinese’ [‘The normalization of diplomatic relations between the Italian Republic and the People’s Republic of China’] in Atti e Documenti, Soveria Mannelli, Rubbettino. 7  Cai, F. (2007). ‘From De Gaulle to Sarkozy’, Shanghai, Shanghai Shiji Chubanshe; Pini, M.F. (2011). Italia e Cina, 60 anni tra passato e futuro, Rome, L’Asino d’oro edizioni; Ortona, E. (1989). Anni d’America: la cooperazione, 1967–1975 [The American years: cooperation, 1967– 1975], Bologna, Il Mulino. 8  See Fardella, E., Ostermann, C.F. & Kraus, C. (2015). Sino-European Relations During the Cold War and the Rise of a Multipolar World. A Critical Oral History, Washington, Woodrow Wilson International Centers for Scholars.

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in-depth studies on the mutual perceptions between Beijing and Europe’s various countries. The study of these misperceptions in international relations has been inspired by the experience of the Cold War and by the risk of a nuclear holocaust that characterized that mindset: the search for a sound theory on the origin of these misperceptions is rooted in the need to reduce the threat of nuclear war and build trust between the superpowers.9 As Sperlich has rightly argued, many of these theories described ‘extraordinary’ situations that were mainly concerned with managing a crisis potentially determined by the buildup in the misperceptions of two nuclear superpowers.10 Therefore, they are ill-suited to describe normal diplomatic relations between third actors as in the case of Italy and China. In China’s case, the issue of misperceptions and their impact on its international relations has become very common in recent years, especially as a key to interpreting the structural criticalities of Beijing’s relations with the hegemonic power, the United States. However, the relevant pioneering studies are based mostly on secondary sources or on statistical samples considered indicative, but very seldom on the analysis of primary sources like those that have become available today in Chinese and Western archives.11 The same applies to recent research carried out on the role of ‘perception’ in relations between China and Europe, a role usually measured through surveys carried out on easily accessible samples, including open source publications, students, scholars and officials.12 9  The monumental study on Sino-Soviet relations from Nixon to Reagan by Raymond Garthoff ends with a long analysis of the structural role that mutual misperceptions between the superpowers played in the demise of the détente. See Garthoff, R.L. (1994). Détente and Confrontation. American-Soviet Relations from Nixon to Reagan, Washington DC, The Brookings Institution. 10  Sperlich, P. (1971). Conflict and Harmony in Human Affairs, Chicago, Rand McNally: 56. 11  David Shambaugh’s fascinating study on Chinese perceptions vis-à-vis the United States, a model of its kind, is based, for example, on the analysis of Chinese ‘America Watchers’; see Shambaugh, D. (1991). Beautiful Imperialist. China Perceives America, 1972–1990, Princeton, Princeton University Press. 12  See for example the study by Zhu, L. (2008). ‘Chinese perceptions of the EU and the China-Europe relationship’, in Shambaugh D., Sandschneider, E. & Zhou, H. (eds.), ChinaEurope Relations. Perceptions, Policies and Prospects. London & New York, Routledge: 148–174. Most recently, the consortium funded by the 7th EU framework program on ‘Chinese Views of the EU’ is producing several interesting and more articulated studies on Chinese perceptions of the EU at various levels. See http://www.nottingham.ac.uk/ cpi/research/funded-projects/chinese-eu/consortium.aspx, accessed 16 April 2014.

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The quality of these sources, though of considerable interest, cannot match that of diplomatic documents, which are sources written for internal use and hence not exposed to the external conditioning typical of open source materials. A systematic study of archival sources—generally more genuine and hence of greater interest to scholars—could enhance our knowledge of the way in which the Chinese and Europeans have structured and continue to shape their foreign policy based on the perception of the other and its role in the inter­ national system. As regards relations between China and Italy during the Cold War, two preliminary considerations need to be made: (a) Sino-Italian relations were a peripheral aspect of the Cold War system. The Cold War system constantly swung between bipolarity and multi-polarity depending on the level of tension: the greater the tension, the stronger the centripetal forces of the two main poles. Within this matrix—quite hierarchical in nature—Sino-Italian relations occupied a very marginal position;13 (b) Italy and China had different dimensions within the system and, consequently, attributed different importance to their bilateral relations. While both countries looked at their bilateral relations as an instrument to flex the constraints of the bipolar system, China, as a major power under constant threat of war with the superpowers, looked to Italy as a mere function in its anti-hegemonic struggle; Italy as a weak middle power constantly inhibited, both externally and internally, by its dependence on the US looked to China as an opportunity to gain more freedom of action within the alliance both politically and economically. China played defense vis-à-vis both superpowers; Italy looked at China as a tempting opportunity to upgrade its status. Based on these assumptions, a distinction should be made between ‘misunderstanding’ and ‘misperception’. In the field of international relations, these two concepts seem to be almost always associated and are often used as synonyms. However, this is not quite correct. Looking at the etymological meaning that reaches far back to Latin, the term ‘under’ could be interpreted

13  In the conversations between Chinese and American leaders, for example, during the Nixon, Ford and also Carter administrations, Italy was either bypassed or briefly touched upon and always in connection with the Soviet threat. Furthermore, Beijing had a very realistic image of the role of Italy in the international system: ‘Italy is a second level country in the imperialist camp as it does not have that much power. That makes Italian foreign policy too weak and its guiding principle is to follow the big powers’ CMFA, Rome to Ministry of Foreign Affairs, 12 December 1965, 110-02033-02, CMFA (translated by the author).

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as ‘inter’ rather than ‘beneath’.14 The meaning of the word understanding is hence to ‘stand in the midst of’ and therefore differs from the meaning of the verb word ‘perceive’ understood as a process of intuitive direct recognition. It follows that ‘misunderstand’ can be understood as not being able to stand in the midst, not being able to understand the situation and keep a balance: a failure to understand something correctly that leads to disagreement. Hence, in this specific context—namely in the analysis of a bilateral relation— ‘misunderstand’ can be seen as the inability to achieve a convergence between common interests. Misperception, on the other hand, should be interpreted as an inability to correctly estimate the other side’s intentions. In this sense, misperception can lead to misunderstanding but it can simply prevent contact and prolong a stalemate.

Italy and China: 1949–1970: A ‘Forced’ Misunderstanding

If we apply these two concepts to Sino-Italian relations during the Cold War, we can infer that there were no ‘real’ misunderstandings in the bilateral relationship: they were a ‘forced’ misunderstanding, or better constraints, imposed by the structure of the international system and the Cold War logic that inspired it. From the establishment of the PRC until 1964, Italian governments repeatedly tried to initiate diplomatic relations with the PRC, but the Cold War system limited its margins of action. Italy did not have any special interests in Asia like the UK or France and was more dependent on Washington and its containment policies toward China than either of those European powers. A perfect example of this structural influence on Sino-Italian relations was the reaction to the proclamation of the People’s Republic of China in October 1949. In January 1950, the Labor Government in UK sent a note to Beijing in which it accepted the PRC as China’s government de jure and proposed to send a chargé d’affaires pending the appointment of an ambassador. However, the presence of a British consul in Taiwan made the British offer somewhat ambiguous in the eyes of the Communist leadership and led the Chinese government to consider the British delegate not as a chargé d’affaires but as a simple delegate for negotiations on the establishment of diplomatic relations.15 14  See http://www.etymonline.com/index.php?term=understand, accessed 12 April 2014. 15   A SMAE (1952). Note ‘Cronologia di alcuni dei più importanti avvenimenti connessi con il riconoscimento della Cina comunista’ [‘Chronology of some of the most important events linked to the recognition of Communist China’], 27 August.

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Right after the British initiative, Italian foreign minister Sforza wrote a letter to Zhou Enlai in the early days of February. In the letter, he expressed Italy’s intention to recognize the PRC. Before sending it, however, he deemed it necessary to sound out Washington’s opinion.16 The timing of the Italian initiative, coupled with his intrinsic weakness, played against Sforza’s plan. On 9 February, US Senator McCarthy unleashed his witch-hunt against communism with a fierce purge against all those at the State Department who were favorable to a closer relationship with Maoist China. On 14 February, Mao and Stalin signed the treaty of friendship and cooperation in Moscow. It was the foundation of the new Sino-Soviet alliance in which the regime in Beijing stood side by side with the Soviets in the fight against Western capitalism. A chilly anti-China wind was blowing in Washington and the State Department clearly tried to discourage Sforza by playing down the advantages that inspired the move.17 Sforza tried to insist and the State Department made representations to the Italian government while US newspapers accused Italian diplomacy of having ‘communistic traits’.18 The desire to normalize relations with Beijing ran across the entire political spectrum in Italy, but the tensions of the Cold War and Washington’s firm opposition called for caution. Moreover, Taiwan sat on the UN Security Council and its vote was decisive for Italy’s admission in the Organization. This set of factors made it necessary to wait for the most suitable moment to establish official contacts with the Chinese. That moment presented itself at the beginning of the 1960s. Beijing’s antagonism to the duopoly of the superpowers and its urgent need to develop trade with foreign countries—to compensate for the havoc wreaked by the Great Leap and by the suspension of economic cooperation with Moscow in 1960— opened another chapter in Sino-European relations. In Europe, De Gaulle’s policy of independence vis-à-vis Washington and his aversion to the nuclear detente between the Anglo-Saxon powers and the USSR—embodied by the 16   A SMAE (undated). ‘Bozza di telegramma di Sforza a Zhou Enlai’ [‘Draft telegram from Sforza to Zhou Enlai’], in DGAP, Office VI, b.21, cited in Pini, M.F. (2011). Italia e Cina: 67. 17   A SMAE (1950). Telegram No. 67, in DGAP (1950) Office VI, b.21; ASMAE (20 February 1950). Telegram No. 1798 , Embassy of Italy to the United States in DGAP, Office VI, b.21, 18 February. 18   A SMAE (1952). Note ‘Cronologia di alcuni dei più importanti avvenimenti connessi con il riconoscimento della Cina comunista’ [‘Chronology of some of the most important events linked to the recognition of Communist China’], 27 August. In this regard, Pini writes, on the other hand, that Sforza’s words as well as the decision not to send a diplomat to Taiwan were a mere attempt to please the Socialist and Communist opposition proving not be totally at Washington’s service, Pini, M.F. (2011). Italia e Cina: 72–73.

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Nuclear Test Ban Treaty of 1963—reflected Beijing’s criticism to the bipolar condominium. This curious affinity between Paris and Beijing brought the two countries rapidly closer and, in January 1964, mutual diplomatic recognition was reached. It was a historic step that broke the cohesive front that Washington had tried to protect up to then, and it came without notice and at a particularly sensitive time for Washington, i.e., during the escalation in the Vietnam War and China’s support to North Vietnam.19 Thanks to the French move, Italy’s new center-left coalition—with a key role played by the Italian Socialist Party (PSI), one of the main sponsors of engagement policies towards Beijing as alternative to the Italian Communist (PCI) pro-Soviet stance — tried to take advantage of the cracks emerging in the US front vis-à-vis China and managed to open commercial offices with diplomatic status (shāngwù dàibiǎo chù, 商务代表处) that functioned as a de facto embassy in Beijing and Rome. According to what the PSI senator Vittorelli had told the Chinese leaders in Beijing, these offices could have served as a ‘bridge’ in view of diplomatic normalization in about a year.20 The agreement significantly facilitated trade and communications between the two countries, but did not lead to normalization according to the time plan that Vittorelli had charted out. The US reaction to these initiatives stopped the Italian government from following the French example.21 Washington could not tolerate a similar opening toward Beijing at the very moment its men were fighting against the Chinese and North Vietnamese in Indochina. If Paris could violate US sensitivity, it was not the case for Rome.22 The window of opportunity for normalization came in 1968–1970 due to the degeneration of the Sino-Soviet conflict, which led to a profound revision of Beijing’s foreign policy towards Vietnam and the West, the US included. Hence, when the structure began to change, the potential for misunderstanding vanished and the two sides converged. 19   A SMAE, Pietro Nenni, Government Series, b.115, file 2388 (1968). ‘Politica Italiana nei confronti della RPC’ [‘The Italian Policy toward the PRC’], DGAP Off. XI to Nenni, 27 November. 20   C MFA 110-02011-08 (1964). Memorandum, CMFA to Chen Yi, 29 May. 21  The Chinese felt that the US had pushed the Italians to cool down political relations with Beijing due to the war in Vietnam, CMFA 110-01902-01 (1965). ‘Changes in Italian diplomacy’, Chinese Commercial Office to Rome [hereinafter UCR] to CMFA, 15 December. 22  Christian-democrat leader Amintore Fanfani went on to say to the Chinese that the tension caused by Vietnam kept Italy from proceeding as it hoped with normalization with Beijing in January 1965, CMFA 110-01899-01 (1965). ‘Relations between Italy and China’, UCR to CMFA, 20 September.

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The Resilience of Misperception in Sino-Italian Relations

If the structural changes at the end of the 1960s reduced the space for misunderstanding between China and Italy, misperception, interpreted as an inability to correctly estimate the other side’s intention, has always been the major factor for potential stalemate in bilateral relations. According to our observations of the sources examined for this study, the root of misperception between Italy and China mainly stemmed from the differences in the institutional morphology of the two countries. The secrecy of the Chinese political system, the absence of a free press, the lack of any knowledge of the Chinese Communist Party’s inner workings, prevented the Italians from perceiving the domestic roots of China’s foreign policy.23 To Chinese eyes, Italy was quite a peculiar European country. A country whose democracy, formally built on the cooperation of all the forces that had defeated fascism, had to reinvent itself in the anti-communist logic imposed by the Cold War structure, namely on the exclusion of leftist forces from the executive. This condemned the Italian political process to a prolonged ‘immobilism’, or opposition to change, and favored domestic political shortterm agendas. The formal structure of a democratic country and the specificities of the Italian political system seemed to produce mixed results in the Chinese perception of Italy’s position: on the one hand, an easier access to information— favored by a free press and a cultural disposition of Italians to vent their personal views to foreigners—certainly offered the Chinese a surprising quantity of information about Italian domestic dynamics, both at the economic and political level.24

23  The Italian diplomat Mario Pini told us in sharing his interesting memories that the only way that diplomats in Beijing had to decipher China was to read the few authorized newspapers and periodicals and to listen to the radio to try and guess the Party’s political line. According to Pini’s account, during the meetings with the other embassies, they were always talking about the same sources and the same editorials. In some rare cases, you could find the Reference news (cānkǎo xiāoxī, 参考消息), a limited distribution daily newspaper that collected the reports of foreign press agencies, translated into Chinese for the party cadres, in the trash. Pini, M.F. (2011). Italia e Cina, 60 anni tra passato e future: 137–138. 24  Chen Baoshun, one of the first diplomats of the CMFA to speak Italian and to work first in the commercial office and then at the Chinese Embassy in Rome, pointed out that the Chinese followed attentively the development of Italian domestic politics, favored

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However, this quantitative mass of inputs—evident in the length and ampleness of the report written by the Swiss Embassy to the Western European Department of CMFA—did not always prevent the Chinese side from misperceiving the logic of Italian political dynamics. The difficulties in grasping the logic behind the length of a ‘complex’ democratic country such as Italy was coupled with the lack of direct contact between the two sides in the 1949–1964 period and the absence of a well-trained group of Italian experts in the CMFA in Beijing. All that left space for a misperception of Italian ‘immobilism’ and often led to a simplistic interpretation of Italian stances that tended to look at Italy, through an ideological prism, as a passive actor, as a piece in the hegemonic plot of the United States, a mere puppet (zǒugǒu, 走狗) of Washington.25 Although progresses were made in this respect—through the creation of a direct channel of communication between the two sides in 1964—after the opening of the commercial office, some evident limits were still in place. In the final stages of the negotiations for diplomatic normalization (that stretched from the beginning of 1969 to the end of 1970) Italian political instability—which led to the collapse of two consecutive governments between February and July 1970, and to the formation of a third one in the summer—led Beijing to believe that Italy was neither a valid nor a ‘reliable interlocutor’ and it shifted its attention to negotiations with Canada.26 As Pini recalls, the minister-counselor of the Italian Embassy in Paris, Walter Gardini, who was in charge of negotiations with his Chinese counterpart, was forced to resort to a series of rhetorical stunts to handle the barrage of questions by the Chinese on Italy’s position on Taiwan at the UN: ‘He could not give precise answers because he had no certainties’, writes Pini. ‘He didn’t know how long the government behind him would have lasted. He didn’t know

in this by the tendency of Italians to share their ideas and points of view. Interview with Cavaliere Chen Baoshun, 24 October 2013. 25  ‘The Italian government follows US imperialist policy to be its faithful watchdog (zǒugǒu, 走狗), and wants to maintain the supremacy of its ‘boss’ (zhǔzi, 主子). This marks the difference between Italy and most other Western countries and reflects the weakness and instability of Italy’s ruling class. It also reflects total US control over Italy’s political scene, economy and armed forces. One reason for this is that Italy has one of the fiercest class struggles in the West so the ruling class has to bolster its counter-revolutionary profile and join the US in suppressing the workers’ movement.’ in CMFA 110-00995-01 (1) (21 June 1960). ACS to CMFA. 26   A SMAE (1970). Letter No. 26, Malfatti to Moro, 12 February; ASMAE (1970). Letter No. 46, Malfatti to Moro, 13 March.

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whether and up to what point that government or maybe the next one would have resisted US pressure on Italy to vote against China’s admission to the UN.’27 Implications for the Present The potential for misperception in bilateral relations was only partially reduced after the establishment of diplomatic relations in November 1970: the above-mentioned ‘peculiarities’ of Italian democracy and the Chinese political system are in fact still at play today. The end of the Cold War had a profound impact on the Italian domestic balance. The First Republic (1948–1994) was buried in the massive corruption scandal—Mani Pulite or ‘Clean Hands’—that in 1992 led to the indictment of all the major political leaders and to the demise of traditional political parties (DC, PSI and PCI). A new political system started to emerge: the Second Republic. In 1993 a referendum changed the electoral system in Italy and moved to the ‘first-past-the post’ system (sistema maggioritario): the old proportional system, and the political and social reality that it was supposed to represent within the Parliament, disappeared under the attack of those who looked at it as the main cause for ‘partitocrazia’ and the corruption of the First Republic. In the ‘first-past-the post’ electoral system, parties are forced to coalesce in a strong coalition with a common political program before the elections and choose their leader who in case of victory will become the Prime Minister: that should be a guarantee for a direct relationship between voters and the leader, less political fragmentation and, as a consequence, more ‘governability’. The result, however, has been far from what many sympathizers of the new system expected: two electoral ‘cartels’ took the place of the traditional parties (DC, PCI), leaving nonetheless political fragmentation within Parliament intact. This, in turn, has led to a rise of populism and of the importance of propaganda in politics. To put it simply, before elections, the various parties have to conceal their identity under a common banner, the program of the coalition, and a common leader who must be able to persuade voters of the unity and harmony of the coalition, both of which obviously vanish in Parliament after the elections. The result in brief is the strengthening of populist tactics and the primacy of short-term political agendas. Prolonged political instability still weakens the creation of a political strategy in support of Italy’s long-term interests in its relationship with China—the

27  Pini, M.F. (2011). Italia e Cina, 60 Anni tra Passato e Futuro, Roma, L’Asino d’Oro Edizioni: 120.

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so-called ‘fare sistema’.28 Furthermore, the relative space acquired in foreign policy after the end of the Cold War vis-à-vis Washington has been partially reduced by a new structural relationship with the European Union whose constraints, such as the arms embargo, hit what is today the most precious part of Sino-Italian relations, namely trade. Enduring Italian political instability coupled with the perverse relationship with Brussels further has expanded the space for both misperception and misunderstanding on the Chinese side. The arc covered by Sino-Italian relations between the end of 1980s and the end of the First Republic provides clear historical evidence of the impact that Italian political instability has had on relations with Beijing. At the end of the 1970s, with his economic reform, Deng Xiaoping broadened Mao’s opening to the West in a symbiotic relationship that connected China’s domestic development with cooperation on international markets. That seemed to further reduce the potential for misunderstanding and increase the space of action for Sino-Italian relations: Italy, one of the most industrialized and developed countries in the West, could compensate for its diplomatic flaws with robust support to China’s economic transformation. The 1980s proved, in fact, to be the ‘golden age’ of Sino-Italian relations, which were boosted by a rapid growth in economic cooperation and the presence of Socialists in the Italian government. For the first time since normalization, Beijing started appreciating Italy’s foreign policy, embodied by the courageous and incisive activism of Bettino Craxi, the leader of the Socialist Party and Prime Minister from 1983 to 1987. Craxi’s independent stances visà-vis Washington—as proven by the Sigonella crisis29—Italy’s activism in the Middle East peace process and Craxi’s belief in a strong and unified Europe were all elements that met with Chinese appreciation.30 At the end of the 1980s, a new strategic opportunity seemed to be unfolding for Sino-Italian relations thanks to the skill of Prime Minister Giulio Andreotti and Foreign Minister Gianni De Michelis (PSI), who managed the crisis that followed the Tiananmen events in June 1989. Right after the EU Council in 28  In this context, ‘fare sistema’ means coordinating Italy’s political and economic initiatives to consolidate the country’s bargaining power in relations with China. 29  The crisis exploded in the air-force base of Sigonella in October 1985 between the Italian armed forces and the US Delta Force. The US forces surrounded the Italian army on Italian soil in order to get control of the plane with the Palestinian terrorist Abu Abbas directed to Tunisia and the Craxi government ordered to resist and sent more troops forcing the US forces to surrender and respect Italian sovereignty. 30  De Giorgi, S. Lontane, Vicine: 14; Jacoviello, A. (1985). ‘Armi e istruttori italiani per le forze armate di Deng’, La Repubblica.

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Madrid imposed sanctions on Beijing on June 27th, Andreotti and De Michelis were sincerely convinced that isolation could alter the benefit of Chinese reforms, and showed solidarity for the Chinese government by calling for the lifting of sanctions.31 In May 1991, Foreign Minister De Michelis visited China, the second foreign minister among Western countries to pay an official visit to Beijing after Spain since June 1989. De Michelis did not discuss politics but focused his visit on trade and investments and offered 500 million dollars in aid for the construction of Pudong in Shanghai, a development project worth USD 10 billion that promised giving Italy a strategic position in the Chinese market.32 On the eve of 1992, Italy seemed to be one of China’s main partners as the visit of premier Li Peng, in January, the first to a Western country since June 4th, clearly signaled.33 A few weeks later, however, the Mani Pulite corruption scandal wiped out the Italian political establishment hitting in particular the two parties that had historically favored dialog with Beijing, the Christian Democrats and the Socialists. As De Michelis said, Italy’s role in China was one of the main victims of this scandal. The destruction of the Italian political system from within hibernated Italian diplomacy: the Ministry of Foreign Affairs stopped cooperation programs with China, Pudong included, and for three years the Italian Ministry of Foreign Affairs did not pay a visit to Beijing.34 Bilateral relations between Rome and Beijing have never recovered since then. Although progress has been made in recent years to reduce the space of misperception at government level by setting up a broad system of bureaucratic diplomacy—the ongoing ‘Comitato intergovernativo’35—the space for misperception is still ample, especially in public opinion, and its connections with the shortcomings of the Italian political system have the potential of giving rise to serious threats to the development of Sino-Italian relations. 31  Caracciolo, L. (1995). ‘La Cina: Istruzioni per l’uso’, Limes 1/9: 209; Coralluzzo, W. (2008). ‘Italy’s Foreign Policy toward China: Missed Opportunities and New Chances’, Journal of Modern Italian Studies 13(1): 6–13. 32  Caracciolo, L. (1995). ‘La Cina: Istruzioni per l’uso’: 209. 33  ‘L’Italia è ora seconda tra i partner europei’, La Repubblica, 26 January 1992; Ansaldo, M. (1992). ‘Una raffica di proteste accoglie Li Peng a Roma’, 25 January. 34  Caracciolo, L. (1995). ‘La Cina: Istruzioni per l’uso’: 209. 35  This committee was established in 2004, on the eve of Premier Wen Jiabao’s visit to Rome. Headed by the two foreign ministers, the committee works as the coordinating body of bilateral relations: it favors interconnection between administrations and entities, both private and public, that work for the development of bilateral relations and it supervises bilateral economic initiatives.

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The devastating impact of the economic crisis in Italy—that has erased one fourth of Italian manufacturing potential since 2008—on people’s social and psychological life is beefing up the consensus of those political forces that point to globalization and its symbols as the origin of all current economic imbalances. China seems to be a perfect scapegoat for those political forces that are trying to gather consensus by capitalizing on the frustrations of people hit by the crisis. Machiavelli wrote in On Ingratitude: “Where less is known, the more suspicions there are.” Italians’ widespread lack of knowledge of Chinese culture and history encourages prejudice and suspicion in public opinion vis-à-vis Beijing and its growing economic presence in the countries most heavily hit by the crisis, such as Italy and Greece. According to some Pew Institute polls conducted in the spring of 2013, the majority of Italian respondents had a prevailingly negative opinion of China (62 %); Italians see China as a threat (80%), an enemy (39%), that does not care about Italy’s interests (83%) and does not respect fundamental freedoms (82%).36 The secrecy of the Chinese political system coupled with a flawed soft power strategy in Europe continues to fuel a pervasive negative image in public opinion with the result of favoring short-term political agendas that hinder the strategic development of Sino-Italian relations. According to figure 7.1 below, drafted by Giovanni Andornino for a study on current Sino-Italian relations, 91% of China-related resolutions, orders of the day and written and oral questions raised before the relevant commissions and the full Chambers of the Italian Parliament between 2008 and 2012 had a negative connotation and only 8% called for further engagement toward Beijing. Conclusion To stop this destructive spiral it would be necessary for both partners to learn from the past and to try to minimize the spaces for misunderstanding and misperception in bilateral relations. In particular: 1.

Create a strong constituency at the political and economic level to encourage the development of bilateral relations: from 1949 to 1989, progress

36  www.pewglobal.org. For the specific set of questions see: http://goo.gl/eXR4mh, accessed 22 April 2014.

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Sino-Italian Relations during the Cold War Other negative 6% Illicit Chinese activities on italian soil italiano 10%

Human Rights 4% Unfair competition and ipr 15%

Italian public debt 1%

Freedom of religion in China 8% Safety 14%

Opportunities for Italy-China cooperation 8% Bad treatment of Chinese companies in Italy 1% Dissidents and censorship 12%

Tibet/Xinjiang/Taiwan 21%

Figure 7.1 China-related resolutions, orders of the day, and written and oral questions (Interrogazioni) raised before relevant commissions and the full Chambers of the Italian Parliament, XVI Legislature. (29 April 2008–22 December 2012). Source: Andornino, G. (2013: p. 161).

in bilateral relations was made thanks to the initiatives of the Italian Socialist Party, which was able to find a strategic horizon for both Italian independence in international relations and the growth of consensus within the country through the consolidation of relations with China. The PSI’s political maneuvers were favored by Mao’s strategy: in the years prior to diplomatic recognition, the Chinese leader sought to strengthen the appeal aroused by trade with China to broaden the constituency of those in favor of closer relations with Beijing in the Italian business community. The disappearance of the PSI in the wake of the Mani Pulite scandal deprived the Italian political system of that driving force favorable to the development of bilateral relations with Beijing. The growing need for foreign investment to revive Italy’s economy, however, could build on

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the strong reformist capital of the new Renzi government to create a new virtuous understanding in bilateral relations with Beijing. Joint training and youth employment pathways: To facilitate this understanding and transform it into an effective long-term strategy that can redress the above-mentioned perverse mechanism—populist trends and short-term political agenda that worsens China’s negative image among Italian public opinion—cash resources from China should be directed to investments that can create jobs for young people especially in sectors linked to culture. Strengthening joint training pathways between Italy and China at the school and university level linking them to employment processes in the two countries could lay the foundations for a virtuous long-term relationship capable of minimizing the risk of misperceptions. Cooperation in the Mediterranean: The so-called Arab Spring and the financial crisis affecting the Southern countries of the Eurozone have turned the Mediterranean region into an ‘arc of tension’, with political instability, bursts of extremism and economic dislocation now dominating the regional landscape. For China, this set of trends in what it calls ‘West Asia and Northern Africa’ (WANA) poses a direct challenge in three respects. First, instability in the region may threaten China’s energy security, as the country increasingly relies on energy imports from select WANA countries to meet its growing domestic demand. Second, over the past decade China’s economic presence in the region has moved well beyond the energy sector, but its trade and investment relations with WANA countries are now negatively affected by political and economic turmoil. Third, the spread of instability and extremism from the region might propagate toward Xinjiang, thus directly impinging on China’s core interest in preserving political stability within its own borders. While developments in WANA countries threaten China’s interests, Beijing currently lacks the tools to effectively engage with regional dynamics. In this respect, Italy represents an interlocutor of critical importance for China: with its traditional economic and political influence in the region, Italy might well prove a key partner for Beijing and a promoter of a new initiative for stability and progress in the Mediterranean within the EU. SinoItalian cooperation in the Mediterranean, as the avant-garde of a wider European commitment in the region, could avoid fueling the perception that China is set on dividing Europe to capitalize on its weaknesses and could help convey the image of a world player committed to promoting stability and development in the region in the eyes of public opinion.

CHAPTER 8

How are Norms Resisted? Insights from China’s Engagement in the Shanghai Cooperation Organization Nadya Stoynova Introduction The question of human rights in China is one of the most pressing and politicized aspects of the China-European Union (EU) relationship. China’s rapid rise on the international scene stirred hopes in Western countries that economic development will also bring about democratization of domestic politics. However, these hopes have not been fulfilled. Despite the range of actors and strategies of engagement, China has still not ratified the United Nations Covenant on Civil and Political Rights and its compliance with Western conceptions of human rights standards is unsatisfactory. The EU in particular has expended a significant amount of funds and efforts in engaging China on the issue of human rights, as exemplified in the EU-China Human Rights Dialog mechanism. The European Union also can boast good trade and economic relations with China, which would suggest it has more scope for influencing other aspects of Beijing’s policies. Yet, even the EU has largely failed to effect change. Instead, China has begun to engage closely with other countries which are notorious for their own abuses, notably within the framework of the Shanghai Cooperation Organization (SCO). Considering that the literature on norm internalization has been relatively silent on why certain norms are rejected1 this paper will set out to explain why this has been the case with China and how Beijing has responded to the pressure it has been subjected to. The paper is structured as follows. First, China’s recent engagement with human rights will be briefly described, followed by a short section on the China-EU Human Rights Dialog mechanism. Next, based on Checkel’s2 and

1  Acharya, A. (2001). Constructing a Security Community in Southeast Asia: ASEAN and the Problem of Regional Order, London, Routledge. 2  Checkel, J. (2001). ‘Why Comply? Social Learning and European Identity Change’, International Organization 55(3).

© koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_009

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Legro’s3 perspectives an explanation will be advanced on why the EU’s engagement with China on human rights has been largely unsuccessful. Then the paper explores how China has been responding to pressure to improve its human rights record. The justification that it has put forth for its non-compliance is re-casted in resistance terms while its involvement in the SCO is tested empirically and shown to be a resistance strategy with important implications for norm entrepreneurs. ASEAN is briefly addressed as well since it was the first regional organization that China participated in4 and it largely formed the blueprint of engagement that China has preferred as evidenced in the similarities that the organizations share.

Theoretical Background

The 1990s constituted a watershed moment in International Relations (IR) and the study of norms made a successful return on the academic map since its fall into disfavor after World War II.5 Despite being rich and multi-faceted, the literature on norm diffusion has tended to focus mostly on norms that are successfully internalized by norm recipients.6 Additionally, most attention is paid to norms and norm entrepreneurs operating on the international level.7 The rationalist tradition, which explains norm compliance with cost-benefit calculations, is particularly strong. On the other hand, constructivists see norms as having an independent influence on behavior or as internal to other interests—actors are morally committed and in following a norm might even go against what in realist terms would be seen as their immediate interests. Yet despite their focus on the social construction of norms, even constructivists have very often relied on an individualist methodology.8 Recently, some authors have begun to develop frameworks which incorporate some previously competing methodologies in their study of why some norms are successful in certain conditions, both in adoption in discourse and 3   Legro, J. (1997). ‘Which Norms Matter? Revisiting the ‘Failure’ of Internationalism’, International Organization 51(1). 4  Ba, A. (2006). ‘Who is Socializing Whom? Complex Engagement in Sino-ASEAN Relations’, The Pacific Review 1(2). 5  Ibid. 6  Ibid. 7  Ibid. 8  Checkel, J. (2001). ‘Why Comply? Social Learning and European Identity Change’, International Organization 55(3): 556.

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actual compliance. Such approaches are valuable because of their ability to draw a more complete picture of normative dynamics. Checkel’s seminal work takes rationalist cost-benefit calculations as well as social learning mechanisms and strides the domestic and international levels of analysis in order to explain norm diffusion dynamics.9 He outlines the leading actors that play the most important roles in bringing norms on the agenda depending on the domestic structure of the polity. Conditional on the most important actors, the motivation behind compliance can be a cost-benefit calculation or elite learning. Checkel’s work on persuasion, which he identified as one of the processes through which social learning takes place focuses on the conditions under which persuasion is likely to work successfully.10 Importantly, some of these factors are internal to the specific interaction, incorporating a social ontology.11 He identifies five factors that help predict if persuasion is likely to be successful. Likewise, Legro looks to both the international and domestic levels in trying to account for variation in compliance.12 He, however, argues that where explanations based on the strength of the norm fail to account adequately for (non)compliance, it is organizational culture of the institution tasked with its implementation that accounts for the variation in compliance. He compares the explanatory power of norm robustness measured by three factors (specificity, relativity, concordance) and posits them against organizational culture which can be generally termed as adherence or violation oriented. Both Legro and Checkel espouse the idea that the ‘fit’ between domestic norms and customs and the international norm that is being advanced is mediated by cultural factors. The same idea is taken up by Acharya, who develops the concept of localization to explain the partial acceptance or adoption of a modified version of the original norm in domestic settings. Localization refers to the ‘complex process and outcome by which norm takers build congruence between transnational norms and (. . .) local beliefs and practices. In this process foreign norms which do not initially cohere with the latter, are incorporated into local norms’.13 He also mentions resistance to norms, taking it to be 9  Checkel, J. (1997). ‘International Norms and Domestic Politics: Bridging the RationalistConstructivist Divide’, European Journal of International Relations 3(4). 10   Checkel, J. (2001). ‘Why Comply? Social Learning and European Identity Change’, International Organization 55(3). 11  Ibid. 12  Legro, J. (1997). ‘Which Norms Matter? Revisiting the ‘Failure’ of Internationalism’, International Organization 51(1). 13  Acharya, A. (2004). ‘How Ideas Spread: Whose Norms Matter? Norm Localization and Institutional Change in Asian Regionalism’, International Organization 58: 241.

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a common first reaction to norms being pushed from the outside, as part of ‘pre-localization’. If at this initial stage sustained and strong resistance is put up, norm transmission is precluded.14 Acharya’s work on localization is important in two respects. In contrast to Legro and Checkel who identify conditions which affect the likeliness of successful norm diffusion, Acharya shows that there are more possibilities than the simple dichotomy of rejection/adoption. Additionally, Acharya places the focus more on domestic actors who are presented as active participants in the norm diffusion process. Localization has been picked up by other authors and has generated some important insights. Capie, for example, has reconstituted localization as resistance in explaining the Association of Southeast Asian Nations’ (ASEAN) partial adoption of the language and practice of small arms norms.15 Even he, however, does not focus on theorizing resistance in depth, only reconstituting localization as such. Thus despite these strides in explaining variations in norm internalization, resistance to norms remains under-theorized. Still it is no less an important part of norm diffusion dynamics. Resisting norms shows significant mismatch between the norm entrepreneur and the norm recipient’s vision about what conduct is appropriate. Such mismatch might be grounded in the substance of the norms, the way it is advanced by norm entrepreneurs or the domestic measures the latter wish to see implemented to ensure compliance. Usually noncompliance with norms and the indignation that it produces has been used as proof that international norms matter.16 However, this is more of a continuum: one country breaching norms and presenting a justification for this might well show the strength of the norm but the more appeal a counter narrative has, the more the norm’s legitimacy is challenged. Sustained and serious challenges to norms might even result in their degeneration, disappearance or replacement with other norms.17

14  Ibid.: 251. 15  Capie, D. (2008). ‘Localization as Resistance: The Contested Diffusion of Small Arms Norms in Southeast Asia’, Security Dialog 39(6). 16  Risse-Kappen, T. et al. (1998). The Power of Human Rights: International Rights and Domestic Change, Cambridge, Cambridge University Press. 17  Panke, D. & Petersohn, U. (2012). ‘Why international norms disappear sometimes’, European Journal of International Relations 18(4).

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Theorizing Resistance to Norms

This paper attempts to make up for this omission by proposing two mechanisms/strategies through which resistance to norms manifests itself on the international level. It focuses on the role of the norm recipient and his/her reaction to norms with which it disagrees. The reasons for such divergence may be manifold—interests, cultural variables etc. and these are not independent from each other. The emphasis of the paper is towards identifying actions that can be seen as a manifestation of resistance to pressure to adopt norms. One such strategy (forming a group of like-minded actors) is studied empirically, while another one (forming a coherent alternative narrative is only re-casted in a new light since it has been identified in previous scholarly studies. Similar to the authors mentioned above the resistance strategies combine rationalist, individual and constructivist, intersubjective arguments. This is mostly evident in the second resistance strategy as the states engage in these organizations for the pursuit of their self-interest, but through their interaction they produce collective outcomes. The same goes for the first strategy, however, as the counter narrative is an integral feature of the interaction between China and the Western powers and it makes little sense outside of it. A rather straightforward way of resisting norms is to formulate and present a coherent argument as to why a norm is resisted. Of course, this is not always necessary. Formally, a state is sovereign and can choose to disregard an array of norms without its existence being immediately threatened, especially outside of those that have already been solidified in jus cogens. However, it is notable that even pariah states try to present at least some justification for breaching or not adopting certain norms that have received wide recognition.18 The considerations behind such justifications are usually based on cost-benefit calculation (be it possible economic sanctions or loss of prestige, domestic legitimacy), but genuine belief in the justification cannot and should not be excluded as a possibility. Such a resistance strategy can sometimes result in the creation of relevant bodies or institutions that are charged with supporting or running the effort. When setting out to construct a counter narrative to widely appealing norms such as human rights, for the justification to be accepted the argumentative standard is likely to be high. When faced with pressure to conform to a certain standard one disagrees with, social psychology has demonstrated that one of the primary ways of resisting is forming a group of like-minded individuals to represent and defend 18  Risse-Kappen, T. et al. (1998). The Power of Human Rights: International Rights and Domestic Change, Cambridge, Cambridge University Press.

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a rival view.19 Resistance, so to speak is social. This paper argues that this insight can be used in International Relations, albeit in a more diluted form. The effect of participation in international organizations for the socialization of norms has been shown as significant in a number of studies.20 This also applies to organizations that have weak or even no mechanisms for formal sanctioning of non-compliance with shared principles.21 Importantly, Bearce and Bondanella have also shown that change in behavior is delayed by four years as it takes time for the shared norms to be socialized.22 Also, norms need not be positive or liberal to be socialized.23 The mechanism is again straightforward: already existing shared understandings are further socialized. When most of the actors in a particular organization already share common norms to a significant degree, these norms might solidify even further as actors get used to interacting in an environment of agreement and relatively little conflict over fundamentals. If this indeed happens, contrast between cooperation with those in the in-group and with actors outside of the group might become increasingly stark, leading members of the in-group to engage in more and more superficial interactions with others while strengthening in-group connection.24 Borrowing from social psychology again, it has been shown that collectively held attitudes show significantly more resistance to25 and with time these organizations can become a united front for representing the common position. However, it should be kept in mind that the resistance strategy of a group of like-minded actors does not imply that organizations are necessarily started up with this idea in mind, or that there are no other legitimate interests prompting the action. 19  Howarth, C. (2006). ‘A Social Representation is Not a Quiet Thing: Exploring the Critical Potential of Social Representations Theory’, British Journal of Social Psychology 45. 20  Pevehouse, J. (2002). ‘Democracy from the Outside In? International Organizations and Democratization’, International Organization 56(2); see also Greenhill, B. (2010). ‘The Company You Keep: International Socialization and the Diffusion of Human Rights Norms’, International Studies Quarterly 54. 21  Greenhill, B. (2010). ‘The Company You Keep: International Socialization and the Diffusion of Human Rights Norms’, International Studies Quarterly 54. 22  Bearce, D. & Bontanella, S. (2007). ‘Intergovernmental Organizations, Socialization, and Member State Interest Convergence’, International Organization 61. 23  Acharya, A. (2001). Constructing a Security Community in Southeast Asia: ASEAN and the Problem of Regional Order, London, Routledge. 24  Risse-Kappen, T. et al. (1998). The Power of Human Rights: International Rights and Domestic Change, Cambridge, Cambridge University Press. 25  Kelley, H. & Volkhart, E. (1952). ‘The Resistance to Change of Group Anchored Attitudes’, American Sociological Review 17.

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A note is due on how these actions showing resistance are to be termed. A strategy presupposes conscious action, a certain awareness and calculation. This is likely to amount for the bulk of resistance to norms, especially in international relations. However, it is also possible to conceive of, at least initially less aware resistance, which would comprise a swift reaction to, for example, a perceived offence. Such difference is not important for the purposes of this paper as it is irrelevant to the result—the manifestation of resistance. Nevertheless, considering the fact that, especially with regard to sensitive issues, much thought is given to state actions the term strategy will be used in this paper. Methodology The paper focuses on the case study of the interaction on human rights between the Chinese government as the norm recipient and the EU as the norm entrepreneur. The EU is not the only actor which is engaging China on human rights, but it is one of the most vocal actors on the issue: it is persistent in engaging China on the issue and compared to the myriad other non-governmental actors, it has enough political influence to make an impact. Moreover, compared to the USA, the EU is better poised to make a difference because of its all-round less confrontational relations with China.26 The argument will be developed in the following way. Firstly, the failure of the EU to effect change in the Chinese human rights practices will be briefly explained with reference to Legro’s and Checkel’s frameworks. These two theoretical frameworks will aid in explaining the lack of success of the internalization of Western conceptions of human rights in China, despite different strategies used by the EU to influence Beijing. Afterwards, the Chinese response will be looked at with one resistance strategy described and re-casted in resistance terms while another, forming a group of like-minded actors, will be tested empirically. In order to see if this is indeed a resistance strategy, a content analysis of all the documents released by the SCO was performed. The organization was chosen because it is regional and can be described as different compared to Western dominated organizations or organizations based on a Western model. The SCO is important since it is the first organization, which China (with the Chinese Communist Party (CCP) in leadership) was instrumental in creating after China’s opening-up. The SCO 26   Casarini, N. (2006). The Evolution of the EU-China Relationship: From Constructive Engagement to Strategic Partnership, Paris, European Union Institute of Security Studies.

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is also significant due to the fact that it has more opportunity for influence on the global stage because of the membership of China and Russia.27 For these reasons, the SCO will constitute the focus of the essay. Nevertheless, ASEAN which was the first regional organization that China took part in after opening up28 sets an important precedent for Beijing’s experience in international cooperation which is important for the development of the SCO. This is evidenced in the resemblances shared by the organizations. Therefore, in order to provide a comprehensive picture of the significance of the particular type of engagement that China favors, it is instrumental to briefly address ASEAN as well. The documents were analyzed to identify the common norms on how the members engage each other, as well as their stance on human rights. The analysis takes into account the extent to which terms such as ‘human rights’ (also variations like civil rights, electoral rights etc.), and ‘democracy’ were used as well as the overall content and spirit of the documents to account for the vision of the members of the organizations. Since direct references to these terms (without any deviating qualifications) are likely to evoke Western notions on human rights, it can be argued they indicate at least a nominal adherence to these principles. Such nominal adherence, on the other hand, can be invoked by norm entrepreneurs. No direct references can be seen as a deliberate distancing from human rights discourse, which is otherwise a prominent feature in international documents.

China and Human Rights

Since China’s opening in 1979, it has officially embraced human rights discourse in the constitution of 1982, which is still the acting constitution of the People’s Republic of China (PRC). It has signed and ratified the majority of the United Nations human rights treaties.29 The only exceptions (excluding any regional initiatives) are the International Covenant on Civil and Political Rights (ICCPR), UN Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families and the UN Convention for 27  Aris, S. (2009). ‘A New Model for Asian Regionalism?’, Cambridge Review of International Affairs 22(3). 28   Ba, A. (2006). ‘Who is Socializing Whom? Complex Engagement in Sino-ASEAN Relations’, The Pacific Review 1(2). 29  United Nations Treaty Series Collection (2014). CHAPTER IV: Human Rights, https:// treaties.un.org/Pages/Treaties.aspx?id=4&subid=A&lang=en.

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the Protection of All Persons from Enforced Disappearance. The nationalist government of China signed the ICCPR in 1967, but it was subsequently not ratified after the Communist government assumed the China seat in the UN. To what extent such turnaround is due to Western pressure is a question for debate, but it is plausible that the Chinese leadership’s desire to find if not greater understanding then at least some peaceful coexistence played a decisive role. When it comes to compliance the story is different. With regard to economic and social norms, one could argue that the Chinese leadership is truly socialized, since despite no perfect conformity, there are genuine attempts to improve the most basic social and economic rights of the Chinese population.30 When it comes to civil and political rights, however, despite being there ‘on paper’ both in the acting Chinese constitutions and in numerous documents (e.g. White Papers on human rights) released by the Chinese Communist party in which it claims their protection, the actual compliance is unsatisfactory by Western standards.31 China-EU Human Rights Dialog The China-EU human rights dialog, which originated in 1995, is a bi-annual meeting of the political elites of China and the EU countries where both parties raise their concerns with regard to the other’s human rights record.32 The human rights dialog is accompanied by two other lower-level initiatives— the legal seminars and practical projects. The legal seminars are composed of academics, legal experts and some NGOs and the idea behind the inclusion of the seminars is for them to serve as a basis for a deeper discussion in the Dialog meetings.33 However, as Kinzelbach and Thelle have remarked, the connection between the different levels is tenuous and coordination is practically non-existent.34 With regard to the practical projects, there is even certain 30  Peerenboom, R. (2005). ‘Assessing Human Rights in China: Why the Double Standard?’, Cornell International Law Journal 38(1): 72–172. 31  Sceats, S. & Breslin, S. (2012). China and the International Human Rights System, London, The Royal Institute of International Affairs. 32  European External Action Service (2014). EU-China Human Rights Dialog, http://eeas .europa.eu/delegations/china/eu_china/political_relations/humain_rights_dialog/ index_en.htm, 2 January. 33  Kinzelbach, K. & Thelle, H. (2011). ‘Taking Human Rights to China: An Assessment of the EU’s Approach’, China Quarterly 205. 34  Ibid.

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reluctance towards linking them with the highly politicized Human Rights Dialog which is seen as potentially disruptive for their functioning.35 In the beginning, the EU strategy was to aid the passing of a resolution on China’s human rights record in the UN Commission on Human Rights (UNCHR). From 1990 until 1997, all EU members cosponsored all draft resolutions against China in annual UNCHR meetings.36 However, these draft resolutions were defeated owing to Chinese efforts and since 1997 the consensus that existed between EU members broke down. The initiative was officially abandoned for the less confrontational approach of dialog.37 The European Union has expended significant effort in trying to socialize the Chinese elite through constructive dialog and persuasion.38 The preoccupation with civil and political rights has been outlined as the main concern for the EU in its engagement with China in the Human Rights Dialog.39 As its main argument regarding human rights, the EU has frequently taken the position that civil and political rights are necessary for economic development.40 However, the Human Rights Dialog has not been very productive. Often the same topics are raised by the parties and these sessions and the legal seminars have been characterized as talking shops.41 Despite some successes such as the limitation in the application of the death penalty which can be attributed to the practical projects,42 the initiatives have largely been described as a failure in advancing the respect for civil and political rights.43

35  Ibid. 36  Zhang, L. (2011). News Media and EU-China Relations, Hampshire, Palgrave Macmillan. 37  Commission of the European Communities (1998). Building a comprehensive partnership with China, Brussels. 38   Casarini, N. (2006). The Evolution of the EU-China Relationship: From Constructive Engagement to Strategic Partnership, Paris, European Union Institute of Security Studies. 39  Freeman, D. & Geeraerts, G. (2010). Europe, China and the Expectations for Human Rights, Brussels, Brussels Institute of Contemporary China Studies. 40  Ibid. 41  Kinzelbach, K. & Thelle, H. (2011). ‘Taking Human Rights to China: An Assessment of the EU’s Approach’, China Quarterly 205. 42  Hood, R. (2009). ‘Abolition of the Death Penalty: China in World Perspective’, City University of Hong Kong Law Review 1(1). 43  Kinzelbach, K. & Thelle, H. (2011). ‘Taking Human Rights to China: An Assessment of the EU’s Approach’, China Quarterly 205.

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Non-Compliance Explained

Using Checkel’s and Legro’s arguments, an explanation will be advanced on the limited success of the European Union (or other actors) to affect change in China’s implementation of Western conceptions of human rights. However, explaining the non-compliance will be given only a cursory glance as it is a necessary foundation for the main argument advanced. Thus, the paper does not claim to do justice to the complexity of Checkel’s and Legro’s arguments. Checkel44 identifies five factors that increase the likelihood of successful persuasion as a social learning mechanism: the actor to be persuaded is in a novel environment, there are few pre-existing ingrained beliefs that contradict the argument that is being advanced, the persuader is an authoritative member of an in-group to which the actor being persuaded wants to belong, the persuader does not lecture or demand but acts according to ‘principles of serious deliberative argument’45 and finally the interaction does not takes place in a heavily politicized environment. Considering Checkel’s novelty and uncertainty of the environment factor, the cards can be seen as being stacked up in the EU’s favor. China has traditionally been much more inward looking compared to other states with similar capabilities. This preoccupation with internal problems gave way to much more engagement with the international community.46 Initially this was only in the economic realm but as time went by China got involved more and more in international affairs and nowadays it can be seen as a full-fledged member of the international community. However, when the EU-China human rights dialog was launched in the mid-90s, it could be said that Chinese diplomats were operating in an environment that was novel and very uncertain. This is due to the fact that despite the opening they formally subscribe to an ideology seen as adversarial by the major powers. The second factor, however, is more problematic. The Chinese regime has not been embracing the idea of Western-style universal human rights and has instead proposed its own notion of human rights. Many would see behind that the pursuit of rational self-interest on the part of the Chinese Communist Party, but a closer look at the idea of human rights the regime espouses reveals a more complicated picture. Indeed, the Chinese Communist 44   Checkel, J. (2001). ‘Why Comply? Social Learning and European Identity Change’, International Organization 55(3): 556. 45  Ibid.: 563. 46  Harding, H. (1987). China’s Second Revolution: Reform after Mao, Washington, Brookings Institutional Press.

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Party has long been hostile to the Confucian tradition, before strategically reviving it.47 However, such a strategy only works because these attitudes are still deeply ingrained in Chinese culture. China is a collectivist society with a very strong emphasis on respect for authority.48 There is a clearly defined hierarchy of authority in Chinese and other Asian cultures in which sex and after that seniority are the prime determinants of one’s position in the family and society.49 Moreover, in Confucian tradition the well-being of the individual is always subordinated to the well-being of the family or the collectivity.50 In fact, individual prosperity is only possible through the well-being of the collectivity.51 This subordination of the individual to the collectivity and to fixed merit-attributing features suggests the value of stability and constancy over individual freedom. Values such as free expression sit uncomfortably with this emphasis on stronger societal control. Similarly, the idea that civil and political rights can be limited for the advancement of economic and social rights is held by a majority of populations of Asian countries, including China.52 Despite some support for Western type civil and political rights, it also turns out that it is the exception rather than the rule53 and ordinary Chinese have a different view of what rights entail—they do not place nearly as much value on free speech compared to Western respondents.54 Surprisingly, younger and economically better-off Chinese, the group which should be most forthcoming to Western ideas of human rights, value stability much more than freedom of speech.55 Such findings are indicative of a serious difference between Chinese and Western perceptions of which rights first and foremost need protection. 47  Bell, D. (2008). China’s New Confucianism: Politics and Everyday. Life in a Changing Society, Princeton, Princeton University Press. 48  Peerenboom, R. (1993). ‘What’s Wrong With Chinese Rights?: Towards a Theory of Rights with Chinese Characteristics’, The Harvard Human Rights Journal 29. 49  Bell, D. (2008). China’s New Confucianism: Politics and Everyday. Life in a Changing Society, Princeton, Princeton University Press. 50  Peerenboom, R. (1993). ‘What’s Wrong With Chinese Rights?: Towards a Theory of Rights with Chinese Characteristics’, The Harvard Human Rights Journal 29. 51  Ibid. 52  Pew Global Attitudes Project (2002). What the World Thinks in 2002, Washington, The Pew Research Center For The People & The Press. 53  Peerenboom, R. (1993). ‘What’s Wrong With Chinese Rights?: Towards a Theory of Rights with Chinese Characteristics’, The Harvard Human Rights Journal 29. 54  Freeman, D. & Geeraerts, G. (2010). Europe, China and the Expectations for Human Rights, Brussels, Brussels Institute of Contemporary China Studies. 55  Ibid.

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With regard to the third factor, the position of the EU would depend on how the in-group is defined. China can be seen as wishing to be a part of the developed countries and a great power.56 However, it is already moving in that direction in its own way by cautious reform and selective incorporation of capitalist economic principles. Beyond that it is difficult to identify any other ‘club’ it wants to be a part of. Quite the contrary, it very often tries to distance itself from the Western way of approaching international relations, especially when it comes to engaging developing countries.57 The EU’s approach towards China can be defined more as lecturing in Checkel’s terms, as when human rights are mentioned they are taken to mean civil and political rights.58 The persistent criticism and focus on the failures of Beijing is seen as disheartening by both the Chinese political elite and population.59 The fourth factor has a magnified importance in this case since in Chinese culture, the concept of face is very important and is the “most delicate standard by which Chinese social intercourse is regulated”.60 Losing face is a dreaded prospect in a prestige-based culture. Therefore, robust criticism or shaming can prove to be counter-productive. Considering the fact that nationalism is currently on the rise in China, a continuation of the current approach of the EU in the Human Rights Dialog might serve to drive China further away from compliance. Last but not least the politicization of the environment can also be seen as working against successful persuasion, particularly in the case of the High Level dialog. China’s human rights record is highly publicized and this fact puts pressure on both sides. China is frequently being singled out for human rights breaches, especially on a number of ‘hot’ issues. EU leaders face domestic pressure to be more proactive and to not prioritize economic relations over human rights issues. The legal seminars are politicized in the fact that the Chinese participants are closely watched by government officials.61 The only initiative that is relatively free from political interference and consistent with 56  Wang, F. (2005). ‘Preservation, Prosperity and Power: What Motivates China’s Foreign Policy?’, Journal of Contemporary China 14(45). 57  Alden, C. & Large, D. (2011). ‘China’s Exceptionalism and the Challenges of Delivering Difference in Africa’, Journal of Contemporary China 20(68). 58  Freeman, D. & Geeraerts, G. (2010). Europe, China and the Expectations for Human Rights, Brussels, Brussels Institute of Contemporary China Studies. 59  Peerenboom, R. (2004). ‘Assessing Human Rights in China: Why the Double Standard?’ Cornell International Law Journal 38: 71–172. 60  Lin, Y. (1943). My Country and My People, New York, The John Day Company: 199–200. 61  Kinzelbach, K. & Thelle, H. (2011). ‘Taking Human Rights to China: An Assessment of the EU’s Approach’, China Quarterly 205.

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Checkel’s theory, the practical projects, seems to have been most successful in effecting change.62 Legro’s account of organizational culture illuminates another aspect of why EU engagement with China is not bearing much fruit with regard to compliance with civil and political rights.63 The first and foremost interest of any organization is its own survival. It is not difficult to see why the pursuit of Western conceptions of civil and political rights can be seen as a danger to this survival. The Communist Party values stability and the status quo, and reform is possible only through incremental change, where a certain benefit is perceived, as it is visible in the ‘Cross a river by feeling the stones’ approach to economic reforms.64 Moreover, the Communist Party has a ‘tradition of distrust and fear of foreign power and influence’,65 a mentality prompted by the experience of the century of humiliation. Therefore, the idea that internal dissent together with help from Western powers is threatening the very survival of the CCP and its leaders is prevalent.66 Considering such concerns it is not surprising that the EU and other norm entrepreneurs fail to secure compliance. Therefore, as it can be gleaned from the previous considerations, there are serious domestic factors that account for Chinese reluctance to adopt human rights norms wholeheartedly. While Western powers see the CCP’s interest as the main reason, a more in-depth analysis shows that cultural factors are also important and their legitimacy is much harder to challenge.

Resistance to Norms

Counter-Narrative The Chinese government has constructed its narrative around a few central themes, which can be subsumed beneath the heading of ‘human rights with Chinese characteristics’. The China Society for Human Rights Study (CSHRS) was created in response to Western pressure67 and its task is ‘building 62  Ibid. 63  Legro, J. (1997). ‘Which Norms Matter? Revisiting the ‘Failure’ of Internationalism’, International Organization 51(1). 64  Maurer-Fazio, M. (1995). ‘Labor Reform in China: Crossing the River by Feeling the Stones’, Comparative Economic Studies 37(4). 65  Wang, F. (2005). ‘Preservation, Prosperity and Power: What Motivates China’s Foreign Policy?’ Journal of Contemporary China 14(45): 669–694. 66  Ibid. 67  Wan, M. (2001). Human Rights in Chinese Foreign Relations: Defining and Defending National Interests, Philadelphia, University of Pennsylvania Press: 19.

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a theoretical system of human rights with Chinese characteristics’.68 The abstract argumentative foundation refers to a more cultural and historical relativist interpretation of human rights, a view with an established tradition.69 The idea that Chinese communitarian tradition makes for a different conception of human rights has recently been reiterated by Luo Haocai, the head of the CSHRS, who stated that Individual rights have to be balanced against collective rights.70 Other themes have been the primacy of first realizing economic, social and cultural rights more fully and the different developmental stage that China is in.71 Both Western and Chinese scholars have also emphasized the Confucian underpinnings of Chinese collectivist norms although the Communist party has been more careful with such references.72 The general support of the Chinese population for ‘human rights with Chinese characteristics’ has been demonstrated earlier in the text. Some other arguments find their way in the mix. Some of them are related but not essential to the theoretical foundation of the narrative of human rights with Chinese characteristics; rather they follow from it. Western pressure on human rights is construed as unwarranted and sometimes even imperialist interference in domestic affairs.73 Relatedly, another response is blaming the opponent for their failures in areas where China is doing well: the USA’s account on economic, social and cultural rights is unsatisfactory.74 Another counter-narrative, which originated from ASEAN but has also received Chinese support, is the Asian Values discourse. Conceptually very close to human rights with Chinese characteristics. Asian Values are centered on the idea that Asian cultures share distinct collectivist features which preclude Western individualist conceptions of human rights to be applied in

68  Liu, H. (2011). On Building Theoretical System of Human Rights with Chinese Characteristics, China Society for Human Rights Study, http://www.chinahumanrights.org/CSHRS/ Magazine/Text/t20110520_746459.htm. 69  Donnelly, J. (1984). ‘Cultural Relativism and Universal Human Rights’, Human Rights Quarterly 6(4). 70  Wall Street Journal (2014). ‘Human Rights with Chinese Characteristics’, http://online.wsj. com/news/articles/SB10001424053111904353504576566261960626614. 71  Wan, M. (2001). Human Rights in Chinese Foreign Relations: Defining and Defending National Interests, Philadelphia, University of Pennsylvania Press: 19. 72  Ibid. 73  Peerenboom, R. (1993). ‘What’s Wrong With Chinese Rights?: Towards a Theory of Rights with Chinese Characteristics’, The Harvard Human Rights Journal 29. 74  Wan, M. (2001). Human Rights in Chinese Foreign Relations: Defining and Defending National Interests, Philadelphia, University of Pennsylvania Press: 19.

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their pure form.75 After the Asian crisis of 1997, the Asian Values discourse has faded to a certain degree. Nevertheless, the ideas advanced still hold appeal across Asia.76 Accounting for China’s human rights record yields an interesting result. Human rights norms are complex, contested and multidimensional but they are often pushed as a package by norm entrepreneurs or even only civil and political rights norms are pursued.77 As previously mentioned, China has embraced economic, social and cultural human rights norms to a large degree.78 On the other hand, incorporating the language of civil and political rights has generated little actual enforcement. Because the latter rights are seen in a different way (as essential and inalienable by norm entrepreneurs and as distinct and not equally important by China), the idea of human rights with Chinese characteristics can be seen both as localization and resistance. In fact in this case they not simply coincide, but are mutually constitutive. China localizes human rights norms by adopting a set of human rights norms that best suit its cognitive priors. Subsequently, it uses this internalization and the need for further advancement of these rights to justify the rejection of another set of human rights norms. Thus in this case, China’s internalization of human rights norms, like ASEAN’s localization of small arms norms,79 is the two sides of the same coin, resistance as well as a localization. However, differences in how this is perceived might be expected depending on the actor. For example, a norm entrepreneur that has a strong stance on a particular norm is likely to see such actions primarily in light of the rejection of normative principles, as a resistance. This is evident in the behavior of the EU which has stepped up criticism of China in recent years80 despite Beijing’s strides in advancing basic economic and social rights.

75  Barr, M. (2004). Cultural Politics and Asian Values: The Tepid War, Abingdon, Routledge. 76  Ibid. 77  Freeman, D. & Geeraerts, G. (2010). Europe, China and the Expectations for Human Rights, Brussels, Brussels Institute of Contemporary China Studies. 78  Peerenboom, R. (2004). ‘Assessing Human Rights in China: Why the Double Standard?’ Cornell International Law Journal 38: 71–172. 79  Capie, D. (2008). ‘Localization as Resistance: The Contested Diffusion of Small Arms Norms in Southeast Asia’, Security Dialog 39(6): 637–658. 80  d’Hooghe, I. (2010). The Limits of China’s Soft Power in Europe: Beijing’s Public Diplomacy Puzzle, The Hague, Clingendael.

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Forming a Group of Like-Minded Actors

The Significance of ASEAN China is not happy about the criticism that it has received over human rights, which it sees as undue interference in its domestic affairs and also as the application of a double standard on the part of Western countries.81 This has informed its strategy of engaging other countries—China’s official rhetoric on giving out financial support to developing countries is that no political conditionality is attached.82 However, this has not only been central to bi-lateral relations but has also influenced China’s approach in multilateral relations. ASEAN’s engagement with China was a unique initiative and it was part and parcel of what has been termed China’s new regionalism.83 ASEAN and SCO share many similarities in member engagement.84 Relations with ASEAN were amongst the first active multilateral engagements of China since its opening up and are therefore significant. China was engaged by ASEAN as part of a strategy to socialize Beijing into a less threatening great power.85 ASEAN members have their own style of engaging with each other often referred to as the ASEAN way, based on non-interference, consensus building, informal negotiations and the ‘absence of any highly institutionalized legal framework’.86 This style of negotiating suits China to a significant degree and Ba (2006) has argued that ASEAN has managed to socialize Beijing and the interaction has been beneficial in reducing the tensions between the smaller neighbors and a burgeoning China. ASEAN itself has a human rights body, the ASEAN Intergovernmental Commission on Human Rights which produced an ASEAN Human Rights Declaration, claiming the protection of civil and political rights as set out in

81  Peerenboom, R. (2004). ‘Assessing Human Rights in China: Why the Double Standard?’ Cornell International Law Journal 38: 71–172. 82  Alden, C. & Large, D. (2011). ‘China’s Exceptionalism and the Challenges of Delivering Difference in Africa’, Journal of Contemporary China 20 (68): 21–38. 83  Krumm, K. & Kharas, H. (2004). East Asia Integrates: A Trade Policy Agenda for Shared Growth, Washington, The World Bank for Reconstruction and Development. 84  Aris, S. (2009). ‘A New Model for Asian Regionalism?’ Cambridge Review of International Affairs 22 (3): 451–467. 85   Ba, A. (2006). ‘Who is Socializing Whom? Complex Engagement in Sino-ASEAN Relations’, The Pacific Review 19(2): 157–179. 86  Sharpe, S. (2003). ‘An ASEAN Way to Security Cooperation in Southeast Asia?’, The Pacific Review 16(2): 232.

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the Universal Declaration of Human Rights.87 The ASEAN Declaration, however, also sets out collective rights to be protected, such as the right to development, and restrictions in the General Principles suggest that individual rights are subordinate to those of states.88 Therefore, the Declaration seems to remain largely in line with the shared norms of engagement in the organization. The engagement with ASEAN is significant because it provided China with a blueprint for interaction that was free from interference, which still brought benefits in terms of economic cooperation. The SCO largely emulates this type of interest-driven cooperation free from criticism89 and it is conceivable that the SCO configuration owes at least some of its features to China’s socialization by and learning through cooperation with ASEAN90 as its first prolonged multilateral regional engagement. The ASEAN framework has if nothing else, at least reassured multilateralism-shy China that it can have its cake and eat it too if it engages with similarly inclined states. The SCO The SCO is the case for a resistance strategy investigated, since China is one of the founding members. The organization started as the Shanghai Five, established in 1996 between China, Russia, Kyrgyzstan, Tajikistan and Kazakhstan who were cooperating on resolving border issues between each other, culminating in the signing of Treaty on Deepening Military Trust in Border Regions in 1996 and the Treaty on Reduction of Military Forces in Border Regions in 1997. In 2001, Uzbekistan joined and the organization was renamed the Shanghai Cooperation Organization. The core principles of the SCO are summarized in the SCO version of the ASEAN way, the Shanghai spirit, which espouses ‘mutual trust, mutual benefit, equality, consultation, respect for cultural diversity and pursuit of common development’.91 For the members is it is paramount to 87  Clarke, G. (2012). ‘The Evolving ASEAN Human Rights System: The ASEAN Human Rights Declaration of 2012’, Northwestern Journal of International Human Rights 11(1). 88  Ibid.: 22. 89  Aris, S. (2009). ‘A New Model for Asian Regionalism?’ Cambridge Review of International Affairs 22(3): 451–467. 90   Ba, A. (2006). ‘Who is Socializing Whom? Complex Engagement in Sino-ASEAN Relations’, The Pacific Review 19(2): 157–179. 91  Shanghai Cooperation Organization (SCO) (2012). Declaration of the Heads of State of the Member States of the Shanghai Cooperation Organization on Building a Region of Lasting Peace and Common Prosperity, http://www.sectsco.org/EN123/show.asp?id=442.

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‘respect each other’s right to choose ways of political, economic, social and cultural development’.92 However, where does the SCO stand on human rights? The term itself is mentioned in four SCO documents—the 2002 SCO Charter, the 2007 Treaty on Long-Term Good-Neighborliness, Friendship and Cooperation between the Member States of the SCO, the 2008 Dushanbe declaration and the 2012 Declaration of the Heads of State of the Member States of the SCO on Building a Region of Lasting Peace and Common Prosperity. These references besides being few are also far between, since there are five years between each of them. However, in all of these reference their advancement is delimited to promotion in ‘accordance with the international obligations of the member States and their national legislation’.93 The qualification of domestic legislation thus allows significant scope for loose interpretation and deviation from human rights standards. On the other hand, issues of eliminating poverty94 and rising living standards,95 and promoting development, closely associated with advancing economic, social and cultural rights are prominent. Mostly, they are implied in the text and are only sometimes explicitly mentioned, as for example in the 2012 Declaration’s pledge to protect ‘the social and economic rights and interests of citizens from other member states residing within their borders’.96 Therefore, when looking at the documents released by the SCO it quickly becomes visible that advancement of social, economic and cultural rights is a goal of the organization, while the language of civil and political rights is mostly eschewed. Yet, the terms ‘democracy’ and ‘electoral rights’ are used in interesting ways that will be elaborated on below.

92   S CO (2007). Treaty on Long-Term Good-Neighborliness, Friendship and Cooperation between the Member States of the Shanghai Cooperation Organization, http://www.sectsco .org/EN123/show.asp?id=71. 93   S CO (2002). Charter of the Shanghai Cooperation Organization, http://www.sectsco .org/EN123/show.asp?id=69; Also SCO, Treaty on Long-Term Good-Neighborliness; Also SCO (2008). Dushanbe Declaration of the Heads of the Member States of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=90. 94   S CO (2008). Dushanbe Declaration of the Heads of the Member States of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=90. 95   S CO (2011). Astana Declaration of the 10th Anniversary of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=294. 96   S CO (2012). Declaration of the Heads of State of the Member States of the Shanghai Cooperation Organization on Building a Region of Lasting Peace and Common Prosperity. http://www.sectsco.org/EN123/show.asp?id=442.

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A few notable developments can be gleaned from the more recent documents and initiatives, indicating that the leaders of the member states are becoming increasingly more ambitious about cooperating with each other. The SCO was initially established as a collective security community with focus on fighting non-traditional security threats, mainly ‘the three evil forces’ of separatism, extremism and terrorism.97 Later on the fight against transnational crime and drug trafficking was added to the priorities of the SCO.98 However, cooperation in other fields such as economic development, trade, transportation, health care and culture has also been picking up speed. A gradual deepening and widening of issues on which the states cooperate can be observed.99 New bodies have been established with specific tasks such as the SCO Interbank Consortium, the Business Council and working groups in different issue areas. The observer states now include Afghanistan, Iran, India, Pakistan and Mongolia. Turkey, Belarus and Sri Lanka are dialog partners. The SCO is increasingly represented on the international stage and is now an observer at the United Nations General Assembly. It has established relations with the EU, ASEAN, the Commonwealth of Independent States and the Organization of Islamic Cooperation. Besides the expansion of interactions, another development can be observed, which first began in 2007. Despite the usual dissociation with political and civil rights and strict principle of non-interference, an SCO mission was invited to observe a referendum in Kyrgyzstan.100 This became a somewhat regular practice, which continued in 2008 with elections monitored in Russia, in 2009 (Kazakhstan, Kyrgyzstan), 2010 (referendum and parliamentary elections in Kyrgyzstan). Some comments regarding the electoral legislation of the members was also put forth by these delegations. Expectedly, their assessments all affirm the democratic quality of both the respective legislation and the conduct of the elections. The electoral legislation of Russia were summarized in 2008 as conforming to ‘generally accepted international electoral standards and provides Russian citizens with the necessary legal preconditions for universal,

97  Aris, S. (2009). ‘The Shanghai Cooperation Organization: “Tackling the Three Evils”. A Regional Response to Non-traditional Security Challenges or an Anti-Western Bloc?’, Europe-Asia Studies 61(3). 98  Ibid. 99  Ibid. 100   S CO (2007). Chronicle of main events at SCO in 2007, http://www.sectsco.org/EN123/show .asp?id=97.

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equal, direct and free expression of the voters’ will by secret ballot’.101 The 2010 Kyrgyzstan referendum was summarized in the following way: ‘The organization of the referendum generally met the universally accepted standards and was better than expected, given the recent events in the country’.102 It is thus unlikely that this practice is in any way meant to advance social and political rights in SCO countries. The principle of non-interference still reigns supreme as the delegations are always invited and even in the case of Kyrgyzstan’s referendum on amending the constitution in a more democratic direction, no criticism was advanced despite Russian disapproval.103 Nevertheless, the practice shows another way through which member states are willing to use the organization to confer legitimacy on their domestic political dynamics. Also interesting is the way the term ‘democratic’ is used outside of the context of the observing delegations, which has been used to refer to a desired state of international relations since the setting up of the organization. The democratization of international relations is a recurring theme featuring amongst other in the 2007 Bishkek Declaration, the 2011 Astana Declaration, the 2012 Declaration on Building a Region of Lasting Peace and Common Prosperity.104 By appropriating the language of democratization (which is what the West wants to see happen in the members’ domestic polities) and applying it to the international realm indicates the critical stance of the members against Western powers’ pursuit of civil and political rights. The first reference appears in the 2002 SCO Charter, which speaks about multi-polarity in international relations.105 The idea resurfaces in the Declaration on the Fifth Anniversary of the Shanghai Cooperation Organization, in which the organization is referred to as a ‘good example of dialog among civilizations and an

101   S CO (2008). Chronicle of main events at SCO in 2008, http://www.sectsco.org/EN123/show .asp?id=66. 102   S CO (2010). Chronicle of main events at SCO in 2010, http://www.sectsco.org/EN123/show .asp?id=255. 103  Volkov, A. (2010). Russia Snubs New Kyrgyzstan Constitution, The Epoch Times, http:// www.theepochtimes.com/n2/world/russia-snubs-new-kyrgyzstan-constitution-38231 .html, accessed 28 January 2014. 104   S CO (2007). Bishkek Declaration of the Heads of the Member States of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=92. 105   S CO (2002). Charter of the Shanghai Cooperation Organization, http://www.sectsco .org/EN123/show.asp?id=69; Also SCO, Treaty on Long-Term Good-Neighborliness; also SCO (2008). Dushanbe Declaration of the Heads of the Member States of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=90, 27 December.

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active force for promoting democracy in international relations’.106 In the 2008 Dushanbe declaration the ‘overcoming (. . .) unipolarity’107 is emphasized. The Yekaterinburg Declaration108 and the Declaration of the Tenth Meeting of the Council of the Heads of the Member States109 reiterate the need for a ‘just world order’. Members are adamant that “models of social development should not be ‘exported’; differences in civilizations should be respected”.110 The stance of the members, particularly Russia and China, against unipolarity is well-known. Yet, its crystallization as one of the prominent goals of the organization is still significant as showing the growing consensus of the members. Seemingly, beneficial interaction within the SCO framework has enhanced its perceived utility and has opened the door towards the idea of the SCO as a vehicle through which the states can pursue at least some of their interests on the international stage. Indeed the members on numerous occasions have expressed their satisfaction with the ‘continued expansion of international relations of the SCO and growing authority of the Organization in the world as a whole’.111 The members of the organization share similar problems and benefit from interaction and cooperation free from unwanted interference or conditionality. Indeed the member states leaders have stated their satisfaction about the ‘similarity and convergence of approaches of SCO member states on relevant global and regional problems’.112 Thus the SCO is valued since the ‘solidarity it offers provides symbolic political legitimacy and equality to Central Asian regimes that struggle to assert this on the broader international stage’.113 These developments point to a significant degree of socialization. This makes sense not only from the point of view of pursuit of mutual interest but 106   S CO (2006). Declaration of the Fifth Anniversary of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=94. 107  Ibid. 108   S CO (2009). Yekaterinburg Declaration of the Heads of the Member States of the Shanghai Cooperation Organisation, http://www.sectsco.org/EN123/show.asp?id=87. 109   S CO (2010). Declaration of the Tenth Meeting of the Council of the Heads of the Member States of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show .asp?id=225. 110   S CO (2006). Declaration of the Fifth Anniversary of the Shanghai Cooperation Organization, http://www.sectsco.org/EN123/show.asp?id=94. 111   S CO (2013). Communique of Meeting of the Council of Ministers of Foreign Affairs of the SCO Member States, http://www.sectsco.org/EN123/show.asp?id=440. 112  Ibid. 113  Allison, R. (2008). ‘Virtual Regionalism, Regional Security and Regime Security in Central Asia’, Central Asian Survey 27(2): 196.

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also from the development of interpersonal relations. As Greenhill (2010) has noted, international organizations facilitate socialization by giving state leaders the opportunity to interact with each other on a regular basis. Such dynamics are likely to be even more prominent in organizations like the SCO, whose member states’ leaders stay in power much longer compared to their democratically elected counterparts. Since it is essentially the same people meeting every year, the possibility of them developing closer personal ties is higher. Looking at the development of the SCO, the organization seems to be growing in importance. The organization is China’s attempt to show that countries with ‘different civilizations and social systems can coexist in peace without democratizing domestic systems’.114 Its relative success has largely been overlooked because it lacks the institutional development of the organizations such as the EU. Yet, together with ASEAN, the SCO has shown that the shared norms need not be liberal in order to establish a lasting organization.115 China seems to appreciate the role of the SCO as evident in speeches of its leaders.116 Frameworks of engagement such as the ASEAN and the SCO have ‘become a model of state-to-state and regional cooperation in the 21st century’117 and can be seen as a statement on how China and the other members would like to be engaged in international relations. Strength in numbers is important on the international stage. Kazakhstan’s President Nursultan Nazarbaev’s assertion at the 2005 SCO summit that ‘the leaders of the states sitting at this negotiation table are representatives of half of humanity’118 is telling for the growing importance of the SCO.

114  Wang, J. (2007). ‘China and SCO: Towards a New Type of Interstate Relations’ in Wu, G. & Lansdowne, H. (eds.)., China Turns to Multilateralism: Foreign Policy and Regional Security, London, Routledge: 118. 115  Aris, S. (2009) ‘A New Model for Asian Regionalism?’ Cambridge Review of International Affairs 22(3): 451–467. 116  Wang, J. (2007). ‘China and SCO: Towards a New Type of Interstate Relations’ in Wu, G. & Lansdowne, H. (eds.)., China Turns to Multilateralism: Foreign Policy and Regional Security, London, Routledge. 117   S CO (2012). Declaration of the Heads of State of the Member States of the Shanghai Cooperation Organization on Building a Region of Lasting Peace and Common Prosperity, http://www.sectsco.org/EN123/show.asp?id=442, accessed 7 January 2014. 118  Ahmad, N. (2011). SCO Faces Real Challenges Ahead, European Dialog, http://eurodialog .org/SCO-faces-real-challenges-ahead, accessed 17 January 2014.

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Conclusion ‘Reading’ the response of the norm recipient thus can have far-reaching practical implications for the norm entrepreneur. The European Union’s pursuit of civil and political rights is hampered by both cultural and situational factors. Thus, in the case of China, there is evidence to suggest that both the substance of the norm as well as the engagement tactics of the norm entrepreneurs are being objected to. The EU’s good trade relations with China have proven insufficient to overcome these barriers. Rather, as the paper demonstrates, the insistence on genuine implementation of Western notions of civil and political rights might lead to a shift in Chinese international policy towards engaging more closely with less demanding partners. Resistance to norms is an underdeveloped area in norm research. However, it is just as important a part of the story of norms as successful internalization. It is essential to identify manifestations of such resistance in order to advance understanding of norms and because they can have significant practical consequences for foreign policy. The current paper advanced two such resistance strategies, which are by no means the only possible ones: the formation of a coherent counter-narrative and the formation of a group of likeminded actors. A coherent counter-narrative is an obvious and likely the most often used strategy for resistance but has not been theorized as such. The other strategy— formation of a group of like-minded actors—generally resembles collective action dynamics like oppositional groups of any kind on the domestic stage. Member states’ engagement in the SCO illustrates how the mechanism of resisting norm socialization through forming a group of like-minded actors works in practice. Through socialization in interaction setting free of conflict where also common benefits accrue to the members, they attach increasing value to the organization as representative of their shared values on the international stage. The type of engagement becomes even more attractive compared to the conditionality approaches used by Western norm entrepreneurs. Thus the model of interaction presented in the SCO becomes the standard that the members emphasize as most desirable for them.

Part 3 Security and Geopolitics

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CHAPTER 9

EU-Asia Security Cooperation: Security Cooperation Between the People’s Republic of China and the European Union Neil Duggan Introduction On 5 January 2012, the US Department of Defense launched a ten-year postIraq, post-Afghanistan defense strategy—‘Sustaining US Global Leadership: Priorities for 21st-Century Defense’. The document outlines a new focal point for America’s military and economic focus: Asia. The policy calls for a ‘necessary rebalance toward the Asia-Pacific region’1—that is, a strengthening of existing alliances and an increased US military presence in the region.2 The policy marks a shift in US security and economic policy away from Europe and toward the Asia-Pacific region. This realignment questions Europe’s role in global security—particularly in Asia and with Asian actors. Economically, the European Union (EU) is a key actor in Asia. The People’s Republic of China (PRC) is the EU’s second-largest trading partner after the United States. Overall, bilateral relations between the PRC and the EU have broadened and deepened since 2003, when the two actors established a strategic partnership. Sino-European economic interdependencies are constantly increasing, with goods and services worth well over €1 billion being traded between the partners every day (European Commission 2013). Since diplomatic relations were established in 1975, the relationship has broadened and become institutionalized. The bilateral relationship now encompasses more than 50 dialogs and three main pillars—namely, a high-level economic and trade dialog launched in 2007, a strategic dialog (2010), and a high-level people-to-people dialog (2012). Economic relations in the area of trade and investments have so far been the main driver of this development. The emergence of 1  U S Department of Defense (2012). Sustaining US Global leadership: Priorities for 21st Century Defense 2. 2  Bersick, S. & Duggan, N. (2013). ‘China’s Strategic Development in the Asia-Pacific: Challenges and Prospects’, in Huldt, B., Sivonen, P., Ries, T. & Huldt, C. (eds.), The Emerging Global Security Environment Strategic Yearbook 2012–13, Vasteras, Edita Vastra.

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a Sino-European axis in terms of economic cooperation has occurred. The PRC and the EU cooperate in global economic governance bodies such as the Basel Accord and the G20.3 However, an emerging axis in the field of global security governance is deemed highly unlikely and is presented as rhetoric.4 The presence of the EU’s arms embargo on China, conceptual gaps in human rights and sovereignty, and increasing levels of competition for natural resources are all barriers to the development of this axis. Yet both the PRC and the EU have attempted to increase their respective role in global security. China’s role has changed dramatically, though incrementally, over the past decade.5 China has attempted to develop the role of a responsible great power ( fù zérèn de dàguó, 负责人的大国). In line with this new role, China has increased its multilateral engagement—most notably, its part in the Iran nuclear case, its part in the six-party talks on North Korea, and its part in resolving the Darfur conflict.6 The EU’s role in global security governance has also evolved over the past decade. With the strengthening of the Common Foreign and Security Policy (CFSP), the EU has become more active in international security, developing a common role in security issues. The CFSP was designed to deal with the soft issues in security and, therefore, the EU has adopted a strong position in non-traditional security issues. But when the CFSP was supplemented in 1999 by the European Security and Defense Policy (ESDP—renamed in 2009 to the Common Security and Defense Policy (CSDP), the EU began to develop a role in conventional security issues. As both China and the EU have become more proactive actors in global security matters, the question of a possible axis between the two actors re-emerges. 3  Gottwald, J. & Schild, J. (2013). ‘Filling the Leadership Gap? The European Union, China and the G 20’, Paper presented at the UACES conference, Leeds, 2 September. 4  Biedermann, R. (2009). ‘The European Union and China in Security Relations-Already Strategic Partners?’, Journal of Asia-Pacific Studies, Vol. 7; Smith, M. (2012). ‘The EU’s Strategic Partnership with China The Rhetoric and Reality of Diplomacy in the New Great Power Politics’, Paper presented at the UACES Annual Conference, Passau, Germany 3–5 September. 5  Zhu Z. (2010). China’s New Diplomacy Rationale, Strategies and Significance, Weg Court East, Ashgate. 6  Horowitz, S. & Ye, M. (2006). ‘China’s Grand Strategy, the Korean Nuclear Crisis, and the SixParty Talks’, Pacific Focus 21(2): 45–79; Gottwald, J. & Duggan, N. (2011). ‘Hesitant Adaptation: China’s New Role in Global Policies’, in Maull, H.W. & Harnisch, S. (eds.), Role Theory in International Relations, London, Routledge; Pieper, M. (2013). ‘Competing visions of dealing with the Iranian Nuclear Program: Challenges for EU-Chinese political relations under New Leaderships’, Paper presented at the UACES Annual Conference, University of Leeds, 2–4 September.

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This chapter examines Sino-EU security cooperation in global security governance, which will be understood to be a collection of rules and norms created by global and regional bodies, allowing for collective action to resolve and/ or prevent traditional and non-traditional security issues.7 The paper will first outline the individual roles played by the EU and by China in global security governance. It will then analyze areas of cooperation between the two actors. The EU’s Role The EU’s role in global security governance is mixed. Seeking to play a more active role in global affairs, the EU has developed the CFSP and the CSDP. In many foreign policy and security issues—particularly softer security issues— the 28 EU member states have a powerful collective influence. However, some critics—including significant others, such as the United States, Russia and China—assert that, on the whole, the EU remains an economic power only and that its foreign and security policies have little global impact.8 Past institutional arrangements that developed to give the EU a security function have often failed to coordinate the EU’s full range of resources, most notably the conflict after the breakup of Yugoslavia (Dover 2005). The inherent difficulties of reaching a complete consensus among the member states and the conflicting global security role key members such as France and the United Kingdom play set limits on the EU’s external policies.9 The EU has conducted 30 operations under its CSDP.10 To develop a stronger CSDP that would have a greater impact in global security issues, EU member states have been attempting to increase their military capabilities and promote greater defense integration. Outside non-traditional security issues and

7  Bossong, R. (2008). ‘The action plan on combating terrorism: a flawed instrument of EU security governance’, Journal of Common Market Studies 46(1): 27–48; Erikson, E.O. (2011). ‘Governance between expertise and democracy: the case of European Security’, Journal of European Public Policy 18(8): 1169–1189. 8  Mix, S.E. (2013). The European Union: Foreign and Security Policy, Congressional Research Service; Fernandes, S. (2011). ‘European Security through EU-Russian Relations: Towards a New Multilateral Order?’, Journal of Contemporary European Research 7(2): 195–215. 9  Koenig, N. (2014). ‘Between conflict management and role conflict: the EU in the Libyan crisis’, European Security, 23(3): 250–269. 10   ‘Security and Defense—CSDP’, last modified 1 June 2014 http://www.eeas.europa .eu/csdp/

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civilian missions, these efforts have met with limited success thus far.11 Civilian missions and capabilities, however, are also central components of the CSDP.12 The majority of CSDP missions have been civilian operations in sectors such as police training and rule of law.13 The EU has been far more collective in soft areas of global security14 and has been a strong actor in the fields of trade, humanitarian aid, development assistance, and food and energy security using soft tools such as enlargement and neighbourhood policy to encourage peace within the region.15 This fits with the typology of the EU as a ‘civilian power’ during the Cold War16 or as a ‘normative actor’ in the 1990s17 or as a ‘Minervian Actor’.18 All these typologies have a common role: As outlined by Karen Smith ‘the EU still clearly prefers positive civilian to coercive military measures’.19 ‘The emphasis is on the panoply of civilian instruments that the EU, in contrast to, for example, the North Atlantic Treaty Organization (NATO), has at its disposal, and that puts it in the unique position of being able both to contribute to prevent conflict from erupting and to manage the aftermath of conflict.’20 It seems clear that in global security governance, the EU’s role is as a normative civilian power focusing on conflict prevention through its use of economic power within the system to prevent conflict from occurring 11  ‘A Strong Britain in an Age of Uncertainty’, last modified 22 June 2014, Strategy https:// www.gov.uk/government/uploads/system/uploads/attachment_data/file/61936/nationalsecurity-strategy.pdf. 12  Tonra, B. (2003). ‘Constructing the Common foreign and security policy: The utility of a Cognitive approach’, Journal of Common Market Studies 41: 731–756. 13  Ginsberg, R.H. & Penksa, S.E. (2012). The European Union in Global Security. The Politics of Impact, Basingstoke, Palgrave Macmillan. 14  Borja, L., Pohlmann, C., Katsioulis, C. & Liebert, F. (2009). European Union Security and Defense White Paper, Friedrich-Ebert-Stiftung. 15  The European Neighbourhood Policy seeks to deepen the EU’s relations with its southern and eastern neighbours while encouraging them to pursue governance and economic reforms. 16  Duchêne, F. (1972). ‘Europe’s Role in World Peace’, in Mayne, R. (ed.), Europe Tomorrow: Sixteen Europeans Look Ahead, London, Fontana. 17  Nathalie, T. (2008). ‘Who is a Normative Foreign Policy Actor?’ The European Union and its Global Partners center for European Policy Studies, http://aei.pitt.edu/32609/1/48._ Who_is_a_Normative_Foreign_Policy_Actor.pdf. 18  Manners, I. (2013). ‘The European Union as a Minervian Actor in Global Institution Building’, in Tiberghien, Y. (ed.), Leadership in Global Institution Building, Basingstoke, Palgrave Macmillan: 33–48. 19  Smith, K.E. (2003). European Union Foreign Policy in a Changing World, Cambridge, Cambridge University Press: 111. 20  Sjursen, H. (2006). ‘The EU as a ‘normative’ power: how can this be?’, Journal of European Public Policy 13(2): 237.

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or to reconstruct governance institutions after conflicts have been resolved. However, a number of EU member states have a long history of playing a major power role in global security—most notably France and the UK. These historical roles as great powers still have an influence on the overall role of the EU. Both the UK and France have played a strong role in global security over the past few decades. It is clear that they also plan to continue this role. In the UK’s 2010 National Security Strategy, for example, it is clear that the UK still sees itself as having a major role in international security: This strategy for maintaining British security and influence in the world is characterized by the new National Security Council. We will tie in the efforts of all government departments to address threats to our security and interests and to seek new opportunities for Britain. The National Security Council has reached a clear conclusion that Britain’s national interest requires us to reject any notion of the shrinkage of our influence.21 The historical self of France and the UK as great powers has a strong influence on the EU’s role in global security. The UK promotes its role as a great power within the framework of NATO, while France attempts to develop an independent EU role in security matters under the Petersberg tasks.22 Le Livre blanc sur la Défense et la Sécurité nationale (2013: 64) highlights this clearly: France shares with its European partners most threats and the risks it is confronted with: The most pragmatic approach to this problem is that we are more effective if we are able to face the problem together. That is why, as part of its national defense and security, France considers the development of a common European defense and security a priority. This is driven by the belief that a European response would be greater than the sum of national responses.23

21  ‘A Strong Britain in an Age of Uncertainty’, last modified 22 June 2014, Strategy https:// www.gov.uk/government/uploads/system/uploads/attachment_data/file/61936/nationalsecurity-strategy.pdf. 22  The Treaty of Lisbon (Article 42 of the TEU) complements the range of missions that may be carried out in the name of the European Union (EU). From now on, they cover humanitarian and rescue tasks; conflict prevention and peace-keeping tasks; tasks of combat forces in crisis management, including peace-making; joint disarmament operations; military advice and assistance tasks; post-conflict stabilization tasks. 23  ‘Direction de l’information légale et administrative’, last modified 22 June 2014, http:// www.gouvernement.fr/sites/default/files/fichiers_joints/livre-blanc-sur-la-defense-et-lasecurite-nationale_2013.pdf: 64.

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These contradictory paths to playing out their roles of great powers within a European framework prevent the EU from playing a role in harder security issues. Instead, the EU often plays a supporting role to NATO. Nicole Koenig highlighted this conflict of roles in the 2011 Libyan crisis, where differing views of the EU’s role in the crisis led to an inability of the EU to surpass civilian power, leaving the hard security role to NATO.24

China’s Role

Rather than a “rising”, the contemporary ascent of China can be better described as a “return” to the nation’s historical position as a leading political, cultural, economic and military power. However, in terms of global governance, China has adopted what Jing, Humphrey and Messner describe as a ‘low-profile approach’ to participation in global governance organizations.25 Employing this approach, China would only actively participate in setting the rules and guidelines of a given global governance organization when the body directly affected China’s domestic policy. When that was not the case, China would act as a bystander and refrain from interfering with the formation of rules and guidelines. One of the main reasons behind China’s low profile in global governance is that many of the bodies and organizations that compose the current system of global governance—such as the International Monetary Fund (IMF), the World Bank, the United Nations (UN) and the G8—were developed between 1944 and 1980 and have been dominated by Western actors. For much of this period, the People’s Republic of China was isolated from the international community and played little or no role in the rule- and agenda-setting of many of the key institutions of global governance. However, China’s rise and the 2008 global financial crisis has fuelled a new round of debates concerning the sustainability of transatlantic norms, ideas and institutions that have dominated global governance, including global security governance. China is often seen as a threat to global security and as an aggressive actor in Asia. This has given rise to the China threat theory, which states that China, as a rising power, will come into conflict with the US, the current hegemonic power. This conflict will result in the US and its allies attempting to prevent China’s rise within international relations. China’s Peaceful Rise (Zhōngguó hépíng juéqǐ, 24  Koenig, N. (2014). ‘Between conflict management and role conflict: the EU in the Libyan crisis’, European Security 23(3): 15–17. 25  Jing, G., Humphrey, J. & Messner, D. (2008). ‘Global Governance and Developing Countries: The Implication of the Rise of China’, World Development 36(2): 274–292.

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中国和平崛起) was a direct response to the China threat theory, which developed from the realist understanding of the balance of power theory. China’s Peaceful Rise, later given the title China’s Peaceful Development (Zhōngguó hépíng fāzhǎn, 中国和平发展), was an attempt to present a different view of China’s future role within international relations and to present China as a responsible great power (fù zérèn de dàguó), which works to maintain a stable global system. The development of both theories has sparked a debate over the future role China will play in international relations. Barry Buzan’s 2010 article26 and the subsequent debate between Buzan and Zhang Xiaoming about the nature of China’s rise set a broad narrative of China’s role in international relations between those who see China as a status quo state and those who see China’s role as a revisionist state.27 In terms of its role behaviour, China can be said to be playing both the role of an aggressive actor / revisionist state and of a responsible actor / status quo state, matching both China’s threat and China’s peaceful development theories. China’s policy in the South and East China Seas over disputed territories such as the Senkaku/Diaoyu Islands and the Spratly/Nansha Islands, as well as assertive behaviour in the Indian Ocean,28 is the behaviour of an aggressive actor. However, China’s increased involvement in areas such as UN peacekeeping, antiterrorist and non-traditional security areas, such as food security29 fulfil its responsible actor role. The fact that China plays both roles can be explained by the development of its historical self and by domestic expectations of China’s role in the world. Historically, China held a position at the center of a regional power structure referred to in the West as the ‘Tributary System’.30 Song Nianshen, who prefers the term zōngfān (宗藩), or hierarchy system, to Tributary System, highlighted that the system was far more than an interstate system; it was a multilateral and multi-layered system of international relations. According to Song, the state-to-state relationships within the Tributary System were ‘woven 26  Buzan, B. (2010). ‘China in International Society: Is ‘‘Peaceful Rise’’ Possible?’, The Chinese Journal of International Politics 3(1): 5–36. 27  Zhang, X. & Buzan, B. (2010). ‘Correspondence Debating China’s Peaceful Rise’, The Chinese Journal of International Politics 3: 447–460. 28  Bersick, S. & Duggan, N. (2013). ‘China’s Strategic Development in the Asia-Pacific: Challenges and Prospects’, in Huldt, B., Sivonen, P., Ries, T. & Huldt, C. (eds.) The Emerging Global Security Environment Strategic Yearbook 2012–13, Vasteras, Edita Vastra. 29   Duggan, N. (2014). ‘The Rise of China Within Global Governance’, in Dessein, B. (ed.), Interpreting China as a Regional and Global Power Nationalism and Historical Consciousness in World Politics, Basingstoke, Palgrave Macmillan: 256 . 30  The Tributary System was a system of state interactions in East and Southeast Asia that centered on the Chinese empire from 221 BC to the early 1800s.

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into a complex, multilevel power nexus composed of interconnections among multiple political, economic, ideological, and science and technological cores and peripheries’.31 This conception of China’s position at the centre of a complex, multilevel power nexus has a profound effect on China’s ontological understanding of its role within international relations and on states’ management of their interactions. It means that within the development of China’s contemporary role, the historical self conceptualizes China as a central power or ‘civilization-state’,32 pushing China toward creating a role that has a great power or central power foundation.33 This can be seen in a number of contemporary foreign policy documents, such as ‘China’s Peaceful Development, China-Japan-ROK Cooperation (1999–2012), China’s Foreign Aid, and Diaoyu Dao: An Inherent Territory of China’, all of which highlight China’s position as a historical major power. This historical position also links previous reincarnations of China with the contemporary state in terms of the territories that are understood to comprise China, and it creates a very strict understanding of the limits of those territories.34 The events of China’s period of semi-colonisation by Western powers (1839–1949), known as the ‘century of humiliation’ (bǎinián guóchǐ, 百年国耻) also has an influence on China’s current role in global governance. This contributed to the fall of the Qing empire and the rise to power of the Chinese Communist Party (CCP). After the foundation of the People’s Republic of China, the country played two roles in international 31  Song, N. (2012). ‘Tributary’ from a Multilateral and Multilayered Perspective’, The Chinese Journal of International Politics 5: 167. 32  Pye, L. (1990). ‘China: Erratic State, Frustrated Society’, Foreign Affairs, 69(4): 56–74. 33  Connolly, C. & Gottwald, J.C. (2013). ‘The Long Quest for an International Order with Chinese Characteristics: A Cultural Perspective on Modern China’s Foreign Policies’, Pacific Focus 18(2): 269–293; State Council ‘Zhōng Rì Hán hézuò (1999–2012)’ báipíshū (quánwén)《中日韩合作（1999–2012）》白皮书（全文）[‘Japan-Korea Cooperation (1999–2012)’ white paper (full text)] last modified 20 July 2011, http://www .gov.cn/jrzg/2012-05/09/content_2133457.htm State Council ‘Zhōngguó de duìwài yuánzhù’ báipíshū 《中国的对外援助》白皮书 [‘China’s foreign aid’ White Paper] last modified 20 July 2011, http://politics.people.com.cn/GB/1026/14450711.html, State Council, Zhōngguó de hépíng fāzhǎn 中国的和平发展 [China’s peaceful development], last modified 20 July 2011, http://big5.xinhuanet.com/gate/big5/news.xinhuanet. com/politics/2011-09/06/c_121982103.htm, State Council, ‘Diàoyúdǎo shì Zhōngguó de gùyǒu lǐngtǔ’ báipíshū (quánwén)《钓鱼岛是中国的固有领土》白皮书（全文）   [‘Diaoyu Islands are China’s inherent territory’ White Paper (full text)], last modified July 20th 2012, http://news.xinhuanet.com/2012-09/25/c_113202698.htm. 34  Schneider, J. (2014). ‘Early Chinese Nationalism: The Origins under Manchu Rule’, in Dessein, B. (ed.) Interpreting China as a Regional and Global Power Nationalism and Historical Consciousness in World Politics, Basingstoke, Palgrave Macmillan.

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relations—that of a new type of socialist great power and that of a developing great power.35 The century of humiliation helped to create an anti-imperialist, pro-developing–states role for China in the period after World War II. The colonial question, which concerned the peoples of Africa and Asia that convened in Bandung (Indonesia) in 1955, accelerated the PRC’s involvement with the developing world. The Bandung Conference laid the ideological and philosophical foundation for South-South Cooperation. ‘Following the Bandung Conference, China began to cultivate ties and offer economic, technical and military support to African countries and liberation movements in an effort to encourage wars of national liberation and revolution’.36 This can be seen as an attempt by the PRC to shed its historical victimhood of the semi-colonial period of Chinese history through the promotion of decolonization within Africa. This attempt continued through the 1950s, and by the early 1960s, the PRC had established relations with a number of left-leaning or radical states, such as Egypt and Algeria.37 The PRC supported most Third World liberation movements.38 A focus on the needs of the developing world is contained in China’s contemporary role in global security governance. Chinese pressure within the G20 to increase its focus on developing nations’ food security has already created some reforms within global food security governance.39 At the G20 meeting in Cannes in 2011, then president Hu Jintao called for food security, infrastructure, and tariff-free and quota-free treatment for the leastdeveloped countries. These issues have been the focus of the G20 consultations on development ever since. They are also the key areas in which China has been helping other developing countries within the framework of South-South cooperation.40 Hu emphasized that China would take greater responsibility in food security, and he identified that by the end of 2010, China had provided 35  Men, H. (2013). ‘Quánqiúhuà yǔ Zhōngguó rèntóng’ [‘Globalization and China’s identity’], http://news.hexun.com/2013‐07‐26/156515566.html, 26 July. 36  Domingos Jardo, M. (2004). ‘Africa and China’s Strategic Partnership’, African Security Review 13(1): 6. 37  Larkin, B.D. (1971). China and Africa 1949–1970: The foreign policy of the People’s Republic of China, Berkeley, University of California Press: 39. 38  Ness, P. van (1971). Revolution and Chinese Foreign Policy, Peking’s support for wars of national liberation, Berkeley, University of California Press. 39  Duggan, N. & Naarajärvi, T. (2012). ‘China’s Position Toward Global Food Security Governance’, paper presented ‘China and the G 20: Chinese Contributions to New Global Economic Governance’, Fudan University. 40  ‘Hu Jintao Addresses the G20 Summit on Financial Markets and the World Economy in Washington’, last modified 16 November 2008, http://www.fmprc.gov.cn/eng/wjdt/zyjh/ t522600.htm.

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4.3 billion yuan in food aid through bilateral channels to help African countries cope with severe drought and food crises. China has announced 533.2 million yuan in emergency food aid to the affected countries.41 Historical influence has created a role for China that often can be contradictory. While China is playing the role of an Asian great power within its region and defending its historical territory, it also plays the role of leader/defender of the developing world outside the Asian region, in line with its anti-imperialist, pro-developing–states role. For example, China does not cooperate with Japan in terms of security governance within Asia; however, it is willing to cooperate with other power actors, like Russia, in the Shanghai Cooperation Organization. Yet China does cooperate with Japan outside the Asian region, as in the case of maritime security cooperation in the Gulf of Aden. Chinese domestic security expectations also contribute to the contradictory role China plays in global security. As Peer Møller Christensen and Li Xing identified, several domestic phenomena have affected China’s international role, including growing domestic divisions in the understanding of security in China—such as nationalist, internationalist, realistic or liberal attitudes—as well as a growing importance of various interests stemming from political, economic and social spheres of society.42 Christensen and Li argue that China’s self-perception of its security situation domestically has both a conventional aspect (e.g. territorial integrity) as well as an unconventional aspect (e.g. nontraditional security, such as food and energy).43 The latter is backed by a 2012 survey on the Chinese public’s security perceptions, which identified that the top security concerns for the majority of Chinese are not economic and military threats from the outside but internal energy shortages.44 China’s role as an anti-imperialist, pro-developing–states actor is also present in Chinese discourse around China’s role in global security governance.45 As outlined by Nele Noesselt, in creating an international role, ‘the Chinese government is . . . faced with the difficult task of trying to balance domestic and global expectations, as 41  ‘Hu Jintao Addresses the G20 Summit on Financial Markets and the World Economy in Washington’, last modified 16 November 2008, http://www.fmprc.gov.cn/eng/wjdt/zyjh/ t522600.htm. 42  Christensen, P.M. & Li, X. (2013). ‘China’s Self-perception of Its Security Situation: The Nexus of the Internalities and Externalities’, Journal of China and International Relations 1(1): 26–45. 43  Ibid. 44  Jung, J. (2012). ‘Rising China and the Chinese Public’s Security Perceptions’, EAI Asia Security Initiative Working Paper, Korea University. 45  Zhao, K. (2010). ‘Zhōngguó juéqǐ yǔ duìwài zhànlüè tiáozhěng’ [‘China’s Rise and Its Foreign Strategic Readjustment’], Shèhuì kēxué.

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well as old and new role conceptions’.46 In terms of the creation of China’s role in the area of global security governance, it is clear that China’s role can differ greatly, depending on geographical location, the partners involved in governance and the type of security issues. However, China does attempt to play some form of great power role. China-EU Security Governance Cooperation China and the European Union are key trading partners, so China’s relationship with the EU as a collective actor is strategically important to China. Although China often plays a divide-and-rule game with EU member states, many scholars focus on China’s relationship with the more powerful members of the union, such as the United Kingdom, Germany and France.47 The EU itself is a significant other for the formation of China’s role conceptions, and, as the EU considers China to be a strategic partner, China is also a significant other in the formation of the EU’s role conception. Although the term ‘partnership’ was first used by the EU in 1998,48 it was just after the turn of the 21st century that the EU-China Strategic Partnership was seen as the development of a key relationship for both Europe and China.49 The EU-China Strategic Partnership, which is based on the 1985 EEC-China Trade and Cooperation Agreement, has grown to include foreign affairs, security matters and international challenges, such as climate change and global economy governance. The issues that the EU and China discuss during their regular meetings are organized into three pillars: political dialog, economic and sectoral dialog, and people-to-people dialog. There are annual summits, regular high-level dialogs and more than 50 sectoral dialogs on topics including security cooperation. Despite the presence of the security cooperation in the sectoral dialogs of the EU-China Strategic Partnership, it is unclear what each actor’s role expectation is of the other. 46  Noesselt, N. (2014). ‘China’s Multiple Role(s) in World Politics: Decrypting China’s North Korea Strategy’, GIGA Research Unit: Institute of Asian Studies GIGA Working Papers 243: 17. 47  Sandschneider, E. (2002). ‘China’s Diplomatic Relations with the States of Europe’, The China Quarterly 196: 33–44. 48  Commission of the European Communities (1998). ‘Building a Comprehensive Partnership with China, Communication of the Commission, COM 181, Brussels’, last modified March 1998, http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri¼COM:1998:0181:FIN: EN:PDF. 49  Shambaugh, D. (2004). ‘China Engages Asia: Reshaping the Regional Order’, International Security 29(3): 64–99.

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As highlighted by Stumbaum,50 for decades the EU considered China ‘ “just too far away and too weak” to matter to the Europeans in security aspects’, while today the EU considers China to be a key player in global security governance. For its part, China sees the EU as a peaceful power51 and an important part of the development of a multipolar world. Wang Yiwei, Professor at the School of International Studies, Renmin University, went as far as to state that ‘China and the EU are the two independent development models against globalization and Americanization’.52 However, there is a clear understanding that, as a security actor, the EU is a secondary significant other compared with the US and Russia in matters of traditional security and is expected to support the position of the US. In terms of non-traditional security matters, however, China sees the EU as a significant other. As outlined by Zhu Wenxia, in China, the EU concept of security has been seen to gradually shift from an emphasis on political and military security, sovereignty, and development to an emphasis on safety—the safety of human society and a comprehensive and integrated security.53 In terms of China’s security concept, in order to become a responsible great power, China must move toward more comprehensive, integrated security, and the EU is seen as a key partner in that shift. As China does not see the EU as having a strong military role in Asia, it is, therefore, not seen as a threat to China’s national cores interests.54 China’s expectation of the EU’s role in global security can be clearly seen in the 2014 China’s Policy Paper 50  Stumbaum, M.U. (2011). ‘Europe’s view on China’s role in International security’, in Putten, F. van der & Chu, S. (eds.), China, Europe and International Security: Interest, roles and prospects, London, Routledge: 15. 51  Zhang, Y. (2011). ‘China’s views on Europe’s role in International security’, in Putten, F. van der & Chu, S. (eds.) China, Europe and International Security: Interest, roles and prospects, London, Routledge: 15. China, Europe and International Security: Interest, roles and prospects, London, Routledge: 24. 52  News China (2014). ‘Zhōng’ōu hézuò yǒu sān dà shǐmìng Zhōngguó mèng yǔ Ōuzhōu mèng gòng cù shìjiè mèng 中欧合作有三大使命中国梦与欧洲梦共促世界梦’ [‘China-EU cooperation has three main missions of promoting European dream a dream and the dream world’], last modified 3 January 2014, http://news.china.com.cn/world/2014-03/24/ content_31879160.htm. 53  Zhu, W. (2007). ‘Shìjì zhī jiāo de Zhōng’ōu guānxì——jiān lùn Zhōng’Ōu ānquán guān 世纪之交的中欧关系—兼论中欧安全观’ [‘Turn of the Century China-EU relations—Also on the Central European Security Concept’], Shanghai Academy of Social Sciences, Research Center for European Studies, Working paper, http://www.escsass.org .cn/cn/show.asp?id=488. 54  ‘Shìjì zhī jiāo de Zhōng’ōu guānxì——jiān lùn Zhōng’Ōu ānquán guān 世纪之交的中 欧关系—兼论中欧安全观’ [‘Turn of the Century China-EU relations—Also on the Central European Security Concept’].

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on the EU, which focuses on non-traditional security matters like water and energy security rather than more traditional security issues like nuclear arms talks with Iran and North Korea.55 The EU’s role expectation of China is that it becomes a more responsible global power. José Manuel Barroso, president of the European Commission, stated: With global power comes global responsibility, and we want China to be part of the solution in addressing some of the pressing issues facing the international community from climate change to cyber-security, and we have decided in fact to set up also our cooperation in the G20 where we are working together to address global challenges of the great interest for the global economy.56 This is also the case for global security governance, where the EU expects China to play a greater role in dealing with many of the world’s security issues. It is clear that the EU sees itself as a partner for China in global security governance. Catherine Ashton, high representative of the European Union for Foreign Affairs and Security Policy, has outlined that the EU is willing to strengthen pragmatic cooperation with China in high-level dialog, antipiracy, peacekeeping, international and regional security,57 and the ‘Guidelines on the EU’s Foreign and Security Policy in East Asia’ also clearly sees China as a partner in global security, as well as regional security, in Asia.58 The EU has also engaged with China in the Iranian nuclear proliferation issue, as well as the conflict in Libya59 and the ongoing conflict in Syria, but success has been limited. In the area of Sino-EU security cooperation, the EU sees China as a rising power that needs to be engaged and encouraged to become a responsible power, helping

55   ‘China’s Policy Paper on the EU: Deepen the China-EU Comprehensive Strategic Partnership for Mutual Benefit and Win-win Cooperation’, last modified 22 June 2014, http://www.fmprc.gov.cn/mfa_eng/wjdt_665385/wjzcs/t1143406.shtml. 56  ‘The EU and China: A Crucial Partnership’ last modified 14 February 2012, available at http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/12/95. 57  ‘Chinese Defense Minister meets with EU foreign policy chief (MOD)’, last modified 28 April 2013, http://eng.mod.gov.cn/TopNews/2013-04/28/content_4445415.htm. 58  ‘Guidelines on the EU’s Foreign and Security Policy in East Asia’, last modified 22 April 2012, http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressdata/en/ misc/97842.pdf. 59  ‘Nos Partenaires Chinois Réagissent Beaucoup à la Pression’, last modified 1 June 2010, http://www.euractiv.fr/institutions/interview/francois-godement-partenaires-chinoisreagissent-pression-13676.html.

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to maintain the current system of international relations. Socialising China within that system is part of the EU’s role as a normative power.60 Conclusion Historically, both China and Europe have played major roles in determining global security and have helped develop the current system of global security governance. Europe has a major role in global affairs and particular security issues are clearly part of the EU’s self-identity. This can been seen by the development of the CSDP but also by role behaviour such as the formation of an EU mission in the Gulf of Aden outside the umbrella of NATO. This is a result of the EU meeting its domestic expectations to play a greater role in security affairs. This expectation has developed from Europe’s historical role as a major power in global security affairs. However, in terms of security governance, the EU is a normative actor. This is due to the internal role conflict that prevents the EU from moving beyond its function as a civilian power and to the fact that external powers view the EU’s role as acting within the realm of non-traditional security issues. In terms of Sino-EU security cooperation, it is clear that China sees the EU as an important actor but considers its role as one of a non-traditional security actor. While actors such as the US and Russia are perceived by China as having a traditional security role. China is attempting to play the role of a responsible great power in global security governance. This can be seen by its increased activity, in particular in global security responses. This chapter follows Stumbaum’s conclusion that areas of possible cooperation between China and the EU are limited to terrorism, proliferation of weapons of mass destruction, instabilities, regional conflicts and failing states, organized crime, environmental issues, pandemics, and securing resources.61 However, it also adds an extra geographic dimension, arguing that cooperation can only occur outside each actor’s geographic neighbourhood and that of their key significant other (the US).

60  Odgaard, L. & Biscop, S. (2008). ‘The EU and China: Partners in Effective Multilateralism?’ in Kerr, D. & Liu, F. (eds.), The International Politics of EU-China Relations, Oxford, Oxford University Press: 54–78. 61  Stumbaum, M.U. (2007). ‘Opportunities and Limits of EU-China Security Cooperation’, The International Spectator 42(3): 351–370.

CHAPTER 10

Taking or Avoiding the Path to China-US Rivalry: European Perspectives and Responses David Kerr Introduction This essay is organized in two parts. It first considers the problem of an emerging rivalry between China and America in the Asia-Pacific region. It rejects the assumptions of some analysts that China and America are already rivals by pointing to some significant restrictions impeding the path to rivalry between the two powers. However, it argues that historically rivalries have often developed between great powers unintentionally and inadvertently because strategic change is a structural relationship that great powers have not always been able to control, even when they may have wished to. In these instances rivalries emerged despite intentions and because of inadvertent consequences such as impacts on third parties. Despite Chinese claims to have achieved US understanding of the need for a ‘new kind of great power relations’ between the two states the path to rivalry still exists as demonstrated in clear and persistent strategic mistrust. This problem of a structural relationship that may result in rivalry is not only a regional issue but a global issue because of the high degree of interdependence of other regions with Asia in strategic and other terms. The second part of the essay therefore considers European perceptions of the future of China-US relations and how an independent European position on the problem of China-America rivalry might be fashioned.

China-America Relations and the Problem of Rivalry

The complexities of the Asia-Pacific region (APR) defy easy categorization: interactions between state power and social power, between political change and social, economic, and technological change, and between national security and human security, are complex and dynamic. The paradox of the APR is that despite this dynamism the strategic structures of the region show significant degrees of continuity between the past and the present. Strategic Asia exited the bipolar Cold War system with four characteristics: the region was © koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_011

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organized as a hierarchy with great powers, middle powers and smaller powers exerting variable influence on regional structures, some promoting change, some defending the status quo; the predominant relationship between the great powers was a balance of power system, with balance of threat confined to two relationships—India-Pakistan and DPRK-ROK; US hegemony was significant in strategic and economic terms but was most influential for those within the US alliance system—US ability to shape regional relations was politically and geopolitically limited outside the alliance system; finally, regional multilateralism was a middle and small power project constrained by the interaction of the preceding characteristics—hierarchy, great power balancing, and hegemonic management. This hybrid strategic structure has evolved without changing its fundamental character, so the core questions about strategic change are about how these primary structures are changing in relation to one another: What is happening to regional hierarchy—is the region returning to a new form of Sinocentrism? Great power balancing is intensifying— what will happen to Japan-China-India relations in the next 20 years and how will outlying powers like Russia or Australia intervene to shape this balance? Is American hegemonic management durable—or in decline? Can nominal regionalism be developed so that it offers some prospect of governance around international or human security? It is wrong to reduce this complex regional architecture to any one bilateral relationship but China-America relations are important because they contain some of the answers to each of the preceding questions—the possibilities and limits of a new Sinocentrism, the future of great power balancing, the durability of the American alliance, and the prospects of regional multilateralism will be significantly shaped by the future of China-America relations. Moreover the outcome to these questions will have significance far beyond Asia given high degrees of interdependence between Asia and other countries and regions of the world. There is then a great deal of discussion in America and China about the future of their relationship and its wider impact, but this debate is becoming a global discussion also given the significance of the bilateral relationship to the future of Asia and its relations with the rest of the world. Stephen Walt of Harvard University has said that one of the five big questions we should be asking about the coming decades is whether China will continue to tolerate American military predominance in Asia or whether it will take sustained efforts to match American power with the ultimate aim of forcing the US out of the region. Walt argues: The current situation is clearly anomalous. Historically, it is somewhat unusual for one great power to have a tight set of alliances in the

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immediate neighborhood of another great power and to maintain a lot of military force in its vicinity, without the other power having a compensating presence in close proximity to its rival.1 Though some analysts have claimed that China and US are already rivals it is important to use accurate terminology.2 For example, Chinese analysts characterize the current position as an oppositional relationship (duìshǒu, 对手) but not an adversarial relationship (díshǒu, 敌手) thus correctly differentiating between opponents and enemies.3 This reflects the recognition that there are some significant factors restricting the path to rivalry. First, strategic rivalries develop because one state cannot exercise its strategic interests and strategic values because another power’s interests and values impede it. China and America are not yet in this position—they can each exercise their existing strategic capacities and interests without directly challenging or impeding the other. The only exception to this is Taiwan. The second factor is regionalization and globalization. When rivalries emerge often the concerned parties feel that strategic space is closing—their ability to protect or advance strategic interests is lessening because geopolitical space is becoming scarce. Despite widespread strategic and technological modernization the Asia-Pacific remains a very large region and America and China are a long way from running out of geopolitical space in which to advance and defend their interests, though it is important to note that presently geopolitical frictions between the two are undoubtedly rising. The final factor is interdependence in institutions. All previous great power rivalries have seen intensive contests about international institutions— rising and established powers contested how international institutions should be employed and even the value of such institutions. But China has achieved 1  Walt, S. (2013). ‘How Long Will China Tolerate America’s Role in Asia?’ Foreign Policy, 2 December. 2  Discussion of the prospects for China-US rivalry in Friedberg, A.L. (2005). ‘The Future of US-China Relations: is conflict inevitable?’, International Security 30(2): 7–45; Layne, C. (2012). ‘This Time It’s Real: The End of Unipolarity and the Pax Americana’, International Studies Quarterly 56: 203–213; Mazarr, M.J. (2012), ‘Rivalry’s New Face’, Survival: Global Politics and Strategy 54(4): 83–106; Tellis, A.J. (2013). ‘Balancing without Containment: A US Strategy for Confronting China’s Rise’, The Washington Quarterly 36(4): 109–124. 3  For example, Yan, X. (2010). ‘Duì Zhōng-Měi guānxì bù wěndìngxìng de fēnxī 对中美关系不 稳定的分析’ [‘Analysis of the instability in China-US relations’], World Economy and Politics 12: 4–30; Yuan, P. (2012). ‘Guānyú gòujiàn Zhōng-Měi xīnxìng dàguó guānxì de zhànlüè sīkǎo 关于构建中美新型大国关系的战略思考’ [‘Considerations on the strategy of building a China-US new kind of great power relationship’], Contemporary International Relations 5: 1–8.

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its remarkable rise within the fabric of international institutions that America created and helped to sustain in the post-war world. Some Chinese analysts have begun talking about a post-Americanized world order4 but others have pointed out that a post-American system might well see the retreat of the very institutions that China needs to complete the task of national rejuvenation set out by the current leadership.5 Therefore China cannot afford a rivalry that would see it excluded from these institutions or the institutions themselves harmed. Due to these restrictions in the path to rivalry both leaderships seem to be willing to explore new ways of defining their relationship. Chinese officials have since 2012 advanced the idea of a ‘new kind of great power relations’ so that the two sides will ‘through creative thinking and concrete steps, prove that the traditional belief that big powers are bound to enter into confrontation and conflicts is wrong’ as President Hu Jintao stated it at the opening of the 2012 Strategic and Economic Dialogue.6 The Chinese believe that they achieved American agreement on the new terminology at the Xi-Obama summit in California in June 2013. Speaking in Washington in September 2013 Foreign Minister Wang Yi said: This year has been of great significance for China-US relations. In June, the two heads of state successfully held a historic meeting at the California Annenberg estate. The most important outcome was that the two sides agreed by mutual consent to build a new type of major power relations between China and America. The strategic, constructive and pioneering nature of this important consensus has directed the orientation, and opened the way, to the future of Sino-US relations, and will inevitably also have a positive and profound influence on the evolution of the international structure of the Asia Pacific region.7 4  Xinhua ‘Commentary: US fiscal failure warrants a de-Americanized world’ 13 October 2013, at http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm. 5  See the discussion in Zhang, X. (2014). ‘China Dream: a new Chinese Way in international society?’ in Kerr, D. (ed.), China’s Many Dreams: comparative perspectives on China search for national rejuvenation, London, Palgrave Macmillan: 226–245. 6  ‘President Hu: China, US should break traditional belief of big powers’ conflicts’, Xinhua, 3 May 2012. http://news.xinhuanet.com/english/china/2012-05/03/c_1315. 7  ‘Rúhé gòujiàn Zhōng-Měi xīnxìng dàguó guānxì—Wáng Yì Wàizhǎng zài Bùlǔjīnsī xuéhuì de yǎnjiǎng 如何构建中美新型大国关系—王毅在布鲁金斯学会的演讲’ [‘How to establish China-America new kind of major power relations—speech of Foreign Minister Wang Yi at the Brookings Institute’], 20 September 2013, http://www.fmprc.gov.cn/mfa_chn/ zyxw_602251/t1078765.shtml.

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As this suggests, the Chinese see the new kind of great power China-America relationship as having considerable significance not just in bilateral terms but in reaching mutual accommodation and potential diplomatic coordination in the Asia-Pacific. If the Chinese are confident that they can create and manage this new kind of relationship what then are the reasons for believing that the path to rivalry is still there? The reasons are two-fold—intentionality and inadvertence. The Chinese believe very much in great power responsibility and they assert that if both China and the US behave responsibly they can avoid rivalry.8 But this overstates the control that great powers have over strategic change. The Cold war rivalry was unusual in that the Soviet Union and America took decisions that promoted—or indeed actively sought—rivalry; historically most rivalries have been unintentional, not sought. The obvious case is Europe between 1880 and 1914. At the beginning of that era the major powers had operated a reasonably stable balance of power system —the Concert of Europe—for six decades but by the first decade of the 20th century they were moving from a balance of power system to a balance of threat system indicated by emergence of cross-cutting alliances. From there they moved to an interlocking mobilization system so that if any pair of them were at war the others were at war also. Most of the decisions that were taken for rivalry and then for war were taken in spite of states’ intentions not because of them. As this suggests, strategic logic has a structural character that exceeds the capacity of any state or even several states to repress it. To this problem of non-intentional change must be added the issue of inadvertence, which is often seen in the impact on third parties. For example, what are Asian regional leaderships to make of the claim above by Foreign Minister Wang that the US-China consensus will have profound influence on the international structure of the APR? As China reaches for parity with America what are regional states such as Japan, India, Vietnam or Indonesia, to make of this? To use Japan as an example, there is no point pretending any longer that Japan is not in a security dilemma with China—it is. From the Chinese perspective Japanese attempts to break out of the constraints that the post-war settlement imposed on Japan is driven by ideology—by Japanese revisionism. But from the Japanese perspective China’s attempts at regional parity with the US have the ultimate ambition of weakening the alliance system and re-establishing a Sinocentric East Asia. Change has already reached the point where Japan has to respond. Therefore 8  This is called ‘avoiding the Thucydides trap’; see for example, ‘The Most Powerful Leader in the World: a conversation with Chinese President Xi Jinping’, at: http://berggruen.org/ topics/a-conversation-with-president-xi-at-big-s-understanding-china-conference.

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China is already exerting great pressure on the strategic structure in Asia even though this is not its intention—China is inadvertently driving responses from others. This in turn forces America to look to regional relationships with Japan, India and others, within the alliance system but more generally under the terms of the ‘pivot’. The US re-balancing to Asia is not a China containment strategy as yet; it is more an attempt to contain the pressures driving the balance of power dynamics across the region. Yet since China is the primary driver of change to the Asian strategic balance, containing strategic pressures means dealing with the intended and unintended consequences of China’s strategic transformation. From the United States’ perspective the major issue of concern with China’s strategic shift is the element of uncertainty it introduces into the region. Quadrennial Defense Review (QDR) 2014 notes: The Asia-Pacific region is increasingly central to global commerce, politics, and security. Defense spending in this region continues to rise. As nations in the region continue to develop their military and security capabilities, there is greater risk that tensions over long-standing sovereignty disputes or claims to natural resources will spur disruptive competition or erupt into conflict, reversing the trends of rising regional peace, stability, and prosperity. In particular, the rapid pace and comprehensive scope of China’s military modernization continues, combined with a relative lack of transparency and openness from China’s leaders regarding both military capabilities and intentions.9 As this suggests, the United States is focused on the present and future purposes of China’s strategic transformation. Until the United States has a clearer understanding of Chinese intentions vis-à-vis the United States and its allies and partners across the region it is unlikely to view Chinese impact on the strategic balance in Asia as positive. Conversely, Chinese statements reveal Chinese concerns with the objectives of the US rebalance. China’s new Ambassador to America, Cui Tiankai, co-authored a paper with a Foreign Ministry colleague which asserted: ‘China has no intention to challenge the US standing, still less to compete with it for hegemony. It does not square with the facts to think that China intends to challenge the American international standing.’10 Instead it pointed to Chinese concerns about US intentions: 9  Quadrennial Defense Review (2014), Washington, D.C., Department of Defense: 4. 10  Cui, T. & Pang, H. (2012). ‘China-US Relations in China’s Overall Diplomacy in the New Era—On China and US Working Together to Build a New-Type Relationship Between

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In the course of returning to the Asia-Pacific, the United States has been vigorously strengthening its alliance system, advancing the anti-ballistic missile system in the Asia-Pacific, pursuing ‘sea-air battle’ and intervening in the disputes between China and its neighbors. What is the true motive behind all these moves? What signals do they want to send to China and the region? All these have not only made China raise doubts, but also have upset other countries in the region. The United States must face the issue and convince China, other countries in the region, and the international community, that there is no gap between its policy statements on China and its true intentions.11 This then is the problem with the Chinese discourse of new kind of great power relations—it does not effectively address the immediate issue of strategic distrust between the two major powers, which is driven by problems of transparency and intentionality; and it does not recognize the fact that China’s movement towards closing the strategic gap with the United States has the inadvertent effect of causing third parties in China’s immediate vicinity to have concern with the Asian strategic balance and to adjust their own postures and relationships accordingly. It is for these reasons that the China-US relationship stands at a point of balance between avoiding or taking the path towards rivalry. It is important not to ignore the restrictions on China-US rivalry—they do not as yet greatly impede each other strategically; geopolitically the Asia-Pacific region remains quite open; and China needs to retain coexistence with America within international institutions. But it is equally important not to underestimate the consequences of unintentional and inadvertent change in US-China strategic relations and its impact on the wider region. Moreover, because of its significance the US-China relationship has become a global issue. It is already one of the major factors shaping AsiaPacific relations but given the advance of Asia-centrality in global affairs the trajectory of US-China relations will increasingly assume global significance. Other countries and regions need to understand this relationship but given their interdependence with change in the Asia-Pacific they need also to consider whether they have any possibility of shaping the relationship. The remainder of this essay looks at European perspectives on the future of the

Major Countries’, http://www.fmprc.gov.cn/eng/wjb/zzjg/bmdyzs/xwlb/t953682.htm, 20 July. 11  Ibid.

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US-China relationship, including ideas about how it might want to shape the relationship—if it was able to.

European Perspectives and Responses

For Europe the changes to the strategic balance in Asia will prove very significant. The Atlantic community has been the dominant strategic center of world affairs for more than a century but it has now lost this position. The US rebalance to Asia expresses and reinforces a diplomatic and security shift from West to East—Asian capitalism, democracy, technologies, and security will occupy the places that Europe held in the 20th century. Of the many adjustments that Europeans will have to make one of the most difficult to deal with will be the shift in strategic modernization. For most of the last 100 years strategic modernization was a predominantly European phenomenon—the only exceptions being America and Japan. Now strategic modernization is predominantly Asian and will likely stay so for several generations. Moreover given the change in the nature of weapons systems Europe will be even more interdependent with the consequences of Asian strategic modernization than Asia was with European strategic change. Europe has been relatively slow to recognize and respond to these developments given divided priorities between internal and external challenges and between neighborhood policies and global level policies. More recently there has been an increased engagement of Asia in what some scholars have seen as an incremental or soft pivot towards Asia.12 The immediate challenges for Europe in Asia are matching its limited resources to specific objectives. This would suggest three broad responses: i) Lacking strategic capacity Europe develops those capacities that it does have and intervenes where possible to match non-strategic means to strategic ends; ii) Europe develops partnerships in Asia and combines European assets with regional partner assets. Note that Campbell and Ratner are talking about US ‘pivot partners’.13 Who are the European ‘pivot partners’: are they the same as the US, different to the US, or should 12  For example Casarini, N. (2013). ‘The European “pivot” ’, European Institute of Security Studies, Issues Alert. 13  Campbell, K.M. & Ratner, E. (2014). ‘Far Eastern Promises: Why Washington Should Focus on Asia’, Foreign Affairs.

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we resist the temptations of geopolitics and take an independent stance—no preferred partners, only issues? iii) Europe places long-term confidence in developing regional and inter-regional institutions in spite of the fact that these are presently the weakest facet of regional security. Europe’s current thinking seems to combine some elements of each of these, yet each contains certain doubts and controversies. This is evident if we examine the most detailed document to date on European strategy—the Guidelines on the EU’s Foreign and Security Policy in East Asia released June 2012.14 The notable characteristics of this document are: – The perspective on East Asia in the document is often global-level down in terms policy areas, institutional connections, and potentials and risks. This would contrast with analysis conducted from the region which tends to take a ground-level up approach; – Europe’s interests in the region are much more clearly detailed than its responses: out of a document of 32 paragraphs Europe’s interests are allotted 10 paragraphs, while European responses are allotted only 4; – The range of responses remains quite narrow and could be defined as dialog, institution-building, and what might be termed progressive mercantilism. Thus in a key section the paper notes: The EU’s essential interests are thus closely tied up with the security of East Asia, and with the foreign and security policies of the region’s main players. The EU’s economic presence in the region, and its unique experience of post-war reconciliation and political and economic integration, position it well to play an important role in helping to bolster regional security.15 There seem to be two issues with this approach. Firstly, the fact that European experiences of reconciliation and integration are unique clearly points to the difficulties Asian will have in following that experience: many Asians might want to take the European route to historical reconciliation and institutional integration, the problem remains how they are supposed to find that path. Second, Europe is welcome as a dialogue partner in Asia bilaterally and 14  Council of the European Union (2012). ‘Guidelines on the EU’s Foreign and Security Policy in East Asia’, Brussels, June. 15  Ibid.: 8.

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multilaterally but nearly all dialogue outcomes require resource commitments; and this raises the question of how much and what kind of resources Europe is willing to commit. In the 2012 Guidelines and in many related commentaries it is assumed that Europe’s position as major commercial actor, covering not only trade, but investments, technology and knowledge exchanges, give it a particular influence in Asian affairs. This stance can be called progressive mercantilism. Traditional—or regressive—mercantilism advocated the utilization and regulation of foreign trade in the interests of national wealth and power and was invariably zero-sum in that any gains for one state were assumed to be a loss for another state. Europe clearly still believes in mercantilism but now dresses it in positive sum gains across regions. There may be some economic questions to be asked about this strategy; but the most important issue is whether—or to what extent—it meets the objective of matching non-strategic means to strategic ends: just how much strategic influence does European commercial power deliver? This problem of matching non-strategic means to strategic ends, and the quantity and effectiveness of resourcing of these means, is not confined to Europe. In April 2014 the Committee on Foreign Relations of the United States Senate released a report entitled ‘Re-balancing the Rebalance: resourcing US Diplomatic Strategy in the Asia-Pacific Region’, which questioned the relative distribution of resources for the rebalance between the military and the nonmilitary aspects of the strategy.16 The report noted: The United States has successfully moved forward with the initial phases of implementing the military aspects of the rebalance. But given the broader strategic and policy goals, it is essential that the non-military elements also move forward with equal speed and weight. An ‘unbalanced’ or under-resourced approach to the rebalance threatens to undermine the goals of the policy and, consequently, the prospects for greater prosperity and security in both the Asia-Pacific region and the United States.17 So it may be that all external powers find their resources constrained and their strategies of engagement restricted by the imbalance between limited resources domestically and the scale and complexity of the APR as a region.

16  ‘Re-balancing the Rebalance: resourcing US Diplomatic Strategy in the Asia-Pacific Region’, Committee on Foreign Relations of the United States Senate, Washington DC, 17 April 2014. 17  Ibid.: 1.

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Europe between America and China It is not necessary to be entirely pessimistic about Europe’s strategy in Asia: the case of the Iran nuclear settlement reached in the Joint Action Plan agreed in Geneva on 24 November 2013 is a good example of Europe’s successful participation in a commercially-based sanctions regime culminating in a multiparty settlement—though it also very important to note the specific political and geopolitical contexts that permitted the settlement.18 Across Asia as a whole the opportunities to duplicate this process may be quite limited, not least because of the complex strategic structures of the region. The trajectory of US-China relations indicates this fundamental problem. Europe may be in a better position than any other international actor to influence this relationship—it has excellent relations with the US and pragmatic and beneficial relations with China. It is noticeable that all other major actors that might have influence on the relationship—the obvious examples are Japan and Russia— are compromised in some way, and actually make US-China relations more complicated not less. Yet Europe as a whole has conducted very little debate or analysis about what is happening in US-China relations outside the primary processes that reflect European interests: rebalancing the global economy and managing the consequences for NATO of changing US strategic priorities.19 In these two areas there has been some debate; but on the wider problem of how Europe might want to influence China-US relations there seems to have been limited discussion—at least publicly. Part of the problem with this stance is that it leaves up to China or America how they wish to deploy the European factor. Here we see an asymmetrical development in which Europe’s position has tended to lose prominence in Chinese strategy but gain some in America’s. From the Chinese side we can consider how or if Europe fits into the Chinese vision of ‘new kinds of major power relations’. A traditional Chinese statement of its diplomacy is: ‘great powers are the key; the neighborhood is the priority; developing countries are fundamental; the main arena is multilateral’.20 While these remain constant each Chinese leadership interprets their relative merit depending on circumstance and individual inclinations. Under Xi Jinping great power diplomacy and neighborhood relations have seen resumed importance, 18  Discussion of China-Europe security interactions including the Iran case in Kerr, D. & Xu, Y. (2014). ‘Europe, China and security governance: is there evidence of normative convergence?’, Asia Europe Journal (12): 79–93. 19  For example Shea, J. (2013). ‘NATO and the US Pivot to Asia: To Follow or Not to Follow?’ German Marshall Fund, Transatlantic Security Task Force Series. 20  ‘Dàguó shì guānjiàn, zhōubiān shì shǒuyào, fāzhǎn zhōng guójiā jīchǔ, duōbiān shì zhòngyào wǔtái, 大国是关键, 周边是首要, 发展中国家基础, 多边是重要舞台’.

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precisely because of awareness of changing relations between China and major states and certain contradictions in China’s neighborhood relations.21 The problem for Europe-China relations is that it has never been possible to say clearly how Europe fitted into this Chinese view of strategy and geopolitics. Some Chinese analysis will refer to Europe as being one of the major powers, but most do not. In an interview with the Foreign Affairs Ambassador Cui Tiankai, when asked about China’s ambition for reform of the international system, he pointed to the significance of the G-20: For the last few years, we’ve had the G-20. This mechanism is quite new. It’s different from the G-7 or the G-8. The G-20 has all the existing powers and also countries like India, Brazil, South Africa, Russia. China is also a member of the G-20, and we are playing a very important role in it. For the first time in history, these countries are sitting together around the same table as equals and discussing major international financial and economic issues. This is the kind of change we want to have.22 Though Europe is not mentioned it is clearly important in new governance mechanisms like G-20 so when global governance issues are debated China would expect Europe to be present. This points to China’s ambitions to have a global concert of powers depending on specific issues and as a supporting mechanism to the UN system. At the same time Xi Jinping chose to make his first international visit as President in March 2013 to Russia and was reported as making these comments in a speech at the Moscow State Institute for International Relations—the training institute for Russian diplomats: The relationship between China and Russia can be said to be the most important bilateral relationship in the world. It can also be said to be the best relationship between major countries. A strong China-Russia relationship at a high level not only accords with the interests of our two countries, but is also an important guarantee for maintaining international strategic balance as well as world peace and stability.23 21  See, ‘Xi, J. (2013). ‘Let the Sense of Community of Common Destiny Take Deep Root in Neighbouring Countries’ 25 October, available at: http://www.fmprc.gov.cn/mfa_eng/ wjb_663304/wjbz_663308/activities_663312/ 22  ‘Beijing’s Brand Ambassador: A Conversation With Cui Tiankai’, Foreign Affairs, July/ August 2013, available at: http://www.foreignaffairs.com/discussions/interviews/beijingsbrand-ambassador. 23  Xing, G. (2013). ‘A New Chapter in China-Russia Strategic Partnership’, Qiushi 5(4), http:// english.qstheory.cn/magazine/201304/201311/t20131107_288108.htm, 1 October.

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So the conclusion can only be that there are many types of major power relations in the world but some are more major than others, and that Russia fits the mold of what China wants from a great power relationship more than its relations with the European Union. In contrast the US has encouraged consultation and coordination with the EU on Asia-Pacific affairs. Obama administration policy has stressed the importance of a multi-partner world not a multipolar world, and this has also meant a renewed interest in multilateralism, including in the Asia-Pacific.24 European experience and multilateral capacity has consequently been revalued. In her keynote speech ‘America’s Pacific Century’ of November 2011 Secretary Clinton drew explicit parallels between the construction of the Transatlantic community in the 20th century and what America wanted to achieve for a Trans-Pacific community in the 21st century.25 As the diplomatic dimensions of the rebalance were developed by Hillary Clinton and Kurt Campbell in the first Obama administration, the inclusion of Asia in the Europe-America diplomatic interactions was advanced, as suggested in the US-EU Statement on the Asia-Pacific Region issued in July 2012 when Catherine Ashton attended the ARF for the first time.26 Subsequently US officials talked up the importance of US-European consultation. Assistant Secretary of State for East Asia and Pacific Affairs Daniel R. Russel characterized US motivations as follows in a visit to Brussels in January 2014: The short version of why I am here in Europe is that the US is both an Atlantic and a Pacific country. And as important as our policies and strategy towards the Asia-Pacific region are, it’s equally important that we move in consultation with and in tandem with our European partners. The reason is very simple. We have shared interests, and we should operate as the strategic partners that we are. There are things that we each can do in the Asia Pacific region and there are things that we both can do together. . . . . The Asia Pacific region is hugely important to each of us because it’s so important to the global economy. It’s hugely important to each of us because what happens in the Asia Pacific region is 24  ‘Council on Foreign Relations Address by Secretary of State Hillary Clinton’, Council on Foreign Relations, 15 July 2009, Washington DC, http://www.cfr.org/publication/19840/ council_on_foreign_relations_address_by_secretary_of_state_hillary_clinton.html. 25  ‘America’s Pacific Century’, Remarks, Hillary Rodham Clinton, Secretary of State, East-West Center, Honolulu, HI, 10 November 2011, http://www.state.gov/secretary/20092013clinton/ rm/2011/11/176999.htm. 26   U S Department of State, ‘US-EU Statement on the Asia-Pacific Region’, 12 July 2012, available at: http://www.state.gov/r/pa/prs/ps/2012/07/194896.htm.

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consequential to our interests—both our economic interests, but also our common strategic interests.27 Statements from the EU have contained sufficient overlap with US policy statements to lead some—but particularly the Chinese—to believe that Europe and the US have parallel if not identical objectives and interests in the region. This creates a paradox for Europe in that America believes that Europe is insufficiently committed to Asia (given the imbalance between its economic interests and its diplomatic and security commitments) but China is distrustful even of Europe’s present limited engagements.28 As this suggests, it will be very hard for Europe to find a ‘natural’ or neutral position in Asia-Pacific strategic dynamics: as many countries in the region are finding the space for what used to be called non-alignment is harder to find as competitive pressures mount. If this is true of countries in the region it will be even more so for Europe. Europe’s focus has shifted since 2012 away from its previous focus on larger strategic partners—China, Japan, India—towards ASEAN and other middle powers.29 It is doing this because these relationships suit better its focus on commercial diplomacy and soft security, and because ASEAN is seen as gatekeeper to Asian regionalization overall, including inclusion in the East Asian Summit, which is presently closed to Europe. However, while the logic of closer relations between Europe’s primary regional institution and Pacific Asia’s primary regional institution is strong, this does not address the future of China-America relations or the regional strategic balance overall since ASEAN does not have control over these things nor will it control them in the future.

Conclusion: Dependent by Default or Independent by Choice?

As Berkofsky notes Europe seems to be in a position of ‘damned if it does, damned if it doesn’t’ in its involvement in Asian security.30 If it maintains 27   U S Department of State (2014). ‘Press Availability at the German Marshall Fund’, Daniel R. Russel, Brussels, Belgium, 14 January, available at: http://www.state.gov/p/eap/ rls/rm/2014/01/219769.htm. 28  See the discussion in Berkofsky, A. (2013). ‘The EU in Asian Security—Too Much for Beijing, Not Enough for Washington’, 11 November, http://www.eu-asiacenter.eu/pub_ details.php?pub_id=122. 29  Wacker, G. (2014). ‘Good suggestions, but the EU can do even more’, Europe’s World, 7 January, http://europesworld.org/2014/01/07/the-eus-role-in-shaping-asias-security. 30  Ibid.

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present resource levels and forms of engagement it faces declining relevance in cross-regional terms: there will be some actors who have an interest in a European soft pivot but this will not keep pace with regional dynamics. So Europe must attempt to close the gap between resources, engagements and its extensive interests or it will face accusations of irrelevance or free-riding. But if it does begin to match resources and engagements to its regional interests then it will have to face the resistance, and potentially the hostility, of those who do not wish a European return to Asia 50 years after it beat a colonial retreat. In these circumstances it is most likely that Europe will seek out ‘pivot partners’ and try to converge its assets and interests on theirs. At present this would most obviously direct Europe towards consultation and co-ordination with the United States. But this raises problems for Europe’s strategy: is it becoming dependent by default on US resources and relationships or does it have the resources and the resolve to be independent by choice? A number of European analysts argue that Europe is advancing its strategy for Asia with more vigor and clarity than in the past, but that there is a potential issue of capture within the parameters of US policy. Okano-Heijmans and Van der Putten have argued: The growing activism on the part of the European Union raises the question whether it will speak out in the future also if the United States acts in a way that threatens stability in East Asia. Displaying a preparedness to do so would be the logical next step in becoming an independent player in Asian affairs, and would further strengthen the EU’s image as a neutral but engaged stakeholder in East Asian stability.31 This may be an admirable ambition but the scope for neutral but engaged stakeholders in Asia is becoming very much harder to find. The obvious example is South Korea which has tried throughout the post-Cold war period to assert a position of neutrality between the great powers, for regional institution building, and for a diplomatic stance of some independence from the United States; but has found it harder and harder to sustain this stance. If South Korea cannot find the path to being a neutral but engaged stakeholder how would the Europeans? As suggested there might be a number of pressures bearing on the position of Europe in the Asia-Pacific but none is likely to exert more decisive 31  Okano-Heijmans, M. & Putten, F. van der (2014). ‘The EU should stay its independent course in East Asia’, Europe’s World, http://europesworld.org/2014/01/29/the-eushould-stay-its-independent-course-in-east-asia/

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influence than US-China relations. At every level—from bilateral, to regional, to inter-regional, to global—this relationship will exert great gravitational pull on Europe’s strategy for Asia and beyond, and across multiple issues. The most important single conclusion is that Europe cannot afford to be dependent by default on the United States—it must have sufficient resources, commitments, and channels of engagement to take stances of choice. It would then be in a better position to decide which partners it wishes to take, and to what extent and over what issues it might coordinate with the United States. As Jonathan Pollack notes, having a close coordination with America over China may not provide any great benefits for Europe in its China relations: Europe is far from strategically irrelevant in deliberations over China’s future. Its lack of direct security involvement along the periphery of China may be to its advantage, in as much as European views are far less likely to trigger sharp reactions in Beijing. Being paired with the United States does not necessarily work to Europe’s advantage in trying to draw Beijing into deeper, more sustained discussions about Asia’s future or the relevance of European experiences with international law and institution building. Though some analysts advocate a US-EU-China mechanism for deliberating Asia’s strategic transition, this is unlikely to prove practicable at a Track One level. China will always seek to avoid diplomatic or strategic deliberations where it could be the primary object of discussion involving multiple parties. In a trilateral context, Beijing would see Europe as too integrally tethered to its American partner, and hence far from an independent voice.32 It is clear then that Europe has a number of dilemmas to overcome in its strategy for Asia, and not least in its interrelationship with China and America. A deterioration in US-China relations would have particular consequences for Europe given its interdependence with both and with the Asia-Pacific region. At present the principal dilemma is that Europe does not have sufficient resource to expand and diversify the range of choices for its strategy. Even as this issue is addressed, Europe will have a number of difficult decisions to make about which partners to engage and on what range of issues. Engaging to influence the China-America relationship will be particularly difficult under conditions of US ‘rebalance’ vs. China ‘new great power relation32  Pollack, J.D. (2012). ‘China’s Rise and US Strategy In Asia’, in Pawlak, P. (ed.), Look East, Act East: transatlantic agendas in the Asia Pacific, European Union Institute for Security Studies, December: 57–58.

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ships’. These positions are ambiguous: each side claims that they are advancing them in order to forestall the onset of rivalry—the US by providing reassurance to allies and partners that it remains the ‘lender of last resort’ in regional security and China by indicating that it is aware of the risks of the Thucydides Trap and is determined to avoid them. Yet China’s search for parity with the US under conditions in which capabilities and intentions are cloaked (as QDR 2014 asserts) raises US concerns and are driving vigorous responses from some regional states. The US rebalance conversely is seen by China as a containment strategy in progress and responds in turn, including by inviting Russia into a ‘quasi-alliance’ that seeks to check the US in Europe, the Middle East, and Asia. Europe is in many ways unready to enter into this environment, but its interdependence with change in Asia will force it to engage. There is not yet a rivalry between China and America but their increasingly competitive relationship, China’s intensifying geopolitical claims and interests, and the US determination to defend the strategic status quo—often augmented by demands from regional allies and partners—are exerting great pressure on regional structures. Europe needs to be sufficiently engaged with both China and America to exert influence over their relationship but also sufficiently independent to defend its own interests and values, and resist impressions that it is a factor in their competition not an actor in its own relationship with them and the region. This will be the biggest dilemma of all to resolve. The first priority must be resources and the matching of effective means to effective ends; but even if this can be achieved there will remain the great problem of defining an independent course of action.

CHAPTER 11

Reconceptualizing EU-East Asia Security Cooperation: Process, Norms and the Quality of Interaction Susanne Kamerling Introduction Involvement in East Asian security is widely regarded as not being the European Union’s strong suit. The EU does not seem to be very active nor visible as an actor in hot security issues in the East Asia region. Even though some argue that the EU has its own Asia ‘pivot’ going on,1 more often than not the EU is not regarded as a serious player when it comes to security issues. As the title of this book alludes to: the EU might be an economic powerhouse, but politically, and even more so security-wise, it is weak. This is a view that also resonates in Asia.2 The often-repeated metaphor of the EU as an ‘economic giant, political dwarf and military worm’ continues to be reproduced.3 This chapter however argues that this popular thinking is based on underlying assumptions that could be challenged when rethinking the dominant ideas on the ‘security actorness’ of the EU and its cooperation with East Asian countries, in particular in light of the modes of security multilateralism that have taken root in the region. Much depends on the analytical lens one adopts, and this paper contends that focusing solely on the perceived weakness of EU-East Asia cooperation—a view that is often based on a lack of concrete deliverables— one misses out on the value that lies in the process itself and the quality of the

1  Casarini, N. (2013). ‘The European “Pivot” ’, Issue Alert, The European Union Institute for Security Studies, (March), http://www.iss.europahttp://www.iss.europa.eu/uploads/media/ Alert_Asia.pdf. 2  N FG Research Group (2012). Asian Views of the European Union as a Security Actor, Report Annual Conference and Academic Meeting 20–21 September, Beijing, China, Universität Berlin. 3  As coined in the New York Times by former Belgian foreign minister Mark Eyskens when commenting on the EU’s response to the Gulf War of 1991.

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interaction.4 This focus allows for a deeper view of cooperation than is often recurring when EU-East Asian cooperation is discussed. The point of departure of this chapter is that the goal of international interaction between countries is the protection of the orderly functioning of international life along agreed rules and norms, and not (only) power or status competition as such, as realist accounts would stress.5 Governance approaches such as bilateralism or multilateralism in this light are ways of strategic interaction through which this functioning is channeled.6 As long as constructive patterns of cooperation between actors can find suitable mechanisms, international society thus benefits. The focus should therefore be on the content of interaction, or the process through which international norms and rules are being (re)produced and (re)negotiated. Especially when emerging countries like China, which are relative newcomers to the international society interact with more established powers such as the US or EU countries, this is quite crucial to the socialization of those countries into international life. Attention for process in this particular transitional phase is thus not such an outrageous idea, in particular if we focus on what happens through this process. By only looking at concrete, ‘measurable’ results and outcomes (of the process) we might be overlooking what is actually happening, and how this happens. One distinct area in which this dynamic plays out is in the maritime sphere. Counter-piracy activities and maritime security have become the forefront of direct security and military cooperation between the EU as a foreign policy actor and individual EU member states on the one hand and East Asian countries such as China and Japan on the other. The case of anti-piracy and the maritime security governance mechanisms that have been set up around managing the surge in piracy attacks off the Somali coast since 2008 will therefore serve as an example of this interaction between the EU and East Asia. The following is in three parts, beginning with the proposed framework for looking at security cooperation between the EU and East Asia countries. This first part assesses the security and governance approaches that have developed in East Asia within the context of regional multilateralism and that lays the 4  A term borrowed from Acharya, A. (2003). ‘Regional Institutions and Asian Security Order; Norms, Power, and Prospects for Peaceful Change’, in Alagappa, M. (ed.), Asian Security Order: Instrumental and Normative Features, Stanford, California, Stanford University Press. 5  Goh, E. (2013). ‘Conceptualizing the Relationship between Bilateral and Multilateral Security Approaches in East Asia; A Great Power Regional Order Framework’, in Tow, W.T. & Taylor, B. (eds.), Bilateralism, Multilateralism and Asia-Pacific Security: Contending Cooperation, London, Routledge: 172. 6  Ibid.: 169–170.

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foundation for the different outlook proposed in this chapter. The main part then looks into the case of counter-piracy and maritime security governance and outlines how the EU and East Asian countries have experienced intensified cooperation in the security domain on the high seas. The final part examines the findings that can be drawn from this when taking a different analytical outlook on EU-East Asia security cooperation and the perceived benefits of this interaction or the lack thereof. The proposed reconceptualization of security cooperation between East Asia and the EU in the last part of this chapter will also allow for assessing the potential limits and convergence of their security approaches in the maritime domain and beyond.

Security and Governance Approaches

The lens of many East Asian countries7 vis-à-vis preferred security multilateralism and cooperation is deeply rooted in their own regional experiences and practices. It is important to note that this has led to different concepts, norms and preferences than the ideas that developed in Europe through European experiences. As Acharya notes, Asia ‘(. . .) does not offer examples that fit the established models of security multilateralism, such as collective security, collective defense, or even the “common security” model developed in Europe’.8 Rather, normative development rooted in the post-war experiences in Asia tends to gravitate towards the opposite direction. Ideas on pan-Asianism, nonalignment during the Cold War, and pledges of solidarity between developing countries mostly in Asia and Africa strongly influenced regional preferences of institution building and cooperation. Whereas concepts of collective defense and collective security are based on the military as an instrument (against resp. external or internal aggression), in Asia the trend has, for various reasons grounded in recent historic experiences, been against military pacts and shared defense mechanisms. Also, as the concepts of collective defense and collective security developed through European experiences require formal7  But also Southeast and South Asian countries for that matter, as the evolution of regional institution building is very much a process that brought together the experiences in these sub-regional domains. Great power accommodation has led Southeast Asia to set up ASEAN, which in its turn has inspired setting up SAARC in South Asia, to give just one example. Ideas of pan-Asianism, although largely unsuccessful, also underline this broader regional dynamic. 8  Acharya, A. (2003). ‘Regional Institutions and Asian Security Order; Norms, Power, and Prospects for Peaceful Change’, in Alagappa, M. (ed.), Asian Security Order: Instrumental and Normative Features, Stanford, California, Stanford University Press: 210.

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ized rules of reciprocity, in Asia a preference for more non-legalistic and nonformalized forms of cooperation has found stronger resonance.9 Thus, while Westphalian norms of sovereignty, non-interference and territorial integrity have largely been accepted in Asia, most forms of multilateral security and defense cooperation have been rejected. What has predominantly stemmed from this is a widely shared preference throughout the region for so-called ‘soft’ or non-legalist, non-formalist regional cooperation.10 These three main features have characterized the preferred form of security cooperation formed through regional multilateral institution building in Asia, and that continues to form the dominant governance preferences in East, as well as Southeast and South Asia. In addition, China in recent years has advanced a distinct ‘logic of relationships’ aimed mostly at developing practices of Asian socialization, which shape and condition conceptions of what is acceptable behavior and what is not.11 This logic is based on the assumption that partners in the future are the same as they have been in the past and present, and that both sides are better off if the relationship continues. This is also the crucial element of the meaning of ‘mutual benefit’. Reciprocity, or respect for each other, is required in this logic, rather than symmetry or equality in exchange. Interactions then become significant predominantly in how they shape certain relationships.12 There is much debate about the underpinnings of the relational security governance that is advanced by China. Prominent scholars in China point to the Chinese strategic culture with its Confucian foundations as the source of such governance preferences.13 Others question whether the fundamental concepts of relationality and processes that are key to this approach are distinctly ‘Asian’ or ‘Chinese’, and point to similarities with poststructuralist critiques of mainstream approaches of International Relations Theory as developed in western countries.14 9 Ibid.: 218–219. 10  Ibid. 11  Horesh, N. & Kavalski, E. (2014). Asian Thought on China’s Changing International Relations, Houndmills, Basingstoke, Hampshire; New York, Palgrave Macmillan: 6–7. 12  Ibid. 13  Yan, X. (2011). ‘International Leadership and Norm Evolution’, The Chinese Journal of International Politics 4(3): 233–64. See also: Qin, Y. (2009). ‘Relationality and Processual Construction: Bringing Chinese Ideas into International Relations Theory’, Social Science in China 30(4). 14  Schneider, F. (2014). ‘Reconceptualising World Order: Chinese Political Thought and Its Challenge to International Relations Theory’, Review of International Studies 40(4): 683–703.

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But rather than only advanced by China, the so-called ‘ASEAN Way’ shares important foundations with the logic of relationships, namely that the focus in Asian regionalism—strongly advanced by Southeast Asia—is also on process (dialog, consensus-building).15 Instead of characterizing (East) Asian regionalism as mere ‘summitry’ or ‘talk shops’ or power-driven multilateralism with lack of concrete outcomes or results, the security architecture in the region is by purpose a kind of process-driven institution- building that relies primarily on socialization and identity-building.16 Acharya distinguishes two important claims when discussing the contributions of Asian regionalism. First, that ‘the non-legalistic and consensus-oriented “ASEAN Way” ’ is a distinctive and workable alternative to European-style multilateralism’ and second, that ‘(. . .) Asian regionalism has shown that weak states can offer norm leadership’, the latter mostly by smaller states in Southeast and South Asia. Through regional institution building these countries sought to tie down great powers in the region by committing them to shared norms, goals and interests.17 However unique this approach to security cooperation is to the region or not, the discourse of relational security governance is increasingly promoted as the preferred mode of governance and cooperation, and therefore increasingly dominating policy circles and foreign policy practices. It is an approach in which process is more important than product, expectations are aimed at the long haul instead of immediate or short term, and relations matter. In fact, the process-driven approach is essentially aimed at socialization through interaction, which fosters fundamental shifts in, or emergence of new (shared) interests and identities in the long-term.18 An important caveat here is that apart from the ASEAN experience, how East Asian countries respond to the advance of China’s relational security governance now and in the near future is crucial to how these governance preferences will evolve. Potentially not every country buys into that; Japan and South Korea might see it merely as China’s way of making its rise in the region accepted by its partners and adversaries.19 However, the security architecture in East Asia has increasingly become 15  Acharya, A. (1998). ‘Culture, Security, Multilateralism: The “ASEAN Way” and Regional Order’, Contemporary Security Policy 19(1): 55–84. 16  Acharya, A. (2003). ‘Regional Institutions and Asian Security Order; Norms, Power, and Prospects for Peaceful Change’, in Alagappa, M. (ed.), Asian Security Order: Instrumental and Normative Features. Stanford, California, Stanford University Press: 210. 17  Ibid.: 211. 18  Ibid.: 230. 19  Horesh, N. & Kavalski, E. (2014). Asian Thought on China’s Changing International Relations, Houndmills, Basingstoke, Hampshire; New York, Palgrave Macmillan: 6–7.

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multilateralist and focused on process-driven ‘soft’ institutionalization with increased attention for fora like the ASEAN Regional Forum (ARF), the East Asia Summit (EAS), ASEAN Plus Defense Ministerial Meeting (ADMM+), Conference on Interaction in Confidence Building Measures in Asia (CICA) and APEC, although the latter is not primarily security-focused. The EU has also stepped up its involvement in several regional fora and security mechanisms in Asia in the past few years. It has become a member of the ARF in 2012 and of the Council of Security in Asia Pacific (CSCAP) in December 2013. In terms of specific EU-East Asian cooperation, the Asia-Europe Meeting (ASEM) deserves mention, as also in this forum (maritime) security has been put high on the agenda.20 Although the process and relation-focused approaches outlined in this section do not fit the established models of security multilateralism, it is important to think about how this new reality in East Asia can shape our thinking on security cooperation and what its potential benefits and limits are, even if we do not uncritically accept its premises. As the maritime domain is a key area of development for many countries in (East) Asia, it offers an interesting case for assessing what happens in these processes and what makes up the quality of interaction. Counter-piracy activities in the Gulf of Aden and Western Indian Ocean is where East Asian countries and European countries come together and cooperate on a specific security issue: maritime piracy.

Counter-Piracy and Maritime Security Governance: A Case Study21

Not only has the EU become more active in participating in regional security fora and institutions in East Asia in recent years, it also increasingly interacts with East Asian countries much closer to home: in the Gulf of Aden and Western Indian Ocean. Maritime cooperation in the Gulf of Aden is one of the few examples of direct security cooperation between the EU and East Asian countries. Cooperation in safeguarding several of the world’s important trade 20  Kamerling, S. & Putten, F. van der (2010). ‘Enhancing Maritime Security Governance: European and Asian Naval Missions Against Somali Piracy’, in Bersick, S. & Velde, P. van der (eds.), The Asia-Europe Meeting: Contributing to a New Global Governance Architecture. The Eight ASEM Summit in Brussels, Amsterdam, Amsterdam University Press. 21  This section of the chapter draws heavily on a non-published paper that the author has presented at the ‘EU and Emerging Powers’ conference in the European Parliament on 29–30 April 2013, entitled ‘Stepping up EU security cooperation with Asia: sailing into the wind’

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routes is considered of great economic and political relevance not only to East Asia and the EU but also to other beneficiary regions of that trade. This section explores several avenues of maritime security governance in which the EU and East Asian countries cooperate. In 2014, the EU has adopted an EU Maritime Security Strategy, which highlights the importance it attaches to the maritime domain. The EU also has the largest naval presence in the counter-piracy activities off the Somali coast, while the maritime newcomers that have taken the step of sailing towards Europe are mostly Asian. Especially the activities of China’s first long-distance maritime operation have attracted much attention, while Japan’s out-of-area operations have caused heated domestic and international debate over the country’s presumed pacifist identity. Rather than in Asia itself, security cooperation with East Asian countries thus starts much closer to home for the EU. The expanding naval activities from an increasing number of countries meet in the counter-piracy efforts in the Gulf of Aden and the wider Indian Ocean, in which currently all major powers are present in naval missions. The period between 2008 and 2011 saw a multitude of naval initiatives mobilized to counter the exponential growth of piracy attacks that erupted in 2008 in the Gulf of Aden, and later on, also in the Somali Basin and Western Indian Ocean. The increase in piracy activity severely affected not only the shipping industry itself, but with that also the wider flow of goods that cross the Suez Canal on its way to either the US, Europe, Middle East, or Asia. Almost every continent was affected by the effective, although surprisingly straightforward strategies of Somali pirates looking for gains. The disruption of food aid to Somalia was however the starting signal for the United Nations to call for action. Single European countries—France, the Netherlands and Denmark— started up naval missions to guide ships of the United Nations World Food Program (WFP) and African Union Mission in Somalia (AMISOM) through the risky area. Missions were consequently taken over in December 2008 by the EU in the context of the Common Security and Defense Policy (CSDP); EU Naval Force Operation Atalanta being the EU’s first naval mission ever. Although a palette of countries have contributed to naval missions in the Gulf of Aden and Western Indian Ocean, the majority of these countries are European or Asian.22

22  Europe is defined here as EU member states as well as European countries that are not part of the EU. Asia in this context refers to East Asian, Southeast Asian and South Asian countries. See also: Kamerling, S. & Putten, F. van der (2010). ‘Enhancing Maritime Security Governance: European and Asian Naval Missions Against Somali Piracy’, in Bersick, S. & Velde, P. van der (eds.), The Asia-Europe Meeting: Contributing to a New Global Governance

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European countries are active in several operations and naval alliances: a) the EU Naval Force mission Atalanta, b) NATO missions Allied Protector and Ocean Shield of Standing NATO Maritime Groups (SNMG) 1 and 2, and c) the Combined Task Force (CTF) 151 of the US-led Combined Maritime Forces (CMF). The focus here will be on the first, as it is conducted under EU-flag. The Atalanta naval mission is currently in its seventh year of deployment, its mandate being extended until December 2016.23 EU’s Atalanta mission has the largest naval presence in the region with about 1.200 personnel involved and with an average of between 4–7 combat vessels and 2–4 patrol aircraft deployed, depending on the monsoon season.24 The EU has been very active in coordinating actions of all actors involved in the region and establishing cooperation with East Asian actors like China at the operational and tactical level. For many of the Asian countries active in the Gulf of Aden and wider region, it was the first naval mission against piracy they have undertaken outside of their own region. This also holds true for China, Japan and South Korea. Asian countries like South Korea, but also Singapore, Pakistan, and Thailand have worked together with European (and other) countries in multinational alliances like CTF151, and have taken up the lead in commanding this naval task force. Other Asian countries have however executed naval missions unilaterally rather than acting under a multinational umbrella. Japan supported Operation Enduring Freedom (OEF) from 2001 to 2010 by sending out refueling missions. In March 2009, Japan has launched its counter-piracy mission with two warships and maritime surveillance aircraft being present in the Gulf of Aden.25 The Japan Maritime Self-Defense Force can even make use of naval and air facilities of a de facto base in Djibouti, for which Japan and the East African country have signed an agreement in 2010. This indicates a new international involvement of Japan in the security sphere, which was inconceivable a few decades ago. China has also stepped up its counter-piracy efforts in the Western Indian Ocean since late 2008 and has clearly broken new ground with this initiative: it constituted the first expeditionary deployment of the People’s Architecture. The Eight ASEM Summit in Brussels, Amsterdam, Amsterdam University Press. 23   European Union (2015). ‘EUNAVFOR Somalië’, Mission, http://eunavfor.eu/mission, 5 March. 24  Ibid. 25  Kamerling, S. & Putten, F. van der (2010). ‘Enhancing Maritime Security Governance: European and Asian Naval Missions Against Somali Piracy’, in Bersick, S. & Velde, P. van der (eds.), The Asia-Europe Meeting: Contributing to a New Global Governance Architecture. The Eight ASEM Summit in Brussels, Amsterdam, Amsterdam University Press.

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Liberation Army Navy (PLAN). Beijing is currently already in its 19th steady rotation of naval missions since January 2009. Its deployment consists of two of its most modern warships and one supply ship that head for the Gulf of Aden at least every three months or longer.26 The Chinese ships are equipped with helicopters as well as task forces with about 70 Special Force Commando’s.27 Before, China had little experience with sustaining and executing naval out-ofarea operations and cooperating with other navies and established alliances in a multinational context. As China does not have military bases in the Indian Ocean Region, it is dependent on using port facilities of befriended countries in the region through Memoranda of Understanding (MoU’s) as well as through its network of commercial shipping companies, COSCO being the largest.28 In terms of security governance, several mechanisms were set up to coordinate the activities surrounding the fight against piracy from the tactical to more strategic level. To make a safe route for the shipping industry passing through the piracy-infected Gulf of Aden and to make efficient use of the naval assets from the various countries at a tactical level, the EU initiated the Internationally Recommended Transit Corridor (IRTC) in February 2009. As a transit corridor for commercial shipping, the IRTC runs both ways in two shipping lanes throughout the northern part of the Gulf of Aden, south of the Yemeni coast. The three multinational counter-piracy groupings of the EU, NATO and CTF151 guard the IRTC on a continuous basis. Countries like China, Japan, India and Russia conduct their individual and group transit escorts parallel to this IRTC. In the piracy attempts that occurred in or outside this corridor the countries and task forces present have combined their efforts and used the naval assets closest to the attack to divert actual hijacking. In practice, there are many examples of multinational cooperation outside of the IRTC in safeguarding ships, seafarers and fishing vessels. To formally coordinate all the regional anti-piracy efforts, however, the monthly Shared Awareness and Deconfliction (SHADE) meetings were set up, which take place in Bahrain, the basis of the US Fifth Fleet and CMF. This officer-level forum is a voluntary inter26  ‘“China Military Online”, Chinese Naval Fleet Returns from Somali Waters’, 20 March 2015, http://english.chinamil.com.cn/news-channels/china-military-news/2015-03/20/content_ 6405815.htm, accessed March 2015; see also: Kamerling, S. & Putten, F. van der (2011). ‘An Overseas Naval Presence Without Naval Bases; China’s Counterpiracy Operation in the Gulf of Aden’, Journal of Contemporary China Affairs 40 (4): 119–146. 27  Kamerling, S. & Putten, F. van der (2011). ‘An Overseas Naval Presence Without Naval Bases; China’s Counterpiracy Operation in the Gulf of Aden’, Journal of Contemporary China Affairs 40 (4): 119–146. 28  Ibid.

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national military grouping meant to share and discuss tactical and operational information, and deconflict the activities of actors present.29 If needed, members agree upon a certain division of tasks, use of available naval assets and presence in specific geographical areas of the Western Indian Ocean. Next to the EU, NATO and CTF151, all other countries that operate in the region, including East Asian countries, take part in SHADE. Representatives of international organizations like INTERPOL and the shipping industry also have a seat at the table. Late 2009, China has proposed at a SHADE meeting to take up a leading role in co-chairing SHADE, together with rotating chairs EU and CMF. This proposal was granted to Beijing beginning of 2010, despite alleged objections by India.30 Also, China agreed to patrol a specific ‘area of responsibility’ in or near the IRTC through the Gulf of Aden, and coordinated these actions with Japan and South Korea.31 At the more strategic level the Contact Group on Piracy off the Coast of Somalia (CGPCS) was set up in 2009 under the umbrella of the United Nations in New York. It is a voluntary international forum of countries, international organizations and industry groups that are in some way involved in counterpiracy initiatives near the Somali coast. This forum has brought together over sixty countries, international organizations, industry representations and naval missions, active in five different working groups dedicated to several sub-themes. It operates with the help of its own trust fund established by UN Secretary-General Ban Ki-moon in January 2010, contributors being governments, intergovernmental or non-governmental organizations and private sector organizations.32 The EU External Action Service chaired the CGPCS in 2014, and its then-chair Maciej Popowski characterized the CGPCS as ‘(. . .) a laboratory for innovative multilateral governance to address complex international issues’.33 Both SHADE and the CGPCS are indeed good examples of security governance mechanisms that can also be labelled as ‘multilateralism light’, a concept aiming at pinpointing the trend of dealing with all kinds of political and 29  European Union (2015). ‘EUNAVFOR Somalië’, 8th SHADE meeting sees largest inter­ national participation so far, http://eunavfor.eu/8th-shade-meeting-sees-largest-internationalparticipation-so-far/, 5 March. 30  Pham, J.P. (2013). ‘Pirates and Dragon Boats: Assessing the Chinese Navy’s Recent East African Deployments’, The Journal of the Middle East and Africa 4(1): 87–108. 31  Ohn, D. & Richey, M. (2014). ‘Cooperation on Counter-Piracy in the Gulf of Aden Among China, Korea, and Japan: Implications for Trilateral Security Cooperation in Northeast Asia’, The Korean Journal of Defense Analysis 26(1): 85. 32  Ibid. 33  ‘UN Contact Group on Piracy Off the Coast of Somalia’

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security issues in informal institutions and arrangements.34 As emerging powers are underrepresented in formal institutions in the international system they seem to be especially active in these kinds of governance bodies, and East Asian countries are no exception. Also, as previously highlighted, it tends to align well with their current governance preferences when it comes to security cooperation. The field of maritime security could be seen as a test case in this regard, from which lessons can be drawn for other political or security issues in which multinational cooperation is needed. This rise in more informal global governance is something that the EU should take into account in its thinking and designing of strategies and policy implementation. Non-governmental actors are often also represented in these forums, which would fit the comprehensive approach to security that the EU advocates, and at the same time be a new venture for East Asian countries—especially China—that is more statecentric and less familiar in dealing with non-government bodies in managing public goods. The security governance set up in managing piracy attacks in the Gulf of Aden and wider western Indian Ocean since 2008 typically fits the preferred mode of cooperation for many Asian countries as outlined in the previous section. The counter-piracy deployments and China’s active participation in multilateral governance mechanisms like the CGPCS, SHADE, and the IRTC give leeway to cooperation at the strategic, operational and tactical level with all actors with a naval presence. By being active participants in these fora, both the EU and East Asian countries can contribute to enhancing their cooperation and interaction.

The Quality of Interaction and Opportunities and Limits of Convergence

When taking a deeper look at the cooperation between the EU and East Asian countries within the maritime security governance mechanisms outlined in the previous section, there are several preliminary process-oriented outcomes. First, as Black and Hwang argue, both China and Japan have acted as norm entrepreneurs in responding to piracy with sending naval missions to the Gulf of Aden and therewith intending to transform mainstream norms in the

34  This term was first coined in Penttila, R. (2009). Multilateralism Light; the Rise of Informal International Governance, CER EU2020 Essay, Center for European Reform, July.

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international society.35 This norm entrepreneurship in its turn is grounded in the specific construction of the state identity of these countries. China aims at projecting its self-identity and role perception as a ‘responsible stakeholder’ through its counter-piracy contribution and the country’s cooperation with other naval actors. Japan in its turn has tried through its anti-piracy activities to promote the idea that with its anti-militarist norm it can function as a bridge between East and West, developing and developed countries and members and non-members of the international society.36 The policy elites of both East Asian countries have actively sought to promote new norms through the security governance mechanisms in counter-piracy in a rhetorical sense as well as through their practices. China has worked closely together with the EU in the IRTC, SHADE and the CGPCS aiming to show that it is a benevolent and cooperative power. This neatly fits into China’s ‘harmonious ocean’ concept as advanced by the Hu Jintao presidency.37 China has also put forward the narrative that its foreign policy doctrine is threefold: interventions must fall under international law and UN resolutions; they must be requested by the host country in question and counter-piracy responses should fit a socio-economic approach to security.38 Japan on the other hand has argued that through its previous experiences in fighting piracy in Southeast Asia’s Strait of Malacca it has been able to insert the model of the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) with a dominant role for the Japan Coast Guard (JCG) to the Gulf of Aden situation.39 The country’s anti-militaristic identity, so it argues, has been the source of inspiration for a non-military model to piracy with its JCG, which has served as the country’s main normative contribution through the counter-piracy mission in the Gulf of Aden.40 Also, Tokyo has successfully taken a leadership role in one of the working groups of the CGPCS. China’s self-identification and promotion of its role as a benevolent and responsible power has also spurred attention in South Korea and Japan. They 35  Black, L. & Hwang, Y. (2012). ‘China and Japan’s Quest for Great Power Status: Norm Entrepreneurship in Anti-Piracy Responses’, International Relations 26(4): 431–451. 36  Ibid.: 431–432. 37  Putten, F. van der (2011). ‘Harmonious Ocean: China’s Response to Somali Piracy as Its Contribution to Maritime Security Governance’, Montreal, International Studies Association. 38  Black, L. & Hwang, Y. (2012). ‘China and Japan’s Quest for Great Power Status: Norm Entrepreneurship in Anti-Piracy Responses’, International Relations 26(4): 431–451. 39  Ibid.: 443. 40  Ibid.: 443–445.

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see it as a way of testing China’s abidance by the international code of conduct, in which Tokyo and Seoul can closely scrutinize how China maintains and establishes certain norms and behaves in a shared security context. And how China in its turn deals with responses of other actors to their behavior.41 This hints at the process of socialization, but then as a two-way street in which norm diffusion works both ways.42 Ohn and Rickey see another advantage of the counter-piracy missions in the Gulf of Aden, in which China, Japan and South Korea are active. Whereas traditionally these three countries have kept their security business compartmentalized, out-of-area anti-piracy efforts have actually led to security coordination between these major regional actors. In 2012 these East Asian countries, together with India, established ‘Escort Convoy Coordination’, which is aimed at increasing effectiveness and preventing overlap in the use of naval assets in the Gulf of Aden and western Indian Ocean.43 Next to cooperation in deployment scheduling, the East Asian countries have held joint drills and officer exchange visits. Also, they have coordinated their positions in SHADE meetings through trilateral pre-meetings.44 This trilateral security cooperation is interesting if only because of the bold rhetoric and tensions between Beijing, Tokyo and to a lesser extent Seoul in the region itself when it comes to maritime issues. The potential spillover to help shape security cooperation between these actors in East Asia becomes evident. The experiences that East Asian naval newcomers gain in counter-piracy initiatives, out-of-area naval deployments and maritime security governance will at least partially mold their maritime future. This should be seen as an opportunity for the EU and other established navies—the US first and foremost—to positively influence the experience and lessons learned that these navies take home with them and that are integrated into their thinking about how their maritime capabilities should be further developed and which role to play in maritime governance mechanisms. In short, it potentially enhances maritime socialization; a domain of growing tensions in recent years, and some argue, potential for conflict. This also hints at some first steps in more fundamental shifts in 41  Ohn, D. & Richey, M. (2014). ‘Cooperation on Counter-Piracy in the Gulf of Aden Among China, Korea, and Japan: Implications for Trilateral Security Cooperation in Northeast Asia’, The Korean Journal of Defense Analysis 26(1): 86. 42  Pu, X. (2012). ‘Socialization as a Two-way Process: Emerging Powers and the Diffusion of International Norms’, The Chinese Journal of International Politics 5(4): 341–367. 43  Ohn, D & Richey, M. (2014). ‘Cooperation on Counter-Piracy in the Gulf of Aden Among China, Korea, and Japan: Implications for Trilateral Security Cooperation in Northeast Asia’, The Korean Journal of Defense Analysis 26(1): 85. 44  Ibid.

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preferences and shaping of interests that was alluded to in the first section. This in turn potentially shapes self-perceptions, identity-formation and role behavior in the long haul. The EU could be a positive contributor in this process, and with that strengthen its own position and ‘actorness’. Stimulating the socialization of upcoming naval countries into the institutional maritime security governance set-up is valuable in terms of conflict prevention because dialog, direct contact and cooperation can downplay risk and threat perceptions. The EU is not only well positioned to stimulate this, but also to improve the quality of these interactional mechanisms. Concerning the security governance approaches of East Asian countries and the EU as a foreign policy actor, a few preliminary remarks can be made on the possible benefits and limits of convergence in cooperation preferences. The trend against military pacts and shared defense mechanisms in (East) Asia and a preference for more non-legalistic and non-formalized forms of cooperation fits well with the rise of informal international governance mechanisms. The mechanisms set up in countering piracy off the coast of Somalia are a vivid illustration of this. Overall, responses of policy makers involved in the CGPCS are positive when it comes to the chosen design and outcomes of this governance body.45 Flexibility to respond and quickly adjust to the problem, effectiveness in fighting the problem at hand, and a suitable platform for exchanging information and coordinating policy are stressed as including the CGPCS’s perks. The limit to demand compliance of its participants is mentioned as a disadvantage.46 This provides room for advancing the thinking on models of governance in regional cooperation and integration, something Europe through its experiences and practices has been acclaimed for doing. The EU is also recognized as a major norm-promoter and—setter in international relations.47 Recent research has shown that Asian countries acknowledge this, and would welcome contributions from the EU in this area.48 The EU’s security approach has predominantly been defined in terms of ‘soft power’, civil rather than military, and of a multilateral character rather than bilateral or based on balance of power calculations. The European Security 45  Interviews of the author between 2009 and 2012 and in 2015 with policy makers and military officers who have participated in or have been closely involved with the CGPCS. 46  Ohn, D. & Richey, M. (2014). ‘Cooperation on Counter-Piracy in the Gulf of Aden Among China, Korea, and Japan: Implications for Trilateral Security Cooperation in Northeast Asia’, The Korean Journal of Defense Analysis 26(1): 86. 47  Stumbaum, M.U. (2012). How Does Asia View the EU; Security in an Interpolar World, NFG Working Paper, NFG Research Group. 48   N FG Research Group, Asian Views of the European Union as a Security Actor.

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Strategy document of 2003, and its implementation review document of 2008 have actively stimulated internal discussions and awareness about the role the EU should or could play as a global security actor. Promoting effective multilateralism and a rule-based international order were—and still are—seen as being of primary security interest to the EU and its Member States.49 Although a preference for multilateralism and soft power converges well with the security and governance approaches that have taken root in (East) Asia, the focus on a rule-based international order is a potential limit in cooperation between the EU and East Asia in maritime security governance mechanisms and beyond. It is likely that China among others will continue to promote its more relational-focused security governance approach in a regional and international setting.50 Therefore, the EU and East Asian actors will have to enhance their understanding of each other’s preferences and approaches in security cooperation. Moreover, it seems likely that the gap between rule-based formalized governance mechanisms and more ‘soft’ institutionalism that avoids legalistic and binding commitments, at least in the early stages of cooperation,51 will have to be overcome. Also, it is crucial how countries in the region will respond to China’s approach and if Beijing will succeed internationally to convince predominantly the US but also other sceptics that its intentions are benign.52 This section has aimed to propose taking a different outlook on EU-Asian security, and has pinpointed a few trends in what happens through the processes that security governance enhances. Also, it has briefly assessed convergence and its limits in security cooperation approaches of the EU and East Asia. However, it does not claim to give an exhaustive account of possible benefits of interactions in the context of counter-piracy activities, nor in EU-East Asia security cooperation. But by at least not dismissing EU-East Asia security cooperation as merely weak—and therefore not a serious topic of discussion—one could recognize that the interactions that do exist are a promising avenue for further research. 49  Council of the European Union, A Secure Europe in a Better World—The European Security Strategy, Brussels, Belgium, 12 December 2003, http://www.consilium.europa.eu/uedocs/ cmsUpload/78367.pdf, accessed March 2015. 50  Qin, Y. (2009). ‘Relationality and Processual Construction: Bringing Chinese Ideas into International Relations Theory’, Social Science in China 30(4). 51  Acharya, A. (2003). ‘Regional Institutions and Asian Security Order; Norms, Power, and Prospects for Peaceful Change, in Alagappa, M. (ed.), Asian Security Order: Instrumental and Normative Features, Stanford, Stanford University Press. 52  Horesh, N. & Kavalski, E. (2014). Asian Thought on China’s Changing International Relations, Houndmills, Basingstoke, Hampshire; New York, Palgrave Macmillan.

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Conclusion Towards a Different Conceptualization of Security Cooperation This chapter does not argue that the EU is or will be—or should be for that matter—a dominant security actor in East Asia or regions closer to home. Nor does it contend that EU-East Asian security cooperation is necessarily very extensive—although it has arguably intensified in recent years. However, it aims at making a case for adapting the mainstream outlook when assessing EU-East Asian security cooperation and its contribution to the functioning of international life and order. The quality of the interaction in counter-piracy and maritime security governance lies in the norm dynamics that occur within the processes that are taking place and the potential socialization of emerging maritime powers in East Asia—China and Japan being the prominent ones, but also other bigger and smaller Asian states—within established maritime practices, norms and institutions. Although it is too early to tell if this might also lead to (re)defining interests and preferences and shifts in identity, the potential for change is certainly there. This might not be a short-term deliverable. As (power) inequality and difference are deeply rooted in the current international order it could take decades, if not longer, before changes occur or become strongly internalized in actors. But re-conceptualizing the benefits and limits of the security cooperation and governance mechanisms that are in place allows us to take a closer look at assessing their contributions in a process-oriented way. Understanding what is going on within and through these processes could make scholars and policymakers more conscious not only of what, but also how that happens, and question if this is the desired outcome or if approaches and strategies need to be re-assessed. So the final question that needs addressing is: what is ‘weak’ if we talk about ‘weak politics’. If we define ‘weak’ by pointing to the lack of concrete, directly visible, ‘measurable’ results and outcomes, then the answer might be confirmative. However, if we conceptualize results and outcomes in a different way, one that is more attentive to the benefits of the process and the content of what is being (re)produced and (re)negotiated, the answer might be very different. Crucially, it has to do with the expectations one has of what politics and cooperation are about, or should be about, and what the objectives are. But this has to do more with the outlook one chooses to pursue, than with the quite normative answer to the binary question of what is perceived as being weak or strong. Security cooperation between the EU and East Asia, in particular in the maritime domain, but arguably also in a much broader sense, might be little institutionalized or formalized, and sometimes organized on an ad-hoc

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basis. But these security governance mechanisms can be valuable in developing creative and beneficial ways of organizing the well-functioning of international life. ‘Relational security governance’, ‘the ASEAN way’, ‘multilateralism light’; whatever is in the name, these governance styles might be considered as alternative modes that might just as well reap benefits. Even if this form of cooperation just as well raises specific challenges. Perhaps most important is how to make sure these forms of governance are subject to transparency and accountability. But also, how to enhance relationships of meaningful reciprocity that are not based on formalized rules? Only in a re-conceptualized outlook on security governance can we start thinking about these questions and really look into the contributions as well as potential challenges this different mode of cooperation might pose.

CHAPTER 12

Sovereignty Over the Skies: The European Union and East Asia’s Air Defense Identification Zones Christopher K. Lamont Introduction Air Defense Identification Zones (ADIZs), or ‘unilaterally declared designated areas of non-territorial airspace where states impose reporting obligations on civil and military aircraft for the purpose of national security’,1 constitute a challenge to existing understandings of sovereignty. This is because throughout the 20th century the notion of sovereignty was understood in terms of claims on the part of political entities to surface territories and waters.2 ADIZs, on the other hand, in their most recent form constitute a claim on the part of states to exercise elements of sovereign control, such as reporting obligations, over international airspace. Indeed, beginning with Beijing’s unilateral proclamation of an ADIZ in the skies over the East China Sea in 2013, the European Union has been confronted with a projection of sovereign disputes over territories and waters into the skies. This contribution will explore how contested understandings of sovereignty are crucial to understanding contestations over ADIZs in East Asia. To be sure, it is in part because ADIZs are a relatively understudied security practice that exists at an intersection between state security and public international air law, relatively little attention has been paid to either the legal basis of such declarations or their implications for international politics. This contribution will go some way to addressing this lacuna in the literature through an examination of how contestations over sovereignty in East Asia have spilled over into airspace. In particular, it will also reflect upon how ADIZs challenge existing norms and institutions of airspace governance that emerged in the aftermath of World War II. 1  This definition of Air Defense Identification Zones was presented in an earlier work, Lamont, C.K. (2014). ‘Conflict in the Skies: The Law of Air Defense Identification Zones’, Air and Space Law 39(3): 187–202. Parts of this chapter are drawn from this article in which I explored the legal implications of China’s East China Sea ADIZ. 2  Murphy, A.B. (2001). ‘Political Geography’, in Smelser, N.D. & Bates, P.B. (eds.), International Encyclopedia of the Social and Behavioral Sciences, Amsterdam, Pergamon: 2. © koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_013

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At the outset, however, it is essential to underline the fact that during the Cold War there was no assumption that demarcating airspace as falling within an ADIZ constituted a claim to sovereignty. European states routinely declared airspace far outside their territorial waters as falling within air defense identification zones. Yet, in 2013, ADIZ reporting demands and practices shifted in a manner that suggests a growing tendency to draw a linkage between demarcated ADIZs and claims to sovereign control over both airspace and subjacent waters and islands. What explains this dramatic shift in perceptions of ADIZs from benign air defense mechanisms to potential designators of sovereign boundaries? And, what does this mean for the regulation of international airspace, which has hitherto been conducted through multilateral forums such as the International Civil Aviation Organization (ICAO)? In order to respond to these questions, this contribution will first explore the emergence of ADIZs as a security practice before examining competing rationales for their establishment. This will then be followed by a discussion of how China’s East China Sea ADIZ in the context of public international air law, which guarantee freedom of air navigation in international airspace. In conclusion, it will be argued that ADIZs are best conceived in their narrowest form with their primary task being to survey airspace, while the regulation and administration of international airspace should be left to the ICAO, and not to individual states.

Adizs as a Security Mechanism

Over the last six decades, a growing number of states have acted to designate airspace beyond that which is above their own territorial waters as Air Defense Identification Zones, including European states such as France and the United Kingdom. When initially established in the early years of the Cold War, ADIZ designations rarely became the subject of public debate. Moreover, there was never an assumption that states were making claims to sovereignty over subjacent waters. In stark contrast to escalating tensions in response to China’s prospective ADIZ over the South China Sea, in the past ADIZs were perceived as a benign security practice. ADIZs existed not to exercise control over airspace, but rather they existed to provide states with an early warning of impending strategic air attack.3 In short, early ADIZs were nothing more than areas of demarcated airspace surveyed by radar and aircraft.

3  Dutton, P.A. (2009). Caelum Liberum: Air Defense Identification Zones Outside of Sovereign Airspace, 103 AJIL: 691.

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Far from being an instrument to signal claims over disputed territories or waters, ADIZs were established because rapid post-Second World War technological innovation in strategic air capabilities meant that pre-existing norms that governed air defense practices found themselves antiquated in the early years of the Cold War. In the years following the end of the Second World War states, in particular the United States and the Soviet Union, acquired capabilities to launch strategic air attacks against adversaries with little to no early warning. Armed with high speed jet propelled aircraft and increasingly missile advanced technology, which now permitted aircraft to discharge their deadly ordinance from far beyond a state’s territorial airspace, states were confronted with the prospect of being vulnerable to an armed strategic air attack mounted from far beyond their own territorial airspace. It was in response to this technological innovation in air warfare that states began monitoring larger and larger patches of airspace that extended far beyond their territorial airspace. In some cases, such as the United States, ADIZs extended even 400 miles beyond territorial airspace. Cold War ADIZs provided the essential function of providing states with the ability to detect a potential strategic air attack long before national airspace was threatened. Of course, at this point it must be emphasized that the main characteristic of Cold War ADIZs was that they exercised a solely surveillance, or monitoring, function. They did not impose restrictions on freedom of navigation in airspace over the high seas, and no enforcement measures could be taken against aircraft for simply traversing a demarcated ADIZ. This continues to be the case with the United States’ ADIZ and the reporting requests of ADIZs declared by other North American and European states, alongside Japan and South Korea. In particular, a closer look at the US ADIZ highlights this fact that existing ADIZs do not deny access on the part of foreign aircraft to international airspace. As will be noted later in this contribution, China’s 2013 East China Sea ADIZ is the only example of a reporting regime that attempts to do so. The United States, which was the first country to declare an ADIZ in 1950 so as to provide early warning against a feared Soviet strategic air attack, confronted the need to reconcile the national security necessity of surveying broad expanses of airspace with not infringing upon the freedom of navigation of international airspace. Much of the current confusion over the legality of ADIZs fails to appreciate the narrow obligations imposed by the US ADIZ reporting regime. The US Code of Federal Regulations defines Air Defense Identification Zones as ‘an area of airspace over land or water in which the ready identification, location, and control of civil aircraft is required in the interest of national security’.4 4  14 C.F.R. 14, § 99.

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For the U.S, ADIZs are solely a security measure, and thus do not aim to regulate air traffic within their respective patches of airspace. Therefore, the US imposes its reporting obligation only upon aircraft en route to the US The US does not impose reporting obligations on aircraft simply transiting an ADIZ. In relation to ADIZs imposed by other nations, the US does not recognize the right of states to impose obligations upon aircraft not en route to the state in question.5 In fact, US military aircraft are instructed not to comply with such reporting requirements imposed by other nations.6 In addition, it is somewhat paradoxical that ADIZs have emerged at the forefront of territorial disputes in East Asia given the fact that during the latter years of the Cold War, ADIZs were viewed as obsolete. Further advancements in intercontinental ballistic missile technology resulted in intercontinental ballistic missiles replacing strategic bombers as the principal delivery mechanism for explosive ordinance. For the United States, and its allies, threats to national airspace were thus more likely to take the form of intercontinental ballistic missiles than aircraft, resulting in a shift towards exploring means to intercept these missiles. It was only with the attacks perpetrated with hijacked civilian airliners on Washington D.C. and New York on 11 September 2011 that ADIZs found renewed purpose in a post-Cold War world.7 In the context of East Asia, ADIZs have been justified both on the basis of a need to provide an early warning of a strategic air attack on to detect potentially hijacked aircraft threatening sovereign territory. In relation to providing an early warning of strategic air attack, this particular rationale remains compelling in East Asia despite technological advances in medium and long-range missile technology. In fact, the need to defend sovereign airspace from strategic air attack and was articulated as recently as November 2013 by a Japanese defense official who pointed out that Japan’s ADIZ, which extends hundreds of miles beyond Japan’s territorial airspace, was necessitated by the threat posed by aircraft traveling at high speed. Furthermore, this official also emphasized Japan’s inability to defend territorial airspace if an aircraft’s hostile intent was only detected upon the aircraft’s penetration of territorial airspace.8 Of course, in line with US and European 5  14 C.F.R. 14, § 99. 6  Commander’s Handbook on the Law of Naval Operations, United States Navy, 2007, Supra note 14 at 13. 7  Dutton, P.A. (2009). Caelum Liberum: Air Defense Identification Zones Outside of Sovereign Airspace, 103 AJIL: 691. 8  ‘What is an Air Defense Identification Zone?’, The Japan News, 27 November 2013, available at http://the-japan-news.com/news/article/0000826330.

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practice, Japan neither attempts to deny entry to aircraft not seeking to enter Japan’s territorial airspace, nor includes an implied threat of enforcement. In sum, despite their shifting security functions, from guarding against strategic air attack to detecting hijacked civilian aircraft, the rationales articulated for imposing reporting restrictions upon aircraft hundreds of miles beyond a state’s territorial airspace were exclusively embedded in security concerns. However, China’s East China Sea ADIZ introduced additional non-security justifications for the unilateral imposition of reporting obligations upon aircraft, such as the administrative need to control air traffic in highly congested skies. The next section will outline how these additional administrative functions, and reporting obligations they entail, have effectively created a second generation of ADIZs that perform tasks that are more closely aligned with sovereignty than surveillance.

Adizs and the Regulation of Airspace?

The second generation of ADIZs that was heralded by China’s proclamation of its East China Sea ADIZ highlights how justifications for demarcating airspace as falling within an ADIZ now go far beyond their purported security function. Indeed, a core justification offered by Beijing for establishing its East China Sea ADIZ was its purported need to administer congested international airspace. Even though these congested skies were the product of a growing civil aviation industry in East Asia, thus the aircraft that were to fall under China’s new regulatory regime were for the most part civilian aircraft, China argued it could unilaterally impose reporting obligations upon these aircraft transiting international airspace. However, while this congestion in the skies over the East China Sea in turn was argued to necessitate a Chinese administered ADIZ to carry out the administration of airspace, despite the fact that not a single fatal incident resulting from congested air traffic had occurred in the disputed airspace under its administration by the ICAO’s regional Flight Information Region, there existed no international precedent of a state staking out such a claim. Furthermore, in addition to constituting a challenge to neighboring states, Beijing’s claim to administration of the skies through an ADIZ undermines existing multilateral institutions that were established to carry out this very task. It is important to recall that the administration of airspace over the East China Sea is already carried out by the ICAO, which maintains a global network of Flight Information Regions (FIRs). FIRs, established by the ICAO, a subsidiary organization of the United Nations, perform this regulatory function,

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which Beijing sought to duplicate. In addition, when states seek to impose reporting obligations upon civilian aircraft, these obligations should comply with norms embedded within the 1948 Chicago Convention. As argued elsewhere, Beijing’s ADIZ fails this test.9 To be sure, public international air law, the lex specialis of airspace law, has at its very core the principle of freedom of navigation in the skies above international waters.10 Nevertheless, these same skies are not free of regulation. As the civil aviation industry knows well, reporting requirements for civilian aircraft are imposed through a global network of FIRs. This existing regime, established through the Chicago Convention, include a multilateral forum in which the ‘rules of the air’ are negotiated and implemented by United Nations member states. Within FIRs aircraft are already required to file flight plans for navigational safety. In short, outside territorial airspace, international airspace is already regulated, and even US military aircraft, on routine flights, comply with reporting procedures and make use of FIR services.11 In the context of the current debate of over the East China Sea ADIZ, it is worth pointing out that Japan’s Fukuoka FIR administers much of the same airspace in which China has declared its ADIZ.12 In short, there is no need to duplicate pre-existing international institutions established to regulate international airspace through unilateral security instruments. Thus with the Chicago Convention guaranteeing the freedom of navigation in the skies above international waters, and with FIRs already administering international airspace, it comes as no surprise that China’s East China Sea ADIZ, which imposed obligations that go far beyond existing ADIZs, was viewed as undermining norms of public international air law. Indeed, China’s own definition of an ADIZ is at odds with existing practice. When China declared its ADIZ over the East China Sea, China’s official Xinhua news agency defined ADIZs as follows: [ADIZ] is a zone that can extend in some cases up to 300 miles beyond the territorial sea. It’s established by some countries off their coasts for security reasons. When entering the zone, all aircraft are required to identify

9  Lamont, C.K. (2014). ‘Conflict in the Skies: The Law of Air Defense Identification Zones’, Air and Space Law 39(3): 187–202. 10  This point will be explored further in the next section. 11  Commander’s Handbook on the Law of Naval Operations, United States Navy, 2007, at 13. 12  See Flight Information Region and Control Area, Ministry of Land, Infrastructure and Transport, available at http://www.mlit.go.jp/koku/15_hf_000050.html.

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themselves, report flight plans, and inform ground control of their exact position.13 Note that Xinhua’s description of China’s ADIZ has one feature that stands out: the requirement all aircraft which enter the ADIZ identify themselves, report flight plans and inform ground control of their positions. It is in this respect that China’s own definition of ADIZs is problematic as Xinhua’s definition of ADIZs fundamentally differs from pre-existing ADIZs, which impose no such universal obligation. Of course, this is more than a simple difference of opinion over reporting obligations, but rather betrays a fundamental dispute over the purpose of ADIZs and their relationship to notions of sovereignty. Rather than attempting to interpret Beijing’s ADIZ as an attempt to administer airspace that is already administered by an FIR, it is important to understand that the underlying motive behind Beijing’s 23 November 2013 proclamation of an ADIZ departs from the original intent of Cold War ADIZs, early warning against a strategic air attack on sovereign territory. This is crucial to understanding that from the perspective of Beijing, ADIZs are not primarily a benign security instrument, but a tool that can be employed to advance territorial claims over disputed territories. Indeed, it has been pointed out that for Chinese decision-makers, ‘reducing the risk of surprise attack cannot have been part of the equation’ to establish an East China Sea ADIZ.14 Foreign Ministry spokesperson, Qin Gang, provided support for this observation when Qin linked the ADIZ declaration to China’s territorial claim over the Senkaku/Daioyu Islands in a press conference on 25 November 2013.15 In sum, the wider reporting obligations imposed by 13  Statement by the Government of the People’s Republic of China on Establishing the East China Sea Air Defense Identification Zone, Xinhua, 23 November 2013, http://news.xinhuanet.com/english/china/2013-11/23/c_132911635.htm. 14  Welch, D.A. (2013). ‘What’s an ADIZ?’, Foreign Affairs, 9 December. Nevertheless, on 3 December 2013 China’s Ministry of Defense issued a statement emphasizing an air defense necessity and need to regulate air traffic, alongside a territorial claim to the Senkaku/Diaoyu Islands. China’s Foreign Ministry also issued a statement on the same day; however, this statement emphasized the ADIZ was established due to high flight congestion in the East China Sea and therefore was necessitated to ensure the safety of air traffic. See ‘Defense Ministry spokesman on China’s air defense identification zone’, Xinhua, 3 December 2013, http://news.xinhuanet.com/english/china/2013-12/03/c_132938762.htm; ‘China’s ADIZ to improve identification: FM spokesman’, Xinhua, 3 December 2013, http://news.xinhuanet.com/english/china/2013-12/03/c_132938467.htm. 15  Foreign Ministry Spokesperson Qin Gang’s Regular Press Conference on 25 November 2013, Embassy of the People’s Republic of China in the United States of America, 26 November 2013, http://www.china-embassy.org/eng/fyrth/t1102346.htm.

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China through its ADIZ underlines the fact China’s ADIZ was not declared out of security necessity, to defend sovereign territory against air attack, but rather it was established so as to demonstrate China’s administrative control over contested airspace. It is this administrative function that sought to project a state’s sovereign control over its own airspace into skies over international waters that provoked a swift response from China’s East Asian neighbors. Although the emergent patchwork of rationales for ADIZs is a product of diverse reporting regimes and understandings of ADIZs on the part of states, pre-existing ADIZs did not attempt to perform an administrative function. Thus, even in the absence of an international legal regime governing unilateral declarations through which ADIZs are established, hitherto existent ADIZs have sought to perform a surveillance rather than administrative function. Furthermore, in East Asia where Japan, South Korea and Taiwan all maintain longstanding ADIZs, ADIZs have been part of the security architecture for decades. Yet, at the same time, Northeast Asia’s ADIZ regimes, prior to China’s declaration of an East China Sea ADIZ, were strikingly similar given that their boundaries were all drawn by the US military in the aftermath of the Second World War. These ADIZs were later adopted by South Korea and Japan without significant changes. Therefore, there was also little territorial overlap, and reporting requests were largely similar in nature. For example, Japan’s ADIZ did not include the disputed Takeshima/Dokdo Islands or the Kuril Islands.16 In sum, it is not just the geographic scope included within ADIZs, which often extend for more than 300 miles beyond a State’s territorial airspace that is contested. States that establish ADIZs have widely divergent views on their scope and the obligations they may impose upon foreign aircraft transiting demarcated airspace. This absence of uniformity in ADIZ scope or obligation is a result of the differing rationales that underlie their very establishment. For example, those States that see ADIZs primarily as a security instrument do not aim to regulate air traffic beyond their airspace. In this respect, the US adopts a narrow approach to ADIZ obligations by imposing reporting obligations only upon those aircraft intending to enter US territorial airspace.17 On the other hand, China takes a wider approach to reporting obligations through a

16  Osawa, J. (2013). China’s ADIZ over the East China Sea: A ‘Great Wall in the Sky’?, Brookings Institution, 17 December, http://www.brookings.edu/research/opinions/2013/ 12/17-china-air-defense-identification-zone-osawa#. 17  Japan also maintains a similar ADIZ reporting regime that imposes a reporting obligation only on those aircraft intending to enter Japan’s territorial airspace, but not upon those aircraft only transiting Japan’s ADIZ.

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demand that all aircraft penetrating China’s ADIZ report their flight plans and positions to national authorities. In the absence of an international legal framework to establish international norms and guidelines for ADIZs, widely divergent obligations are now imposed upon aircraft transiting demarcated airspace. This section has demonstrated that variance in the nature of obligations imposed upon aircraft are grounded in two divergent approaches to ADIZs. States that view ADIZs as a defense mechanism, designed to detect an airborne attack on sovereign territory, are reluctant to impose stringent reporting regimes upon aircraft not intending to enter territorial airspace. Meanwhile, states which see ADIZs as an extension of territorial airspace, take a broader view of reporting obligations as they wish to demonstrate their administrative control over aircraft within ADIZs and to use ADIZs to advance claims to sovereignty over airspace and subjacent maritime territories. Given the above, it is therefore not surprising that ADIZs have emerged as a focal point of tension for maritime territorial disputes in East Asia.18 Indeed, throughout the 20th century there was a brought consensus on the limits of ADIZs, which in large part was the product of reporting regimes that emerged in the image of the US ADIZ. This. while ADIZs first emerged in North America, with the United States and Canada being the first two States to establish ADIZs, it was the US which extended this practice of creating ADIZs to the Pacific by establishing ADIZs for both South Korea and Japan in 1951.19 The international consensus over ADIZ practice came to an abrupt end in November 2013. Indeed, it was the linkage between China’s ADIZ on the one hand, and claims to sovereignty on the other, which were highlighted on 28 November 2013 when Catherine Ashton, the European Union’s High Representative for External Affairs, issued a statement on behalf of the European Union, rebuking China for its declaration of an ADIZ in the East China Sea. At the same time, Ashton sought to avoid entering into China and Japan’s conflicting claims to sovereignty over the contested Senkaku/Daioyu islands.20 However, from the perspectives of Brussels, Washington D.C. and 18  It is also important to note that the historic genealogy of ADIZs, as legal and security concepts, is deeply intertwined with the turbulent years that followed the end of the Second World War and onset of the Cold War in the region. 19  In 1969 Japan officially declared its ADIZ; however, ADIZ established by the US led occupation over Japanese territory was established earlier in 1951. Aoki, M. (2013). ‘ADIZs are Common but China’s is Worrisome’, Japan Times, 25 November, http://www.japantimes. co.jp/news/2013/11/25/reference/ADIZs-common-but-chinas-is-worrisome/. 20  Declaration by the High Representative Catherine Ashton on behalf of the European Union on the establishment by China of an ‘East China Sea Air Defense Identification

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Tokyo, there was a consensus that the reporting regime imposed by Beijing went far beyond what was permissible under public international air law. As the previous section demonstrated, it was the expansive nature of Beijing’s reporting obligations and its attempt to perform sovereignty over contested airspace by carrying out its administration rather than the proclamation of an ADIZ itself that brought about an international rebuke of the East China Sea ADIZ and linked ADIZ discourses to questions of sovereignty. Nevertheless, Ashton’s statement is illustrative of how both the EU and the US were confronted with responding to a new frontier in territorial disputes— the skies—without prejudice to disputed claims to subjacent waters and islands. To be sure, the practice of designating non-territorial airspace as an air defense identification zone was not in itself new, rather it is Beijing’s attempt to deny access to international airspace, which departs from air defense identification zone practice. Now, from the perspective of Beijing, control of airspace and control of territories below that airspace goes hand in hand. This is a position that remains at odds with the existing body of public international air law, which does not recognize claims to sovereign control over airspace beyond a state’s territorial airspace. It also cuts against innovative developments in air defense practice, which have seen states move to share surveillance tasks over territorial and non-territorial airspace.21 While the EU and the US, have sought to maintain a status quo in airspace governance, which also holds firmly to the principle of freedom of air navigation outside a state’s territorial waters, the debate over ADIZs highlights an expansion of claims to sovereignty from the traditional sphere of land and waters to airspace. Thus, although scholarly interest in understanding contestations over borders have hitherto focused on states ‘vying with one another for control over parts of the earth’s surface’,22 ADIZs highlight how surface disputes have been projected skyward in the aftermath of Beijing’s East China Sea ADIZ declaration. To be sure, contested borders can longer be understood solely in terms of territoriality, but rather the control of airspace now constitutes a performative aspect of sovereignty. In order to highlight how ADIZs have assumed this broader function beyond security, it is necessary to reflect upon both Beijing’s proclamation of an ADIZ, Zone’, Brussels, 28 November 2013, available at: http://www.consilium.europa.eu/uedocs/ cms_Data/docs/pressdata/EN/foraff/139752.pdf. 21  See the Benelux air defense treaty, March 2015. 22  Murphy, A.B. (2001). ‘Political Geography’, in Smelser, N.D. & Bates, P.B. (eds.), Inter­ national Encyclopedia of the Social and Behavioral Sciences, Amsterdam, Pergamon: 2.

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and responses to Beijing’s proclamation. Indeed, contemporary debates over ADIZs highlight how not only are borders themselves contested, but also how there are conflicted understandings of the very notion of sovereignty. As Beijing’s proclamation of its East China Sea ADIZ resulted in condemnation from both neighboring states, principally Japan, and from the United States, which mounted an immediate challenge to the new air defense zone, we can see that it was not only Beijing which now sees China’s ADIZs as constituting a claim to sovereignty. Finally, it must be noted that changing ADIZ practices also highlight a growing risk to civilian aircraft as states sought to harden borders in the skies and articulated a will to enforce these boarders through measures that could include the use of force. Whereas previously, civilian aircraft could be secure in reporting flight paths through FIRs, unilateral demands by states to report elevate the risk of civilian aircraft being caught up in contestations over sovereignty in the skies.

Adizs and Public International Air Law

What then, if any, international legal basis exists for a state to make claims to exercise limited sovereignty outside of territorial airspace? Are there limits to obligations states may impose upon foreign aircraft entering these designated zones outside their own territorial airspace? These questions highlight the growing urgency to better understand existing public international air law, which provides clear guidance on both. Despite the growing attention paid to ADIZs, there remains little understanding state practice in relation to these zones and the relevant body of international law that limits the ability of states to interfere with air navigation in non-territorial airspace, public international air law. To be sure, ever since states began looking out over the skies beyond their own territorial air space to detect threats emerging from non-territorial airspace in 1951, states have had to reconcile their monitoring practices with a core principle of public international air law, the lex specialis governing airspace law: freedom of air navigation in non-territorial airspace. States did this by limiting the scope of obligations imposed on aircraft en route to their own territorial airspace and accepting that no enforcement action could be taken to expel aircraft violating declared ADIZs.23 Nevertheless, even in these more limited forms it has been 23  China’s ADIZ declaration includes an implied threat that failure to comply would trigger undefined ‘defensive emergency measures’, see ‘Announcement of the Aircraft Identification Rules for the East China Sea Air Defense Identification Zone of the P.R.C.’,

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argued by Cuadra that ADIZs still limit the freedom of air navigation in international airspace. Dutton, on the other hand, argues the requirement to report, implied by an ADIZ, is not a violation of this principle.24 Conclusion Rethinking Security in the Skies and Shared ADIZs? With fears that a forthcoming unilateral declaration of an ADIZ on the part of Beijing in the skies over the South China Sea provoking further tension between China and its Pacific neighbors, ADIZs have transformed from a once benign security practice to constitute a new front in territorial contestations in East Asia. For the European Union, which aims to preserve the existing architecture of public international law, China’s unilateral declarations constitute a growing challenge to multilateralism in East Asia. This contribution has contrasted China’s East China Sea ADIZ with existing state practice and highlighted how the East China Sea ADIZ is in conflict with both existing ADIZ norms and public international air law. Indeed, Cuadra’s insight into the risks posed by ADIZs appears to be affirmed in the context of contemporary developments in the airspace above the East China Sea, where China, Japan and South Korea now maintain conflicting ADIZs. The danger inherent in China’s November 2013 declaration, and reactions to it, are that contestations over sovereignty have entered a new forum in East Asia, that of airspace. However, if China were to return to the initial justification for the establishment of ADIZs, that of air defense, there is no functional reason why its ADIZs should include obligations upon all aircraft entering demarcated international airspace. Furthermore, with some states sharing surveillance functions, there is no reason that states in East Asia could not on the one hand leave the regulation of airspace to the ICAO, while on the other establishing joint ADIZs to protect against common threats such as hijacked civilian aircraft.

Xinhua, 23 November 2013, available at: http://news.xinhuanet.com/english/china/201311/23/c_132911634.htm. 24  For a skeptical view on ADIZs see Cuadra, E. (1977). Air Defense Identification Zones: Creeping Jurisdiction in the Airspace, 18 Va. J. I’l L. 485. For ADIZs as compliant with international law see Ku, J. (2013). Why the US is Not Invoking International Law to Oppose China’s ADIZ; and Dutton, P.A. (2009). Caelum Liberum: Air Defense Identification Zones Outside of Sovereign Airspace, 103 AJIL: 691.

Part 4 Regional Integration and Trans-Regional Cooperation

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CHAPTER 13

The EU Pivot Towards Southeast Asia: Between Regional Integration and Security Dynamics Elisa Hörhager Introduction Southeast Asia, along with the greater East Asian region, is increasingly becoming an important theater of engagement for the world’s powers. The US and China have shown a renewed focus on the Asia-Pacific region. This is both a result and a catalyst of the structural power shifts East Asia has known in the past decade, causing fragility in the balance of power and influencing other actors’ foreign policy towards the region. On the US side, the Obama Administration’s prioritization of the Asia-Pacific region is motivated by economic interests and the need for stability. It has led the US to pursue the strengthening of bilateral security alliances, increase its military presence and expand its trade and investment activities.1 The US has thus reacted to China’s rise by attempting to preserve its position as the dominant status quo regional power. The much discussed ‘pivot towards Asia’ is therefore generally associated with American foreign policy. However, such a pivot can also be identified in EU foreign policy since the beginning of the 21st century. The EU’s foreign policy is substantially different from that of the US. Nevertheless, at least on the level of its policy documents, the EU has been pursuing its own kind of heightened engagement with Southeast Asia. Through its various institutional reforms since the 1993 Maastricht Treaty, the EU has matured into a major player on the international stage. As such, it has been making efforts to formulate a strategic foreign policy towards East Asia. The EU originally discovered the Asian region in 1994 in its communication ‘Towards a New Asia Strategy’, through which it intended to strengthen its presence in order to maintain the EU’s leading role in the world economy.2 In the past decade and especially through its most recent activities, two trends can be identified in the course of EU policy formulation towards Asia. The first is a 1  Clinton, H. (2011). ‘America’s Pacific Century’, Foreign Policy 189: 56–93. 2  European Commission (1994). Towards a New Asia Strategy, COM 94 314 final, Brussels: 3.

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broadening of perspective. Previously focused almost exclusively on trade, it now includes political and security related concerns. The second is the consistently central role attributed to the Association of Southeast Asian Nations (ASEAN), both in the regional dynamics as well as in the EU’s own engagement. With ASEAN as the second most advanced regional organization in terms of its level of integration (behind the EU), the EU has always seen both itself and ASEAN as ‘natural partners’ who share ‘a common DNA’.3 With the relations between the two regional organizations institutionalized since 1980 through the ASEAN-European Community Cooperation Agreement, ASEAN has been the EU’s point of entry onto the regional stage and a major mechanism for economic and political cooperation in East Asia.4 Both the EU’s own specific characteristics as a foreign policy actor and its relationship with ASEAN thus decisively condition the nature of its presence in East Asia. In so far as the EU is not a significant actor in the hard power sense, its importance in East Asia has so far been largely described in economic terms. In its intensifying engagement with Southeast Asia and particularly ASEAN, it is possible, however, to identify a shift in the self-consciousness of the EU in terms of the role it can and should be playing in East Asia. In its 2001 communication on ‘Europe and Asia’, the Commission signaled out ‘strengthening the EU’s political and economic presence across the region . . . to a level commensurate with the growing global weight of an enlarged EU’ as a core objective.5 The question is whether its attempts at more intense and qualitatively expanded relations with ASEAN have been, so far, successful or not. This article focuses on the EU’s most recent efforts to engage Southeast Asia and contribute to the region’s peace and stability. This is done through taking into account recent policy papers, as well as relying on interviews with key interlocutors from the European External Action Service and several Southeast Asian embassies in Brussels.6 A first section of this article focuses on the renewed economic strategy of the EU. This includes the negotiation of a Free Trade Agreement (FTA) with the region. In a second section, the more directly political and security related efforts of promoting peace and cooperation in Southeast Asia and the South China Sea are analyzed. 3   European External Action Service (2013). EU-ASEAN: Natural Partners, Jakarta, EU Delegation. 4  Gilson, J. (2005). ‘New Interregionalism? The EU and East Asia’, European Integration 27(3): 308. 5   European Commission (2001). Europe and Asia: A Strategic Framework for Enhanced Partnership, COM 469 Brussels. 6  These interviews were held in early 2014.

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Throughout its recent engagement, the EU has been trying to move towards actions under the heading of ‘comprehensive security’. The EU, lacking hard military power, can formulate strategic action under the angle of comprehensive security by taking into account non-traditional security concerns. The extent to which the EU’s engagement can be qualified as a sustained pivot towards East Asia will be assessed in the conclusion.

Regional Integration and Economic Interests

The EU has tended to increasingly view economic factors under the perspective of security aspects. It has thus adopted the concept of ‘comprehensive security’, recently popular with scholars and policy makers alike.7 Political and security factors are increasingly put on the agenda in foreign relations, and the security aspects of economic relations are carefully evaluated. In the case of the EU’s approach towards Asia, this has resulted in a renewed strategy of economic engagement. The EU has, firstly, undertaken an economic pivot towards Southeast Asia. Secondly, the strategy pursued in this economic pivot has allowed for the politicization of economic relations, by combining it with its other major concern of furthering regional integration. As part of the EU interests in East Asia, the EU approaches both regional integration and the ‘strengthening of bilateral trade and investment flows, supported by improved market access and investment conditions’ as constitutive elements in its broad security concept.8 In following its own development path as a progressively integrated economic union, the EU upholds the doctrine that increased regional integration in Southeast Asia will not only make those countries more productive, but will also help stabilize East Asia. In the 2012 ‘Policy Guidelines’ on East Asia, these two elements are brought together in a strategic manner. This echoes with the US strategy of ‘competitive liberalization’ as the economic dimensions of its own pivot towards Asia. When compared with the prior development of EU-ASEAN relations, the attempted region-to-region FTA represents a new form of engagement. Trade and investment always lay at the center of the relationship between the two groupings. Initially, however, the main focus lay on development more than on trade. The commercial relations between both regions hardly advanced

7  Yeo, L.H. (2010). ‘The EU as a Security Actor in Southeast Asia’, Panorama: Insights into Asian and European Affairs 2(10). 8  European Commission (2001), Europe and Asia: 3.

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in the 1980s, and were characterized as a donor-recipient relationship.9 With the establishment of the Asia-Europe Meeting (ASEM) in 1996 their relations refocused on trade and investment. Between 1990 and 1998 trade and investment between the two regions increased dramatically.10 Nevertheless, interdependence between the relations was very low, even to the extent that the Asian financial crisis hardly had an impact on their trade relations. A change in dynamics in both the regional context (with ASEAN and EU enlargements and the Asian financial crisis in 1997) and on a global level (difficulties in the WTO trade negotiations) more recently led both sides to refocus on their partnership. Economic factors have increasingly been viewed under the angle of security not just by the EU, but also by ASEAN. To ensure economic growth and financial stability, increasing regional integration has been a central goal of ASEAN in the wake of the Asian financial crisis. In addition, it strengthened its cooperation with its +3 partners China, Japan and South Korea. ASEAN member states have thus managed to diversify the structure of their external trade. With regard to China, this can also be seen as an attempt to embed the rising power in a network of economic interdependence. In 2006, after it lifted the self-imposed moratorium on bilateral trade negotiations, the EU identified ASEAN as a priority partner in its new ‘Global Europe’ trade policy.11 This meant responding to the ASEAN suggestion, advanced since 2003, of negotiating a region-to-region FTA. The organization was therefore successful in promoting its role as gateway to the Asia-Pacific and contributor to peace and stability in the region through its initiatives of the ASEAN FTA and the ASEAN Investment Area, both agreed upon in the 1990s. The EU decided to pursue political stability and economic growth in the region, as two of its key interests, in a single strategy aiming at regional trade liberalization. This gave rise in 2003 to the Trans-Regional EU-ASEAN Trade Initiative.12 This framework for dialog and regulatory communication was followed by the EU-ASEAN Vision Group in 2005 which tackled the issue of the stagnating relative trade and investment volumes between the two regions. 9   Rüland, J. (1996). ‘The Asia-Europe Meeting (ASEM): Towards a New Euro-Asean Relationship’, Rostock Information zu Politik und Verwaltung 5: 16–17. 10  Crozier, A. (2009). ‘The Trade and Aid Policy of the European Union: A Historical Perspective’, in Welfens, P. et al., EU-ASEAN Facing Economic Globalisation, Berlin, Springer: 69. 11  European Commission (2006). Global Europe competing in the World, a Contribution to the EU’s Growth and Jobs Strategy, COM 567, Brussels. 12  European Commission (2003). A New Partnership with South-East Asia, COM(2003) 399, Brussels.

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Once the Global Europe strategy of 2006 opened a window for region-to-region FTA negotiations, this seemed to both sides a mutually beneficial move for preserving the competitive edge in global trade. Nevertheless, a lack of overlap between both sides’ priorities made for challenging negotiations. Shortly before they were supposed to be finalized in March 2009, the negotiations and with them this ‘ambitious project’13 of a region-to-region FTA, were put on hold indefinitely. What seemed to make sense economically therefore failed on the political level, with both sides accusing the other of obstructionist behavior. This failure happened despite the fact that both the EU and ASEAN were pursuing their own seemingly compatible strategies of trade liberalization and that the impact assessment of a region-to-region FTA predicted a positive outcome for both sides.14 The institutional constraints and domestic pressure faced by the European Commission, the EU’s negotiator, were contrasted by the lacking institutionalization and negotiating capacity, as well as the asymmetrical member state interests on the ASEAN side.15 The EU’s official stance, echoed in much of the academic literature on the topic, ascribes this failure to the large systemic differences in ASEAN member states’ economies which resulted in a weak common position on their part.16 At least as important, however, was the fact that issues related to non-tariff barriers (NTBs) in trade, such as services and establishment, intellectual property and sustainable development, as well as public procurement and competition policy, politicized the negotiations. These issues formed the bulk of the negotiations as they were the main subjects of the six Expert Groups set up under the EU-ASEAN Joint 13  European Commission Directorate-General Trade (2013). Civil Society Meeting, EU-ASEAN Trade Relations: State of Play, 14 April, http://trade.ec.europa.eu/doclib/docs/2013/may/ tradoc_151116.pdf. 14  European Commission (2010). Commission Services’ Position Paper on the Trade Sustainability Impact Assessment of the Free Trade Agreement Between the EU and ASEAN, July, http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146294.pdf, accessed 29 October 2014. 15  The Commission relied on the Council negotiating mandate issued in April 2007, and was under time pressure to conclude negotiations before the entry into force of the Lisbon Treaty would necessitate a more complex ratification procedure with parliamentary approval. On the ASEAN side, its legal personality was unclear and will remain as such until the 2009 Agreement on the Privileges and Immunities of ASEAN has been ratified by all member states. ASEAN member states’ interests differed due to the large differences in the structures of their economies. Cambodia and Laos faced lower incentives as they were already benefitting from the EU’s Anything but Arms policy. 16  Andresso-O’Callaghan, B. (2009). ‘How is the EU-ASEAN FTA viewed by ASEAN stakeholders?’, Asia Europe Journal (7): 63–78.

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Committee. The EU had failed to push through these so-called ‘Singapore issues’ in the WTO’s collapsed Doha Development Round, and therefore made them the main focus of its bilateral FTA negotiations. For ASEAN stakeholders, agreeing on NTBs was much more controversial and questionable in terms of economic interests. Rather, their priorities lay with the liberalization of the agriculture and textile sectors. It was these different priorities on the EU and on the ASEAN side, articulated through the vocal demands of civil society and business sectors on both sides, which resulted in the politicization of the negotiations. A further political factor was the exclusion of Myanmar/Burma in the EU’s negotiation mandate. Cambodia and Laos had been temporarily excluded from the EU’s negotiating mandate as well due to the fact that they already benefited from the EU’s Everything But Arms (EBA) regime. Myanmar/ Burma presented a different case, as it had been excluded from the EU’s General System of Preferences in 1997. It did not benefit from the EBA regime and faced restrictive measures imposed by the EU (up until April 2012). The exclusion of Myanmar/Burma from negotiations therefore met with continued resistance on the side of ASEAN during the various negotiation rounds.17 In the wake of this failure, the EU was forced to change its strategy and started to negotiate bilateral agreements with individual ASEAN member states. The central component of regional integration was thus dropped from EU economic foreign policy towards Southeast Asia. The EU went on to negotiate bilateral agreements with the more developed ASEAN countries. All the same, political issues continue to create difficulties. Due to EU institutional reform, completing a Partnership and Cooperation Agreement (PCA) is necessary before the conclusion of a trade agreement.18 They serve as a framework for non-trade related issues, such as labor and employment, migration and environment. PCAs can be interpreted as the EU’s bid to assert its normative power in its external action by basing closer economic cooperation on certain key principles, such as human rights. They are also a bid to bring trade under the umbrella of cooperation on security issues, such as combating organized crime, terrorism financing and illicit drugs. Even though PCAs have been concluded with Singapore, Malaysia, Vietnam and Thailand, the often

17   Doan, X.L. (2012). ‘Opportunities and Challenges in EU-ASEAN Trade Relations’, Academic Publications EU-Asia Center, 2 July, http://www.eu-asiacenter.eu/pub_details. php?pub_id=60, accessed 29 October 2014. 18  European Parliament (2008). European Parliament resolution on Trade and Economic Relations with the Association of South East Asian Nations (ASEAN ), A6–0151/2008. Brussels.

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rather slow progress in bilateral talks on FTAs have not provided the fast-track solution originally hoped for. Lagging behind other commercial powers in its economic engagement of Southeast Asia, the EU has turned to a new initiative, in order to uphold its importance for ASEAN as a showcase of regional integration. With the ASEAN goal of completing the ASEAN Community by 2015, the main focus is being placed on the Community’s first pillar, the ASEAN Economic Community (AEC). It envisages a single market and production base, and a region marked by high competitiveness, equitable economic development, and full integration into the global economy. In the 2013–2017 Bandar Seri Begawan Plan of Action on the ASEAN-EU enhanced partnership, the EU commits itself to supporting the ASEAN Community, designed to incentivize ASEAN to integrate further. The EU’s ASEAN Regional Integration Support Program is the main instrument with 15 million euro in funding between 2012 and 2016. A more recent initiative in this framework is the ASEAN-EU Policy Dialog on Connectivity. Through this exchange, ASEAN can benefit from the EU’s experience in establishing the single market. The lacking political will inside particularly the Southeast Asian regional organization due to weak institutionalization, as well as the weakness of EU-ASEAN political relations in general, interfered with the willingness on both sides to step up their economic cooperation. Overcoming political differences has proven hard, even when economic interests are at stake. Nevertheless, the EU has utilized its role as a key supporter of Southeast Asian regional integration to reach a qualitatively new level in its foreign policy towards ASEAN. The EU’s Role in Regional Peace and Cooperation Southeast Asian states have been trying to deal with the changes in the regional security dynamics, provoked by Chinese and US behavior, on a collective level. At the same time, these challenges have made EU engagement in Southeast Asia both more urgent for the pursuit of its economic and security interests, and more complex. The EU’s position towards East Asian security concerns is often criticized as being limited to soft security and symbolic declarations, and as being relatively weak since it is blocked by divergent EU member state positions.19 Nevertheless, in basing its engagement on comprehensive security, 19  Dominguez, R. (2013). ‘The Security Role of the US in the Asia-Pacific’, in Christiansen, T., Kirchner, E., & Murray, P. (eds.), The Palgrave Handbook of EU-Asian Relations, New York, Palgrave Macmillan: 431.

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the EU has been aiming at becoming an increasingly strategic, coherent and important political actor in Southeast Asia. The EU has been building up security relations with the region through ASEAN and the ASEAN Regional Forum (ARF). Contributing to peace and security is mentioned as the first goal of EU engagement in the 1994 Communication,20 and the 2007 Guidelines for EU-ASEAN relations21 identify political and security cooperation as one of the priority areas. The Guidelines adopt a common definition of comprehensive security, including political, human, social and economic dimensions. The EU has recognized that tensions in the South China Sea have implications for navigation and commerce and therefore touch upon EU trade and investment interests.22 How has the EU pursued this strategy of engagement when it is hampered by the geographic distance separating the two regions as well as by its own limited competence and resources? Any attempt at an answer has to be embedded in the larger context of the EU’s common security and defense policy, operational since the 2003 European Security Strategy. It shows that the EU has recognized that it can hardly be a significant security actor if it rests on the traditional security dimension of effective military capabilities. On the contrary, adopting the comprehensive security perspective gives the EU a particularly important role in the post-Cold War world order, based on its experience in managing different areas of security policy.23 This approach is all the more pertinent to EU policy towards East Asia as its limited military capabilities are projected only in the EU’s direct neighborhood and periphery. The EU has therefore focused on multilateral and civilian power initiatives in an attempt to participate in and shape the norms and rules of security in Southeast Asia. It has been intensifying its cooperation with ASEAN since the 2011 ASEAN-EU Senior Officials’ Meeting in Warsaw. In 2012, it acceded to the Treaty of Amity and Cooperation (TAC) and upgraded its cooperation with ASEAN, notably on political and security issues. The EU’s engagement has thus taken shape in a reinforcement of its commitment to strengthening ASEAN’s central role in the security architecture of the Asia-Pacific region. Since the EU relies on a form of normative power in its role in the AsiaPacific, it has had to engage with what is commonly referred to as the 20  European Commission (1994), Towards a New Asia Strategy: 4. 21  Ibid.: 15–16. 22  European Council (2003). A Secure Europe in a Better World: European Security Strategy, Brussels: 11. 23  Manners, I. (2002). ‘European (security) Union: From Existential Threat to Ontological Security’, Working Papers 5, COPRI.

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‘ASEAN way’. The norms and rules of the ASEAN security community which make up the ‘ASEAN way’ are formed in an ongoing process. Its fundamental principles are mentioned in Article 2 of the TCA, first adopted in 1976. They are respect for independence, sovereignty and territorial integrity of all nations; non-interference in domestic affairs; the settlement of disputes by peaceful manner; and the renunciation of threat or use of force, as well as effective cooperation. Non-intervention is often claimed as the focal point for collective identity of the Southeast Asian nations, as nation-building was a major task for these countries in the 20th century. Non-interference was supposed to enable the process of agreeing on state borders and consolidating internal security by avoiding involvement of Southeast Asian states in any rivalry between great powers. Even though various attempts were made since the Asian crisis in 1997 to revise it, ASEAN has not departed from the principle of non-interference. A second fundamental aspect of the ASEAN way is conflict avoidance as its model of cooperative security, realized through consultation and dialog. The ARF was set up in 1994 to contribute to stability in the Asia-Pacific through confidencebuilding and preventive diplomacy. It offers ASEAN a way to deal with internal and external risks and the region’s major powers in a multilateral setting, while upholding the principles of the TAC. Much less institutionalized and formal than European security institutions, it is based on consensus decision-making, non-interference, the non-use of coercion, and incremental progress at a pace agreed upon by all participants. The EU’s potential for contribution to the ARF is great, as it prefers civilian solutions and respects diversity.24 It has therefore been one of the most activist ARF members. It has committed itself to moving forward the ARF’s development. This follows from the EU’s own process of integration, which has gone beyond inter-governmentalism and, at least formally, also beyond the consensus principle of decision making with the possibility of qualified majority voting. However, revising the slow pace of progress towards a common approach for conflict resolution goes against what most of the ASEAN member states want. Therefore, the EU’s push for more activism is necessarily mitigated by its willingness to keep ASEAN in the driver’s seat of the regional security architecture. The EU has thus far only managed to make attempts to push for more rapid progress as the co-chair of the Inter-Sessional Group meetings of 2004–2005 and 2006–2007, as well as through experience sharing and longer-term confidence building measures.

24  Weber, K. (2013). ‘The ASEAN Regional Forum and the EU’s Role in Promoting Security in the Asia-Pacific’, in Christiansen, T., Kirchner, E., & Murray, P. (eds.), The Palgrave Handbook of EU-Asian Relations, New York, Palgrave Macmillan: 345.

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The EU should be represented on the level of its High Representative for Foreign Affairs and Security Policy in the ARF. However, the first two years after the EU first appointed Catherine Ashton to this position, she did not show up at the ARF. This lack of top-level presence contrasted with other participants such as the US who were represented at the foreign minister’s level. It was interpreted by ASEAN members states as a sign of lacking political commitment showing that the EU did not have the will or the capacities to include the ARF in its foreign policy priorities. This changed dramatically in 2012 after the EU joined the TAC when Ashton attended the 19th ARF in Cambodia. With her presence, she wanted to demonstrate the ‘EU’s commitment to widen the engagement with the countries of this region’ and asked the ASEAN nations ‘to see the EU as a reliable partner’.25 In addition, the numerous non-traditional security related areas on the ASEAN and ARF agendas have provided the EU with increasing opportunities for the exchange of best-practices, information sharing and capacity building. Since 2012, the EU has for example been reinforcing Southeast Asian states’ efforts in the field of crisis and emergency response by helping to establish a regional network of information sharing and early-warning systems. This was upgraded to cooperation in crisis response after the 11 April 2012 Tsunami in Indonesia, when the EU’s Monitoring and Information Center established contacts with the ASEAN Center for Humanitarian Assistance on disaster Management. This crosscutting approach to comprehensive security demonstrates the EU’s potential for mobilizing development aid as well as contributing through humanitarian assistance. Outside of the ARF, the EU has managed to demonstrate its peace-making capabilities in its monitoring mission in Aceh, Indonesia. This mission set a precedent for cooperation with ASEAN member states as the first peacekeeping mission by the EU in Asia. As a civilian mission, the EU was tasked along with five ASEAN countries with monitoring the peace agreement signed in Helsinki in 2005 between the Indonesian government and the Free Aceh Movement. Even though this remained a unique on the ground demonstration of the EU’s peace-making capabilities, it served to demonstrate the constructive nature of external intervention as it did not put into question the sovereignty of ASEAN states. The EU provided expertise and built trust as a mediator between the parties. It put the EU on the map as an effective external actor in the field of peacekeeping, demonstrating its neutral yet engaged stance. Most ASEAN member states resisted the establishment of an ASEAN peacekeeping force, 25  European External Action Service (2012). Reinforcing EU-ASEAN Relations, http://eeas .europa.eu/top_stories/2012/130712_asean_forum_en.htm, accessed 29 October 2014.

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suggested by Indonesia in 2007. Instead, a network was established between national peace-keeping centers. Yet since the Aceh mission ended in 2006, there has been no further opportunity for the EU to take up a role in peacekeeping in such a significant way. Since 2012, the Council has included the issue of the South China Sea tensions in its East Asia Policy Guidelines. During this year, ASEAN failed to act collectively despite the Philippines’ push to seek a regional solution to the territorial disputes with China. ASEAN also failed to stick to its own 2012 deadline for the re-negotiation of a Code of Conduct, this time binding in force. In its Guidelines, the EU and its member states are urged to take notice of the importance of this issue for the EU. It has the potential to significantly strengthen or weaken the EU’s stance of promoting a rules-based international order. It could also impact the EU’s core interests, especially trade and energy security. The EU has called for both dispute settlement on the basis of international law as well as collaborative diplomacy based on a binding Code of Conduct. This position is aligned with the US’ push towards multilateral negotiations. The EU and the US issued a joint statement on the Asia-Pacific region underlining this alignment prior to the ASEM meeting of 2012.26 In light of the South China Sea dispute, ASEAN itself has been trying to create more flexible arrangements involving the region’s great and emerging powers. ASEAN has sought to strengthen the regional security architecture by creating a multi-level network of fora and dialogs, with itself at the center. The blockage in the ARF has led to it being increasingly put into question and compared to a mere diplomatic ritual. Despite the lack of development in the ARF, the EU has continued to engage in this forum, which the EU policy documents place at the center of its political strategy. The EU recently initiated and hosted two senior-level trainings with more than 125 delegates from the ARF members and the ASEAN secretariat. However, the ARF itself is in somewhat of a standstill and the ASEAN member states have been looking for more progressive arrangements elsewhere. The EU is not unaware of this development, yet has not managed to keep up. Among the additional fora that are becoming important, the East Asia Summit (EAS) can be deemed the most successful initiative. The EAS was established by ASEAN in 2005 as a security forum with China, Japan, South Korea and Australia. Its two latest members are Russia and the US, which applied for membership once they realized that ASEAN was tackling difficult issues and moving to a more results-oriented process in

26   U S Department of State (2012). US-EU Statement on the Asia-Pacific Region, Washington DC, GPO.

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the EAS.27 Despite the ARF continuously lacking the means and instruments to implement its policies, the EU has only recently realized the importance of being admitted to the EAS. The 2012 Policy Guidelines on East Asia thus tasked the EU with creating an environment conducive to its participation in the EAS. This means that the EU is now hoping for ASEAN to allow it to join the EAS. Joining this key venue for politico-security problem solving is important if the EU does not want to face the danger of deteriorating in relevancy along with the ARF. A further important forum of which the EU is not a member is the ASEAN Defense Ministers Meeting Plus, established in 2010 with the 18 EAS members. Its agenda looks remarkably similar to that of the most recent ASEAN-EU Plan of Action, and joining it would increase the efficiency of EU efforts to contribute in the area of non-traditional security concerns. The EU’s absence in these new fora reinforces the tendency by other actors to dismiss it as a fledgling actor with little impact in Southeast Asian political and security issues. Conclusion How Sustainable and Relevant is EU Engagement of ASEAN? The establishment of the ASEAN Community and the evolving regional security architecture offer key opportunities for the EU to demonstrate its strength and experience through which it frames itself as an engaged actor. In the interviews conducted for this article, both Southeast Asian and EU interlocutors framed the EU as an actor which can draw on its ‘experience of neutrality’ to contribute to the resolution of the South China Sea disputes. What is meant here is that the EU enjoys credibility through its experience in processes of arbitrating between competing interests and knows how to apply procedural neutrality and fairness to such difficult issues as the joint exploitation of maritime resources. This translates to the context of the South China Sea disputes where the EU, with no military presence, is not seen as a rival. On this basis, some observers have identified a clear ‘demand for “more Europe” ’ coming from ASEAN member states.28

27  Burns, A. (2011). ‘US Joins East Asia Summit: Implications for Regional Cooperation, An Interview with Ann Marie Murphy’, NBR, 17 November, http://www.nbr.org/research/ activity.aspx?id=183, accessed 29 October 2014. 28  Casarini, N. (2012). ‘EU Foreign Policy in the Asia Pacific: Striking the Right Balance Between the US, China and ASEAN’, EUISS Analysis: 1–6.

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With the rivalry between the status quo power of the region, the US, and the emerging power, China, having become more explicit during Obama’s visit to Asia in April 2014, the EU has the opportunity to exploit this demand. The EU has been attempting to prove its capability of devising its own strategy which balances between the US, China and ASEAN. The European Security Strategy was formulated in 2003, when the weakening of the UN through the Iraq war was present in policy-makers’ minds. Its strategy underlines the need to revitalize effective multilateralism through the strengthening of international institutions and a rules-based international order.29 Regional organizations are particularly important in their capacity to support global governance. The absence of EU military presence in Southeast Asia can be interpreted to its advantage, in that it strengthens its credibility in undertaking conflictresolution in territorial disputes. In this respect, the EU has recently been falling back on its assets for capacity building as well as multi-level and crossborder governance. It has started to focus on maritime issues, a central aspect of the South China Sea conflict. Here, joint management and development of maritime resources would present the opportunity for a shift in the conflict. In late 2013, it organized a High-level Dialog on Maritime Cooperation with ASEAN. In parallel, the EU has been attempting to strengthen its cooperation with China on maritime security since the signing of a joint Agreement on Maritime Transport in 2002. In inner-ASEAN conflicts, the EU was invited to take responsibility for certain components of the International Monitoring Team in Mindanao (Philippines) by the parties involved in the peace process. It has also followed a strategy of discrete engagement in low-profile dialogs on the ethnic minority conflicts along the borders of Southern Thailand. A promising focal point for such EU efforts is the ASEAN Institute for Peace and Reconciliation launched in 2012. The EU’s important diplomatic presence in Southeast Asia presents a potential basis for strengthening political ties. Previously, a lack of visibility of the EU commitment was frequently criticized by Southeast Asian diplomats, for whom the interpersonal aspect of political cooperation is central. From 2002 to 2012, new EU Delegations were opened in Cambodia, Laos, Malaysia, Singapore, and finally Myanmar/Burma, in addition to the four delegations already opened in Southeast Asia between 1979 and 1990. Communication has also been improved through increased attendance on the EU side of high-level meetings with ASEAN. The EU has promised an ambassador and a delegation dedicated solely to ASEAN, but has so far shied away from following up this promise with concrete measures due to budgetary concerns. ASEAN will be 29  European Council (2003). A Secure Europe in a Better World: 9.

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watching closely whether or not the EU acts on its word and manages to invest in a new Delegation in a region so far away from its neighborhood. A significant stumbling block in EU-ASEAN political relations has been removed with the transition in Myanmar/Burma. Up until 2011, the latter’s membership in ASEAN hampered cooperation on political and security issues. The EU reacted rapidly to the reform process in Myanmar/Burma and attempted to facilitate its role as 2014 ASEAN chair through a joint EU-Myanmar task force which integrates both public and private sector actors. In future, the EU will have to prove its sustained commitment to such a geographically distanced region as Southeast Asia, despite the developments in its neighborhood requiring its attention, notably the crisis in the Ukraine. Added to the issue of continuity and visibility is the main problem of a lack in strategy and coherence when it comes to moving beyond the pre-existing trade relations. The EU has shown indecisiveness in its attitude towards China’s rise and in setting the priorities of its foreign policy. The EU is attempting to capitalize on the new dynamics afforded by its most recent efforts in Southeast Asia and the reform process in Myanmar/Burma to make sure it is increasingly perceived as a benevolent, rather than an irrelevant, actor. The current context in East Asia is one of continuing power shifts with the rise of China and elements of an arms race surrounding the South China Sea dispute.30 In such a context, the question arises whether ‘benevolence’, in the form of soft-power and regional integration, could itself lead to irrelevance. As the EU has placed its bids on ASEAN and aims at supporting the project of Southeast Asian integration, the success of the relationship rests on the strategic importance of ASEAN in the region. If Western Europe without the EU is now almost unimaginable, the same is not necessarily true for ASEAN in Southeast Asia. At the helm of important regional security fora, ASEAN has managed to gain importance through its collective weight. Yet its continued relevance is endangered by both internal and external factors. Internally, the differences among member states in their economic development, national policies and bilateral relations with the US and China pose a significant challenge. These differences have repeatedly undermined attempts at a unified ASEAN position, such as in 2012 when Cambodia was accused of blocking a joint ASEAN response to rising tensions between the Philippines and China. Externally, the ASEAN and its norms are challenged by China and the US. The US, in the context of its renewed emphasis on the Asia Pacific, has to a large extent focused on strengthening its bilateral military ties with its 30  Beukel, E. (2010). ‘China and the South China Sea: Two Faces of Power in the Rising China’s Neighborhood Policy’, DIIS Working Paper 7: 7–26.

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allies (Japan, the Republic of Korea, Australia, Thailand and the Philippines) and building partnerships with other ASEAN member states individually. China most recently put forward a new initiative, the ‘Maritime Silk Road Project’, in an effort to divert the potential for conflict arising from its steady strengthening of maritime capacity. Even though it accounts for ASEAN indirectly through the China-ASEAN Maritime Partnership, the Silk Road project’s format includes the whole of the Indian Ocean and represents little more than a grouping together of China’s bilateral relationships with the different countries involved. It therefore can be interpreted as China’s attempt at a competing model of regional cooperation which sidelines ASEAN. In light of these difficulties facing ASEAN, how can the EU make a contribution? In response to internal challenges, the EU wants to contribute to increasing institutional capacity and removing obstacles to increased integration. It is offering a blueprint of integration transmitted through development cooperation and knowledge transfer. Yet this attempt hinges on the strength of that very blueprint. Recent developments within the EU, from the failure of the EU Constitution to the Eurozone crisis, highlight the difficulties of integration more than they do the benefits. Along with a much greater diversity in development levels faced by the Southeast Asian nations, the EU’s exemplary status is thus increasingly put into question. Externally, the EU and ASEAN are both similarly programmed foreign policy actors as they attempt to engage other powers in the international order by developing common norms and institutionalizing cooperative procedures. Yet the EU’s failure to engage Russia in this way, as demonstrated through the Ukraine crisis, does not set a particularly positive example for ASEAN’s engagement of China, the region’s rising power with potentially revisionist aims. In conclusion, based solely on their shared identity and raison d’être as the two most advanced regional integration organizations, ASEAN seems the ideal partner for the EU to pursue its normative power-based foreign policy.31 The EU is also the ideal partner for ASEAN in its attempt at developing a normative power of its own in East Asia. However, the apparent ease and mutually beneficial nature of the relationship is undermined when inner and outer obstacles lessen their effectiveness and importance as international actors. For regional integration organizations, normative power is derived from the attractiveness of their existence which is ‘different to pre-existing political forms’.32 If ASEAN and the EU can become “normative partners” and successfully engage China 31  Manners, I. (2002). ‘Normative Power Europe: A Contradiction in Terms?’, Journal of Common Market Studies 40(2): 235–258. 32  Ibid.: 242.

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through multilateral means of conflict resolution, this will strengthen their position both internationally as well as in the eyes of their domestic constituency. Yet because of their specific structure as organizations and not states, both actors face the double challenge of internal differences as well as external pressures. Strengthened EU engagement of ASEAN harbors the potential to highlight their weaknesses in the face of traditional state actors just as much as it can benefit both organizations. The stakes of this relationship might therefore be higher than both actors seem to realize.

CHAPTER 14

Asia-Europe Parliamentary Dialog: Strong Economics, Strong Politics but What Value? Silja Keva Introduction This article discusses the evolution and value of the parliamentary dimension of the Asia-Europe dialog from 1996 to the present day. The Asia-Europe Meeting (ASEM) process was started in 1996 in Bangkok, where the leaders of the European Union member states and the European Commission met with the leaders of the Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea for the first time. After eighteen years ASEM has grown into a large-scale dialog process with fifty-three partners and a plethora of meetings and activities.1 At the same time parliamentarians (Asia-Europe Parliamentary Partnership, ASEP), civil society actors (the Asia-Europe People’s Forum, AEPF), business people (Asia-Europe Business Forum, AEBF) and trade union representatives (Asia-Europe Trade Union Forum, AETUF) have held their own meetings, with the objective of sharing their priorities with the leaders of Asia and Europe. The original motivation for Asia-Europe dialog was to establish a ‘missing link’ between the two continents. Now, in the 2010s the European Union and the Asian countries are each other’s key trading partners as well as each other’s major partners in investments. The EU is building strategic partnerships with China, Japan, South Korea and India. At the same time, there is a constant debate about the actual success of economic and political relations between the two regions. Some, like Yeo Lay Hwee, see that behind strong trade, the EU is still searching for a political and security role in Asia, 1  In 2015, ASEM has fifty-three partners: fifty-one countries and two international organizations. The partners are Australia, Austria, Bangladesh, Belgium, Brunei Darussalam, Bulgaria, Cambodia, China, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Indonesia, Ireland, Italy, Japan, Kazakhstan, Republic of Korea, Laos, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mongolia, Myanmar, the Netherlands, New Zealand, Norway, Pakistan, the Philippines, Poland, Portugal, Romania, Russia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Thailand, the United Kingdom, Vietnam, the European Union and the ASEAN Secretariat.

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while the US has been re-establishing its ‘pivot’ to Asia since 2011.2 Others, like Bart Gaens and Juha Jokela, see that ASEM, while having had only a minimal impact on Asia-Europe trade, has actually succeeded in opening ‘an avenue for political interaction with Asian countries’ for the EU.3 The aim of this article is to analyze whether the often prevalent assumption of strong economics but weak politics is accurate in the Asia-Europe parliamentary dialog and whether the ‘avenue for political interaction’ is evident in ASEP and what is the value of this dialog. This article argues that the dichotomy of strong trade and weak politics is increasingly inaccurate for the ASEP. Four major themes have been recognized from the dialog. First, despite the early emphasis on economics, politics and even security issues were on the ASEP agenda from the beginning. Second, the parliamentarians are increasingly focusing on broad global challenges that involve a variety of political issues. Third, the participants constantly need to balance between the motivations of democratic and authoritarian regimes and fourth, between the interests of advanced economies and emerging or developing economies. This balancing act brings even the sensitive issues to the meeting table. Although the ASEM process has been widely researched4, the parallel dialogs and especially the parliamentarians’ processes have received very little focus in the academic literature.5 Yet up to 150 parliamentarians from about thirty countries convene every other year to debate topical international issues.6

2  Yeo, L.H. (2014). ‘The Europe’s Role in Shaping Asia’s Security’, Europe’s World, 7 January, http://europesworld.org/2014/01/07/the-eus-role-in-shaping-asias-security/#.VNtkZPmsWlU, 1 September. 3  Gaens, B. & Jokela, J. (2012). ‘Interregional Relations and Legitimacy in Global Governance: The EU in ASEM’, Asia-Europe Journal 10(2–3): 157. 4  Lim, P. (2001). ‘The Unfolding Asia–Europe Meeting (ASEM) Process’, in Preston, P.W. & Gilson, J. (eds.), The European Union and East Asia. Interregional Linkages in a Changing Global System, Cheltenham, Edward Elgar: 91–108; Gaens, B. (2008). Europe-Asia Interregional Relations: A Decade of ASEM, Aldershot, Ashgate; Dent, C.M. (2004). ‘The Asia-Europe Meeting and Inter-Regionalism: Toward a Theory of Multilateral Utility’, Asian Survey 44(2): 213–236. 5  Gaens, B. & Jokela, J. (2012). ‘Interregional Relations and Legitimacy in Global Governance: The EU in ASEM’, 157; Bersick, S. (2005), ‘Europe-Asia Relations—ASEM and the Democratization of Inter- and Trans-Regional Dialogs: The Role of Civil Society, NGO and Parliaments’, Europe Solidaire Sans Frontières, October, accessed 30 September 2014, http://www.europesolidaire.org/spip. php?article3074. 6  All 53 ASEM partners belong to ASEP; however, not all countries participate in every ASEP meeting.

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The research is based on the final declarations of the ASEP meetings, selected delegation meeting reports, expert interviews conducted by the author with ASEM- and ASEP-related officials and politicians and the most relevant research literature on ASEM and international parliamentary institutions.7 First, an introduction will be given to international parliamentary institutions. Then, the evolution of the ASEP dialog will be analyzed, and finally the value of the dialog to the participants, national parliaments and the ASEM process in general will be evaluated. International Parliamentary Institutions on the International Stage National parliaments participate in international affairs in three ways: (1) by influencing foreign policy via national channels, (2) by conducting parallel diplomatic relations (often called parliamentary diplomacy) and (3) by establishing representative parliamentary bodies of international and regional organizations called international parliamentary institutions (IPIs).8 Zlatko Šabič further defines IPIs as institutions in which parliamentarians co-operate with an aim of formulating their interests, adopting decisions, strategies or programs, which they implement or promote, formally and informally, in interactions with other actors and by various means such as persuasion, advocacy or institutional pressure.9 The most established and studied IPI is the European Parliament; other well-known institutions include the Inter-Parliamentary Union (IPU), the Parliamentary Assembly of the Council of Europe (PACE) and the Mercosur Parliament (Parlasur) in Latin America. The increasing number of IPIs, especially in the latter half of the twentieth century and the first part of the twenty-first century, is both a result of and a response to the processes of 7  These reports include delegation reports by Japan, Finland and the European Parliament. These were selected for two reasons: first, they represent active participants from both Europe and Asia, and second, these were best available for the author. The reports published by the National Diet of Japan are very detailed transcriptions of the meeting discussions and procedures. 8  Malamud, A. & Stavridis, S. (2011). ‘Parliaments and Parliamentarians as International Actors’, in Reinalda, B. (ed.), The Ashgate Research Companion to Non-State Actors, Surrey, Ashgate: 101. 9  Šabič, Z. (2008). ‘Building Democratic and Responsible Global Governance: The Role of International Parliamentary Institutions’, Parliamentary Affairs 61(2): 258.

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democratization, regionalization and globalization.10 In the post-Cold War globalized world, IPIs have started to play an active role in inter-regional relations. IPIs are part of the new regionalism11 in which international bottomup networks of both state and non-state actors emerge in order to tackle new global challenges.12 Šabič points out that globalization ‘practically forces parliamentarians to become international actors’ and IPIs have made it possible for politicians to discuss international challenges and to find ways to deal with them together.13 In year 2000 the Speakers of Parliaments called in their World Conference (organized by IPU) for ‘greater involvement of parliaments in international affairs’ and stated that ‘whether they wanted or not, legislatures everywhere were under mounting pressure to debate an ever more transnational agenda’ because in the end it is the parliaments’ responsibility to enact the issues of the global agenda into domestic law.14 Another key function for IPIs is to address the issue of international democracy deficit.15 As noted by the United Nations’ Cardoso Panel in 2004, ‘the substance of politics is fast globalizing [. . .], the process of politics is not’, because ‘its principal institutions (elections, political parties and parliaments) remain’ at the national level and have only weak influence on global governance.16 These general definitions also describe the activities of the Asia-Europe Parliamentary Partnership as well as the motivations behind it. However, ASEP is somewhat difficult to place in some of the more detailed definitions of IPIs, because unlike many other IPIs, ASEP is only very loosely attached to ASEM, which itself is not a typical international organization either, but a dialog 10  Currently, there are up to 100 IPIs. 11  For more on new regionalism see e.g Hettne, B. (2003). ‘The New Regionalism Revisited’, in Söderbaum, F. & Shaw, T.M. (eds.), Theories of New Regionalism, Gordonsville, Palgrave Macmillan. 12  Costa, O., Dri, C. & Stavridis, S. (2013). Parliamentary Dimensions of Regionalization and Globalization: The Role of Inter-Parliamentary Institutions, London, Palgrave Macmillan: 3–6. 13  Šabič, Z. (2008). ‘Democracy Across Borders: Parliamentarians and International Public Spheres’, Javnost -the Public 15(3): 75–88. 14  Interparliamentary Union (IPU), ‘Parliamentary Involvement in International Affairs’, 2005(2). 15   Kissling, C. (2011). ‘The Legal and Political Status of International Parliamentary Institutions’, Background Paper #4, Berlin, Committee for a Democratic U.N., accessed 20 September 2014, http://www.kdun.org/resources/2011ipis_en.pdf. 16  United Nations, General Assembly, We the Peoples: Civil Society, the United Nations and Global Governance, Report of the Panel of Eminent Persons on United Nations Civil Society Relations, A/58/817, 11 June 2014, undocs.org/A/58/817.

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forum.17 Categorization established by Claudia Kissling calls ASEP a ‘government-run/inspired non-governmental organization (GRINGO)’, in other words a loosely-structured international entity of parliamentarians that has ties with an intergovernmental institution (ASEM) but remains independent.18 Many IPIs, including ASEP, actually resemble NGOs or interest groups as they lobby governments, develop the parliamentarians’ capacity to oversee their government in international issues and finally facilitates confidence building and socialization among politicians.19

The Asia-Europe Parliamentary Partnership (ASEP) and its Key Characteristics Inspired by the first ASEM Summit, forty-five members of the European Parliament (EP) met with twenty-six parliamentarians from ASEAN+3 countries in April 1996,20 just one month after the leaders’ meeting. The initiative came from the EP.21 At the first ASEP meeting (ASEP1), the partners envisioned the roles and possibilities of the new process: ASEP was to be part of ASEM’s follow-up and a tool for enhancing people-to-people dialog in Asia-Europe relations, which could also affect governments’ policy-making and the EU agenda. Reflecting the informal, non-institutionalized nature of the first ASEM summit, it was decided that ASEP should avoid becoming an institution and remain as a dialog.22

17  More definitions by Cofelice, A. (2012). ‘International Parliamentary Institutions: Some Preliminary Findings and Setting a Research Agenda’, Unu-Cris Working Papers W-2012/3; Cutler, R.M. (2006). ‘The OSCE’s Parliamentary Diplomacy in Central Asia and the South Caucasus in Comparative Perspective’, Studia Diplomatica LIX(2): 82, pre-print accessed 13 February 2015, http://www.robertcutler.org/download/pdf/ar06sdipp.pdf. 18   Kissling, C. (2011). ‘The Legal and Political Status of International Parliamentary Institutions’, 13. 19  Cofelice, A. (2012). ‘International Parliamentary Institutions’, 15. 20  Delegations from China, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam participated. 21  Bersick, S. (2005). ‘Europe-Asia Relations—ASEM and the Democratization of Inter- and Trans-Regional Dialogs: The Role of Civil Society, NGO and Parliaments’, Europe Solidaire Sans Frontières, https//www.europe-solidaire.org/spip.php?article3074, 30 September. 22  Euroopan parlamentti [European Parliament], Aasian Ja Euroopan Välinen Parlamentaarinen Kumppanuus (ASEP). Yhteenveto parlamenttien välisestä kokouksesta [Asia-Europe Parliamentary Partnership, summary of the interparliamentary meeting], 1996.

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Despite the enthusiasm felt at the first meeting, and attempts from the EP to revive the process,23 the second conference did not take place until six years after the first, when the Philippines offered to host a meeting in 2002.24 Many EU member state parliaments now participated in the meeting alongside the EP. Next Vietnam, as the host of ASEM5, organized the following meeting in Huế in 2004. Now the parliamentarians themselves considered their role as complementary vis-à-vis ASEM and they decided to set up a Study Group which would plan a structural framework for ASEP.25 This process was finalized two years later in Helsinki (ASEP4), where it was decided that ASEP should ‘serve as a forum for inter-parliamentary contacts, exchanges and diplomacy among parliaments and to promote mutual understanding among the people and countries of Asia and Europe’ and ‘provide a link between parliaments of Asia and Europe and ASEM, and thereby to make an active parliamentary contribution to the ASEM process and in particular to Summit Meetings.’26 The new ASEP Rules of Procedure now defined the membership (in principle, all national parliaments of the ASEM countries27 and the EP) and the meeting practicalities. The rules gave ASEP more structure, continuity and a clearer purpose. After Helsinki, the next meetings (ASEP5 Beijing 2008, ASEP6 Brussels 2010, ASEP7 Vientiane (Laos) 2012, ASEP8 Rome 2014) followed the same routine. ASEP convened before each ASEM Summit and provided its input to the Summit through its declaration. Now, almost two decades later, ASEP is still a loose process; it has no secretariat or coordinators. Delegations are mostly convened ad hoc, and meetings remain one-time events with little follow-up in between. Actively participating partners (have participated at least five times) from Europe are Belgium, Denmark, Finland, Germany, Hungary, Portugal, Spain, the EP and China, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam from Asia.28 More Europeans participate in the meetings held in Europe and more Asians in the meetings held in Asia. The process of hosting 23  European Parliament, Resolution on the Third Asia-Europe Meeting (ASEM 3) in Seoul, 20–21 October 2000, B5–0768/2000. 24  European Parliament, Delegation for Relations with the Member States of ASEAN, Southeast Asia and the Republic of Korea, European Parliament—Philippines Interparliamentary Meeting, Vol. PE 331.119, 2002. 25   A SEP (2004). Summary Report [ASEP3], Huế, Vietnam. 26   A SEP (2006). Rules of Procedure. 27  Exceptions include Brunei and Myanmar. Brunei joined ASEM in 1996 but ASEP only in 2008. Myanmar joined ASEM in 2006 but ASEP only in 2012. 28  Of these, all countries send ad hoc delegations with the exception of Finland, which has since 2008 appointed a permanent ASEP delegation for the full four-year election period.

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a meeting seems to create feeling of ownership, and therefore e.g. Vietnam, Finland and Belgium, which are relatively small countries, have taken a more active role in the partnership and proposed initiatives to develop the process further. ASEP has a very loose and informal relationship with ASEM. There are no defined responsibilities or powers towards ASEM, and the communication channels between the two are defined in a very general way, mostly by ASEP itself. The ASEP partners agreed in 2004 that ‘the outcome of ASEP Meeting shall be communicated to and taken into consideration as appropriate by the ASEM Summit.’29 In practice, this means that typically the ASEP declaration is handed officially to the host of the upcoming ASEM Summit in a separate meeting. ASEM was originally considered a top-level leaders’ meeting where other sectors of the society were not seen as active contributors but rather as recipients of ideas initiated from the top. Therefore, the meetings of NGOs, trade unions and parliamentarians were first set up outside the official ASEM by the actors themselves.30 Despite the recommendations of the European Commission and the EP in 2000,31 the parallel ASEM events concerning ‘other sectors of society’ were first recognized by ASEM Foreign Ministers in 2003. Finland’s decision in 2006 to invite the President of ASEP4 to the ASEM Summit remained a one-time event. Since 2008, the ASEP contribution has been acknowledged in the ASEM Summit declarations. ASEM10 in Milan 201632 made a difference by inviting all three parallel meetings (ASEP, AEBF and AEPF) to the Summit to deliver their messages to the leaders of Asia and Europe. It can be concluded that ASEMASEP relations are tighter in summits organized in Europe than in Asia. The overall ASEP-ASEM relations have developed greatly from the early 2000s when Paul Lim stated that national parliaments were left outside of the official process and Jürgen Rüland saw that ASEM therefore suffered from lack

29  Parliament of Finland (2006). Summary Report of the Fourth Asia-Europe Parliamentary Partnership Meeting (ASEPIV), Helsinki. 30  Keva, S. (2008). ‘ASEM and Civil Society’, in Gaens, B. (ed.), Europe-Asia Interregional Relations: A Decade of ASEM, Aldershot, Ashgate: 103–104; Lim, P. (2001). ‘The Unfolding Asia–Europe Meeting (ASEM) Process’. During its first decade, ASEM dealt with the other sectors of society through the Asia-Europe Foundation (ASEF). In the 2000s, ASEF briefly organized its own Asia-Europe Young Parliamentarians Meetings. 31  European Commission (2000). Perspectives and Priorities for the ASEM Process into the Next Decade. Commission Working Document, COM/2000/0241 final. 32  The Summit was chaired by the President of the European Council Herman van Rompuy.

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of democratic transparency.33 Twelve years later Gaens and Jokela see that the role of parliaments, partly thanks to the EP’s active work, has grown in the ASEM process.34 On the other hand Sebastian Bersick argues that although ASEP has become part of the ASEM process, it cannot really affect ASEM.35 The relations remain weak and the overall ambition level for concrete measures remains rather weak among the partners.36 If the vertical relations remain weak, ASEP has strengthened its parallel relations with the Asia-Europe civil society and business forums.37 Some parliamentarians also participate in AEPF in their individual capacity and AEPF representatives have been invited to ASEP meetings as guests.

The Evolution of the Asia-Europe Parliamentary Dialog Analyzed

The one- to two-day biennial ASEP meetings consist of formal opening and closing ceremonies, sometimes criticized as ceremonial by the EP, and of two or three thematic panel discussions, where the more informal dialog takes place.38 The place for the most direct and controversial debate is the drafting committee, where representatives from each delegation formulate the final declaration of the meeting, which is then adopted unanimously by the meeting. This section will analyze the evolution of the ASEP dialog over the last eighteen years. The meetings have always reflected many of the most topical issues of the global agenda. The themes have roughly followed ASEM Summit agendas.

33  Lim, P. (2001). ‘The Unfolding Asia–Europe Meeting (ASEM) Process’; Rüland, J. (2001). ‘ASEAN and the EU: A Bumpy Interregional Relationship’, ZEI Discussion Paper, C9, http://aei.pitt.edu/197/1/dp_c95_rueland.pdf. 34  Gaens, B. & Jokela, J. (2012). ‘Interregional Relations and Legitimacy in Global Governance: The EU in ASEM’, 154. 35  Bersick, S. (2005). ‘Europe-Asia Relations—ASEM and the Democratization of Inter- and Trans-Regional Dialogs: The Role of Civil Society, NGO and Parliaments’, Europe Solidaire Sans Frontières, https//www.europe-solidaire.org/spip.php?article3074, 30 September. 36  Interviews with ASEP related politicians and officials. 37  Gaens, B. & Jokela, J. (2012). ‘Interregional Relations and Legitimacy in Global Governance: The EU in ASEM’, 154. 38  European Parliament (2012). Ad Hoc Delegation for the Seventh Asia-Europe Parliamentary Partnership (ASEP VII) Meeting 2–5 October 2012 Vientiane (People’s Democratic Republic of Laos), Report by the Chairman Mr. George Sabin Cutas, PE 497.271v01–00.

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ASEP until 2006—Focus on Economy but Discuss Security At the very first ASEP, many Asian countries considered economic issues to be the flagship of the Asia-Europe dialog, following the lead of the first ASEM summit.39 In the late 1990s, high expectations were placed on economic relations, and it was feared by Asian partners that dialog on sensitive matters such as human rights or democracy would hamper the success in the justestablished economic cooperation.40 At ASEP1 China and Vietnam, reflecting both their own (and ASEAN’s) foreign policy principles, were concerned about the possible interference in domestic affairs. Japan wanted to discuss world trading systems and security issues such as non-proliferation of nuclear weapons and the situation on the Korean Peninsula. The European Parliament, on the other hand, wanted the Asia-Europe dialog to go beyond economy to sensitive political issues such as human rights and democracy.41 The emergence of international terrorism as the major topic in international politics after 9/11 and the challenges that the US-led war on terrorism posed to the international law and the UN were topics that ASEP too had to address. During ASEP2 in Manila (2002), participants discussed international terrorism and political issues such as women’s and children’s rights.42 By ASEP3 in Huế Vietnam (2004), the dialog had grown both in substance and in format. Discussions now focused on a broader range of interregional issues and concrete topic suggestions were sent to the ASEM leaders. The political dialog focused on the international security situation and its challenges to international law, including human rights. The economic panel debated how to make the world trading system fair and equitable, especially for the developing countries. Other issues included the denuclearization of the Korean peninsula and new non-traditional security threats. Finally, the UN reform received also the attention of the parliamentarians.43 So, despite the strong initial focus on economy, politics and security were actually on the agenda of the three first meetings.

39  Euroopan parlamentti [European Parliament] (1996). 40  Keva, S. (2008). ‘Human Rights and Burma/Myanmar in the ASEM Dialogue’, in Gaens, B. (ed.) Europe-Asia Interregional Relations: A Decade of ASEM, Aldershot, Ashgate: 103. 41  Euroopan parlamentti [European Parliament] (1996). 42  Sangiin jimukyoku, 参議院事務局 [Secretariat of the House of Councillors, Japan], (2002). Dai 2-kai Ajia Ōshū giin kaigi (ASEP 2) gaiyō, 第2回アジア欧州議員会議(ASEP 2) 概要 [Overview of the 2nd Asia-Europe Parliamentary Meeting]. 43   A SEP (2004). Declaration of the Third Asia-Europe Parliamentary Partnership Meeting, Hue, Vietnam.

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ASEP since 2006—Focus on Global Challenges At ASEP4 in Helsinki (2006), the structure of the dialog changed. The meeting now focused on few selected issues: climate change and its economic implications and education, mobility and cultural exchange. The traditional political and security issues were no longer listed as separate discussion topics on the agenda. In the declaration the parliamentarians briefly stated that the improving economic relations between Asia and Europe should be complemented with a more comprehensive political dialog.44 The reason behind this change is twofold. Climate change was also a key topic at the ASEM6 summit in Helsinki, where the leaders issued a separate ASEM6 Declaration on Climate Change, with the aim of pushing forward the international climate negotiations. By focusing on similar issues as the ASEM leaders, the parliamentarians were now able to send a stronger message to the summit and to draw more attention to their own process. Second, this change is part of a larger global trend in which global challenges have received more and more attention. In ASEP the traditional three-pillar division of dialog into political, economic and socio-cultural issues has given way to a more comprehensive agenda focusing on broad global challenges such as sustainable development, climate change, clean water, energy, transnational crime, pandemics, food security and narrowing the development gap. At ASEP6 in Brussels (2010) the key topics included sustainable development and its social, economic and environmental aspects.45 The soaring food prices were briefly taken up already in the ASEP5 Declaration in Beijing (2008), and the issue was again on the declaration at ASEP6 in Brussels, where the parliamentarians highlighted the countries’ rights to food self-sufficiency. Belgium, as the host, pointed out that here the role of the parliament was essential because parliamentarians make laws, which could actually outlaw food speculation.46 In the following meetings (ASEP7 in Vientiane 2014 and ASEP8 in Rome 2014) food security, sustainable development and growth and economic and financial governance structures were again on the agenda.47 The global challenges are highly intertwined encompassing political, security, economic and socio-cultural challenges. For example, food security has 44   A SEP (2006). Declaration of the Fourth Asia-Europe Parliamentary Partnership Meeting (ASEPIV), Helsinki, Finland. 45   A SEP (2010). Sixth Asia–Europe Parliamentary Partnership Meeting. Summary Report, Brussels. 46  Ibid. 47  National Assembly of the Lao PDR (2012). Seventh Meeting of the Asia-Europe Parliamentary Partnership, 03–04 October 2012, Vientiane, LAO PDR.

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strong political relevance because it is directly linked to security, peace and human rights (e.g. the right to adequate food48 or gender- and equality-related issues such as women’s access to land ownership and education).49 In ASEP7 in Vientiane (2012), the partners also discussed how natural disasters are not only environmental problems but also affect socio-economic development and international security. Many, especially Asian countries, shared practical examples of their experiences in social participation and public-private partnerships in disaster management.50 Global challenges impact all countries, although often the less-developed countries are more heavily affected. The advanced economies, especially Japan and EU member states, have in ASEP pledged their commitment to help the more severely affected countries while stressing the importance of countries’ own activity. The more advanced countries have used ASEP as a platform to take up challenges in developing countries that they consider important, for example women’s access to land ownership.51 Balancing between Democratic and Authoritarian Regimes The ASEP countries represent a group of very different political systems ranging from full democracies to states such as China, Laos, Vietnam and Russia. Of the fifty-three partners, nine are categorized as not free52 and six as partly free53 in the Freedom in the World Report (2015) issued by the Freedom House. The partners have very different interests and motivations, and it can be assumed that delegations coming from non-democratic countries (e.g. China, Vietnam, Laos), where the legislature is not independent from the government, actually not only represent their parliament but also their government. This section will present a few examples to illustrate how this complex background poses both an opportunity for and a challenge to the dialog on political issues, such as human rights, democracy, rule of law and fundamental freedoms. 48  As defined by the Universal Declaration of Human Rights (UDHR) in 1948 and later by the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1966. 49  Discussed at ASEP7 in Vientiane 2012. 50  Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors, Japan], (2012). Dai 7-kai Ajia Ōshū giin kaigi (ASEP) gaiyō 第7回アジア欧州議員会議 (ASEP) 概要 [Summary of the 7th Asia-Europe Parliamentary Meeting], National Assembly of the Lao PDR, 2012. 51  Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors, Japan], (2012). 52  ‘Freedom in the World 2015’, Freedom House, accessed 12 February 2015, https://www .freedomhouse.org/report/freedom-world/freedom-world-2015#.VNxervmsWlV, Brunei, Cambodia, China, Laos, Kazakhstan, Myanmar, Russia, Thailand, Vietnam. 53  Ibid., Bangladesh, Indonesia, Malaysia, the Philippines, Pakistan, Singapore.

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In the declaration drafting committee of ASEP 4 in Helsinki (2006), the partners discussed whether democracy, rule of law and universal human rights are the key values required for peace and stability in the world, as stated by the host. China and Indonesia objected this formulation by stating that also other values are important for peace and stability, e.g. the imbalance of the world economy and poverty eradication.54 Finally, the proposed text was not included in the final declaration because a satisfactory consensus could not be reached. Although ASEP5 in Beijing (2008) mostly focused on the world trading systems and the dialog between cultures and civilizations, the panels and drafting sessions did handle political issues. This was to be expected because the world’s attention was, at the time, on China and its upcoming Olympic Games in Beijing. China received strong criticism from the EP for its policy in Tibet, its human rights violations and its negligence towards labor laws in the panel dedicated to dialog among different cultures and civilizations.55 Although the EP is known as a strong advocate for human rights, in the ASEP framework this criticism was quite strong. In the final declaration drafting session freedom of media and access to Internet were brought up by EP (a comment directed mostly at China) and debated among the EP, Finland, Japan, UK and China. Finally, China did manage to water down the corresponding wording in the final declaration by demanding that countries must ensure openness and freedom of media ‘according to national laws.’ The EP succeeded in including a reference to the Internet in the same paragraph, which was considered a compensation for the compromise.56 Japan wanted the declaration to refer to the important role of media in building friendly relations between countries and individuals. This argument has its background in the often heated media discussion against Japan in Chinese media over controversial disputes regarding national borders and history issues. In addition, Japan, with the support of the EP, wanted ASEP to 54  Shūgiin 衆議院 [House of Representatives, Japan] (2006). Dai 4-kai Ajia Ōshū giin kaigi hōkoku-sho 第4回アジア欧州議員会議報告書 [Written Report of the 4th AsiaEurope Parliamentary Meeting]. 55  Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors, Japan], (2008). Dai 5-kai Ajia Ōshū giin kaigi (ASEP) gaiyō 第5回アジア欧州議員会議(ASEP) 概要 [Summary of the 5th Asia-Europe Parliamentary Meeting]. 56  European Parliament (2008). Ad Hoc Delegation for the Fifth Asia-Europe Parliamentary Partnership (ASEPV ) Meeting, Beijing, 18–20 June, Report by the Chairman Dr. Georg Jarzembowski, Vol. PE 409.230v01–00.

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condemn violations of human rights in the ASEP5 declaration. The Japanese representative referred in speech to the human rights infringements taking place in Asia. Here Japan may have wanted to draw attention to North Korea’s abductions of Japanese citizens, an issue Japan has brought up repeatedly. China, however, objected to the use of such strong wording, and because consensus could not be reached, the declaration included only a weak wording calling the partners to respect human rights and fundamental freedoms while reaffirming their commitment to the Universal Declaration on Human Rights. This example shows that, for China, it was easier to support human rights than to condemn their violations because it was being accused of such acts itself. In addition, the EP and Japan wanted to include a reference to good governance and rule of law in the final version of the declaration.57 Finally, Japan criticized Myanmar’s undemocratic elections and its deteriorating human rights and refugee situation, a critique that was exceptionally strong in the context of ASEP.58 Myanmar was not a member of ASEP at this point, although it was already a member of ASEM. Before its current democratization process, Myanmar was repeatedly criticized in ASEM Summits, but almost exclusively by European partners because the principle of non-interference in domestic issues is very important to the ASEAN countries as well as China.59 The above examples hint that countries may use ASEP as a platform in which regional issues in can be discussed in an international, multilateral setting. The presence of European and Asia-Pacific democratic countries may help for example Japan to offset China’s weight and facilitate discussion on democratic values, as has been seen in the case of the East Asia Summit.60 Human rights were again discussed at ASEP6 (2010) when Belgium, as the meeting host, tabled a very ambitious list of amendments to the draft declaration, which would have expressed the ASEP partners’ strong commitment to human rights and civil liberties as part of economic and social development. After long negotiations, the final declaration only stated that ‘in order to achieve economic development and social progress, it is necessary to respect fundamental human rights and freedoms’ with the addition of ‘especially the

57  Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors], 2008. 58  Ibid. 59  Keva, S. (2008). ‘Human Rights and Burma/Myanmar in the ASEM Dialog’, in Gaens, B. (ed.) Europe-Asia Interregional Relations: A Decade of ASEM, Aldershot, Ashgate: 80–81. 60  Mochizuki, M.M. (2007). ‘Japan’s Changing International Role’, in Berger, T.U. et al., Japan in International Politics, Boulder, Lynne Rienner Publishers Inc.: 19.

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freedom from poverty and the right to choose the way of development’.61 Thus, the final text was balanced to reflect the interests of developing as well as nondemocratic Asian countries, especially China. As evident in the examples provided the different views of the partners collide when political issues, especially human rights, democracy and rule of law are discussed. Human rights and democracy are central to the external relations of the European Union and therefore also an important part of the EP’s and member states’ political dialog in ASEP. It has been argued that parliamentarians may enjoy more freedom in their speech than government representatives do, and thus they can express their opinions more freely.62 The EP’s criticism over China in the ASEP framework is a good example of such freedom. Within ASEM the human rights dialog has been mostly channeled through the Informal ASEM Seminars on Human Rights. Also, Japan’s criticism of Myanmar supports the argument that parliamentarians may talk more freely compared to government representatives. Japan has not voiced such strong criticism in ASEM. China is one of the most active and vocal partners in the process, especially in the drafting of the declaration. China often tries to highlight itself as a developing country and stresses its own foreign policy principles, repeating that participants must respect countries’ different paths of development that all countries must be accepted as equal members to the international society and finally, that interference in domestic issues must not be accepted.63

Balancing Between Developing and Developed Countries—Making World Trade Work for All Since 1996, economic dialog has been the area in which the most results were both expected and envisioned in Asia-Europe relations. It was also seen as the least controversial area. In ASEP the economic dialog has followed the current global topics of the time. Until 2008, the focus was on the objectives of the WTO Doha Round: making world trade fair and functional for all countries. Here the 61  Shūgiin 衆議院 [House of Representatives, Japan], (2010). Dai 6-kai Ajia Ōshū giin kaigi hōkoku-sho 第6回アジア欧州議員会議報告書 [Written Report of the 6th AsiaEurope Parliamentary Meeting]. 62  Stavridis, S. (2006). ‘Parliamentary Diplomacy: Any Lessons for Regional Parliaments’, in International Relations of the Regions: Sub-national actors, para-diplomacy and multi-level governance, Proceedings of the October 2006 Zaragoza Conference on ‘The International Relations of the Regions’, http:www.unizar.es/union_europea/Conferencia%202006/ actas%20presentacion.htm, accessed 12 February 2015. 63  Euroopan parlamentti [European Parliament], 1996; Sangiin 参議院事務局 [Secretariat of the House of Councillors, Japan], 2008.

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partners tried to find a balance between the interests of the developing and advanced economies. Since 2008 the two major economic crises, the subprime crisis and the Eurozone crisis, have been at the center of ASEP discussions. In addition to a variety of political regimes, the partners also represent very different stages of economic development, including some of the world’s richest and poorest countries. In fact, 45% of the participating countries are categorized by the International Monetary Fund (IMF) as emerging or developing economies,64 including three of the least developed countries of the world: Laos, Myanmar and Cambodia.65 Therefore, the views of the emerging markets and developing economies come out strong in the dialog concerning multilateral trading systems. The emerging and developing economies have commented on the unfairness of the global and regional trading agreements towards them, stressed their right to development and objected trade protection mechanisms potentially harmful for developing countries. In addition, more aid and cooperation from developed countries are often called for. In 2004, Vietnam, host of ASEP3, was in the middle of negotiating its accession to the WTO. Therefore, the parliamentarians discussed, for example, the challenges the world trading system presented to developing countries that were trying to integrate in the international trading systems. Similar themes were discussed at ASEP5 in Beijing (2008) within the WTO and the Doha Round, with several comments regarding developing countries’ access to world markets with their agricultural products.66 If concerns of the emerging and developing economies are strong in the panel discussions, the developed countries try to make sure in the declaration drafting sessions that the formulations are balanced enough to satisfy their own needs and motivations. For example, at ASEP5 in Beijing, the European Parliament and Japan tried to push the developing countries to open their markets for services and investments. After negotiations, the idea was included in the declaration but not as explicitly as originally intended.67 64  ‘World Economic Outlook Database 2014’, International Monetary Fund (IMF), http:// www.imf.org/external/pubs/ft/weo/2014/01/weodata/weoselgr.aspx, 28 August. 65  ‘Map of the LDCs (Least-Developed Countries)’, United Nations Conference on Trade and Development (UNCTAD), accessed 18 August 2014, http://unctad.org/en/Pages/ALDC/ Least%20Developed%20Countries/LDC-Mapp. aspx. Laos, Myanmar and Cambodia are categorized as LDCs (Bangladesh has never participated in ASEPP). 66  Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors, Japan], (2004, 2008, 2010). 67  Sangiin jimukyoku 参議院事務局, [Secretariat of the House of Councillors, Japan], (2008).

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In the most recent meetings the focus has shifted to acute global financial crises, which have affected all ASEP countries regardless of their levels of development. At ASEP6 (2010) in Brussels, the financial and economic world governance structures were discussed at length, and the participants debated the roles and reforms of the IMF and the G20 and shared their own experiences of and responses to the crisis. China urged parliamentarians to use their oversight role in coordination with their governments and to adopt laws and measures to stabilize the financial markets.68 ASEP7 in Vientiane (2012) discussed the sovereign debt crisis and debt management mechanisms in the light of the Eurozone crisis. The parliamentarians stressed that they were the very people who needed to be committed to strengthening parliamentary oversight of governments’ fiscal policies and state budgets. The two crises, originating outside of Asia, gave the Asian countries a chance to highlight their own successful regional financial mechanisms, such as the Chiang Mai Initiative, while acknowledging that they, too, were affected by the crisis and should take action to avoid further problems.69 Parliamentarians tend to look at economic issues and economic development from a broad perspective by including human rights, fundamental freedoms and social and labor related aspects. Economic issues are often linked with global challenges such as climate change food security and sustainable development and the focus is on broader issues rather than inter-regional Asia-Europe trade relations.

Other Issues: Dialogue among Cultures and Civilizations and ASEP’s Institutional Development Until 2008, cultural diversity and dialog among different civilizations were key topics in the ASEP dialog.70 However, these global responses to the emergence of international terrorism, have received less focus in the more recent meetings. Education and the need for stronger student mobility between Asia and Europe were discussed in ASEP4 in Helsinki (2006) and, to some extent, at ASEP5 in Beijing (2008).71 ASEP’s institutional development and its relationship with ASEM have often been on the agenda, with ideas about troikaleadership and better follow-up etc. Due to lack of leadership, and generally 68   A SEP (2010). 69  National Assembly of the Lao PDR (2012); Sangiin jimukyoku 参議院事務局 [Secretariat of the House of Councillors, Japan] (2013). 70  Discussed at ASEP1, ASEP2 and ASEP3. 71  Parliament of Finland (2006); Asia-Europe Parliamentary Partnership (2008). Declaration of the Fifth Asia-Europe Parliamentary Partnership Meeting, Beijing, China.

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low ambition levels among the participants there has been no real progress since 2006 in this aspect.

Asia-Europe Parliamentary Dialog—Evolution and Value

In eighteen years, the focus of the ASEP dialog has changed from individual political, cultural and economic issues to broad, multifaceted global challenges. At the same time, ASEP has stepped away from international political and security questions, over which national politicians have relatively little power, towards global challenges that have more relevance for the parliamentarians. Issues related to the climate, environment and nutrition concern the daily lives of the constituents and often require concrete actions in terms of domestic legislation, which is the key function of national parliaments. Hence, it is more and more relevant for the national parliaments to meet at inter­ national level. The ASEP meetings have provided a chance for Asian and European parliamentarians to report their own experiences and solutions, often in a very practical manner. On the other hand, countries have had the chance to draw attention to issues they deem important. The panel discussions thus have a significant function in sharing and learning about new information. As Kimmo Kiljunen points out, participation in international forums ‘facilitates the parliamentarians’ access to global information [. . .] and reinforces their ability to fulfill their domestic mandate’.72 ASEP is the only place where the parliamentarians of Asia and Europe can discuss together in such a wide composition. For many smaller countries, ASEP provides a possibility to meet with colleagues they would not otherwise meet. Bilateral talks in the realms of the official meetings are frequent.73 According to Šabič, international parliamentary institutions can ‘provide a venue for parliamentarians to stimulate public debate [. . .] and to facilitate

72  Kiljunen, K. (2006). ‘Global Governance and Parliamentary Influence’, in Stapenhurst, R. et al., The Role of Parliament in Curbing Corruption, Washington, The World Bank: 250. 73  Separate from the ASEP, the EP arranges its own bilateral dialogs with all Asian ASEM partners, bilaterally with China, Korea, Japan and India and multilaterally with regional groupings such as ASEAN or South Asian parliaments. Direct bilateral parliamentary contacts between individual European and Asian countries mostly take the form of informal parliamentary friendship clubs.

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the development of shared norms and values’.74 In ASEP issues are discussed with a view that continuous dialog at different fora will contribute to smoother cooperation elsewhere (e.g. the UN, WTO or G8). This kind of ‘minilateral’ function or ‘multilateral utility’ has often been fitted for ASEM too, although results have not been promising.75 In the case of parliamentarians it is even more difficult to see actual results of ASEP meetings, because only individual parliamentarians participate in the inter-parliamentary meetings. This makes IPIs an easy target for the media, which for example in Europe has criticized the EP’s international cooperation as ‘parliamentary tourism’ with little tangible results.76 The drafting of the final declaration however supports the norm-setting function of ASEP. Although the declaration only contains issues on which the countries can agree and therefore often exhibits merely the lowest common denominator, the drafting process itself is an important exercise. Repeated year after year in ASEP and different fora, these negotiations can bring the countries closer to each other and help to create common international norms over time. The analysis of the dialog shows that the partners disagree on many issues and have to constantly balance between their conflicting interests. It is especially difficult to overcome differences in sensitive political issues. Stelios Stavridis has asked whether parliamentary diplomacy needs ‘real parliamentarians’ (which come from democratic systems) to be meaningful and states that the parliamentarians themselves consider it more important to engage different systems in democratic dialog than to exclude them.77 Working with only similar regimes would perhaps be less controversial, but then important actors would be excluded. Cooperation with different regimes may also

74  Šabič, Z. (2008). ‘Democracy Across Borders: Parliamentarians and International Public Spheres’, 77. 75  Rüland, J. (2006). ‘Interregionalism and the Crisis of Multilateralism: How to Keep the Asia-Europe Meeting (ASEM) Relevant?’ European Foreign Affairs Review 11(1): 45–62; Dent, C.M. (2004). The Asia-Europe Meeting and Inter-Regionalism: Toward a Theory of Multilateral Utility, Asian Survey 44(2): 213–236; Gilson, J. (2002). Asia Meets Europe: InterRegionalism and the Asia-Europe Meeting, Cheltenham, Edward Elgar Publishing. 76  Herranz, A. (2005). ‘The Inter-Parliamentary Delegations of the European Parliament: National and European Priorities at Work’, in Barbé, E. et al., The Role of Parliaments in European Foreign Policy: Debating on Accountability and Legitimacy, Brussels, Office of the European Parliament in Barcelona: 79. 77  Stavridis, S. (2002). Parliamentary Diplomacy: some preliminary findings. Jean Monnet Working Papers in Comparative and International Politics. Nov. 2002 JMWP no 48: 7.

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provide interesting opportunities for confidence building and for promotion of democracy.78 For example, EU lists inter-parliamentary meetings as a tool for promoting democracy.79 Conclusion Political dialog is not weak or missing in the Asia-Europe parliamentary dialog. On the contrary, it has been present throughout the history of ASEP. The focus of the dialog has evolved from the traditional division between political, security, economic and cultural issues to common global challenges, which incorporate many key political, security and social aspects, and increasingly belong to the arena of the parliamentarians. The current value of ASEP lies in the parliamentary contacts, socialization and norm-setting functions it offers for the participating politicians and national parliaments. It is still difficult for the parliamentarians to influence the leaders’ summits because the contacts between them are weak and sporadic. Both in ASEP and ASEM there seems to be little ambition to strengthen it and the value ASEP could provide for ASEM remains underutilized. Yet, strengthening this link would be important, so that the potential of the parliamentary dialog could be better employed. ASEP’s other weaknesses are the lack of leadership and continuity which would carry from one meeting to another and help to develop the process further. The discussed issues are merely reported to the ASEM summit, and it is up to the ASEM and ASEP hosts and the national parliaments to oversee whether the message is actually taken up. ASEP should encourage ASEM governments to better accountability by conducting more active follow up on the ASEP contribution to ASEM and also on the decisions taken in ASEM. Furthermore, established channels of communication with regular consultations between ASEM and ASEP would facilitate the flow of ideas and information from the parliamentary process to the leaders meetings. This would also enhance transparency and accountability of the overall ASEM process. However, ASEM is an informal dialog forum and the idea of creating

78  Cofelice, A. (2012). ‘International Parliamentary Institutions: Some Preliminary Findings and Setting a Research Agenda’, 13. 79  ‘EU edistää demokratiakehitystä monin tavoin’ [‘EU Advances Democracy in Many Ways’], Euroopan parlamentti [European Parliament], http://www.europarl.europa.eu/ news/fi/news-room/content/20110415STO17915/, accessed 24 April 2014.

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an ASEM parliament with e.g. oversight powers towards ASEM is not feasible nor in the interests of the parliaments or the governments involved. Still, as the ASEP dialog has evolved to cover global challenges which touch the agenda of the parliamentarians has legislators, it would be increasingly beneficial to include the parliamentarians to the dialog already at the international level and not only afterwards in the domestic political processes. The future challenge is to continue and develop further the kind of inclusion as was seen at ASEM10 in Milan (2014). Especially future Summits held in Asia should follow suit.

CHAPTER 15

A Cinderella Story: The Asian Development Bank and its European Member States Maaike Okano-Heijmans Introduction As economic and geopolitical power shifts from the transatlantic area to the Asia–Pacific, the dearth of political engagement by Europe with the East Asian region is often lamented. What commonly goes unnoticed, however, is the fact that 17 European countries—of which 14 EU member states—have unique access to the oldest regional institution in East Asia: the Asian Development Bank (ADB). This chapter aims to shed some new light on the engagement of European countries with the Asian Development Bank.1 It starts out by briefly detailing the purposes and characteristics of the Bank, including membership and voting rights. It next outlines European roles and interests within the Bank, pointing to commonalities and differences between (groups of) European countries. An assessment can then be made of the relevance of the ADB for European member states in the economic, political and geostrategic sense, including the Bank’s importance for European countries in the context of shifting regional and global power balances.2 The chapter concludes that European countries’ engagement with the ADB resembles a Cinderella story: European member states still view the ADB rather narrowly, mostly as a development organization, and generally pay scant attention. In doing so, they appear to miss the broader point that the ADB holds relevance also on practical matters 1  This chapter follows on to a detailed assessment of European interests in the ADB. The special focus on the Netherlands of the original report is maintained here, see Okano-Heijmans, M. & Waardenburg, D. (2014). The Asian Development Bank: What’s in it for Europe?, Clingendael Report, The Hague. Findings are based on a study of the academic and policy-oriented literature, as well as semi-structured interviews with several (former) ADB executive directors, staff members, consultants and individuals familiar with the ADB, conducted between September-December 2013. 2  While ADB membership covers countries in the Asia–Pacific region, the focus of analysis in this chapter is on European countries’ relations with countries in East Asia, which are of relatively more strategic importance to the Netherlands and other European countries.

© koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_016

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as well as for political and geo-strategic reasons against a context of shifting global power balances. The ADB provides a platform for multilateral discussions that complements bilateral ties with countries in the region. At the same time, the Bank’s Asian style of operation provides a glimpse of a future for multilateral engagement and policy-making wherein Asian countries are relatively more influential.

About the ADB

Relatively unknown by the general public, the Asian Development Bank is one of four major regional development banks that operate alongside the World Bank.3 With a capital base of roughly US$ 163 billion, the Bank’s financing totalled US$ 21 billion in 2013. Its membership covers 67 countries in East, South-East and Central Asia, as well as in the Pacific and several non-regional countries. In practice, however, the ADB’s activities have tended to focus on countries in East and South-East Asia. The Bank is generally held in high esteem by its client countries and regarded as a ‘family doctor’.4 Headquartered in Manila, the Philippines, the Bank has over 3,000 employees, working in 26 country offices in the region and in representative offices in Tokyo, Frankfurt and Washington DC. Different from other international institutions, which are mostly dominated by Western countries, the ADB is commonly described as a regional–multilateral institution with Japanese organizational characteristics and organizational culture.5 For example, the ADB remains imbued with Japanese developmentalist thinking and ideology, characteristics that distinguish its style from the market-liberal reformist approach of the World Bank. Furthermore, the ADB tends to be administered in a style that respects consensus and harmony. It 3  The other banks are the African Development Bank, the Inter-American Development Bank, and the European Bank for Reconstruction and Development. 4  Interviews with several ADB staff members and individuals familiar with the ADB. 5  Interviews with several (former) ADB executive directors. staff members and consultants. See Dent, C.M. (2008). ‘The Asian Development Bank and Developmental Regionalism in East Asia’, Third World Quarterly 29(4): 767–786; Kappagoda, N. (1995). The Multilateral Development Banks Volume 2: The Asian Development Bank, Rugby, Practical Action Publishing; Wan, M. (1995). ‘Japan and the Asian Development Bank’, Pacific Affairs 68(4): 509–528; Wesley, M. (2003). The Regional Organizations of the Asia Pacific: Exploring Institutional Change, New York, NY, Palgrave Macmillan; and Fujita, S. (2013). The World Bank, Asian Development Bank and Human Rights: Developing Standards of Transparency, Participation and Accountability, Cheltenham, Edward Elgar Publishing Ltd.

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has a strong bureaucracy and strict hierarchy that are reminiscent of Japanese culture, especially in the Ministry of Finance. That being said, attempts have reportedly been made to reduce bureaucracy since 2005, when Haruhiko Kuroda became the Bank’s president.6 As stipulated in Article 1 of the ADB Charter, the purpose of the ADB ‘shall be to foster economic growth and cooperation in the region of Asia and the Far East and to contribute to the acceleration of the process of economic development of the developing member countries in the region, collectively and individually’. Poverty reduction became the Bank’s overarching goal in the new millennium, as per the Poverty Reduction Strategy of November 1999. This was reiterated in the ADB’s most recent long-term strategic framework, Strategy 2020, which was formulated in 2008 and is currently undergoing a mid-term review. Recent years have seen an economization of the Bank’s development approach—that is, a return to the original mandate. The operational priorities of the ADB are fivefold and include: infrastructure; the environment; regional cooperation and integration (RCI); finance sector development; and education. Under Strategy 2020, the ADB’s infrastructure operations emphasize public–private partnerships and private sector engagement. The ADB is furthermore increasingly aiming for sustainable, green development, with climate as a spearhead. Also, the scope of operations is shifting towards more regional cooperation. As will be explicated below, these priorities conform well with the interests of European member states in the Asia-Pacific region. The ADB is one of the biggest public actors in the field of development cooperation in Far East Asia and in South and Central Asia. Its operations comprise roughly 15 per cent of official development assistance and other financial flows of the total of the top six donors in the period 2000–2011.7 In addition to financial flows, the Bank also plays an important role as a knowledge center that shares information and expertise, and provides policy advice to client countries in these regions. Here, the ADB distinguishes itself from other actors that engage in development assistance. Membership, Contributions and Voting Rights At present the ADB has 67 members, comprising 48 countries from the Asia– Pacific region and 19 non-regional members. Non-regional members are the 6  Fujita, S. (2013). The World Bank, Asian Development Bank and Human Rights: Developing Standards of Transparency, Participation and Accountability, Cheltenham, Edward Elgar. 7  O ECD Development Assistance Committee (2013). Geographical flows to developing countries, http://stats.oecd.org, accessed 1 December 2013.

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Table 15.1 Voting power vs. contributions in the Asian Development Bank of key members Voting Power vs. Contributions* in the Asian Development Bank of (A) (B) (C) (A) (B) (C) Voting Contrib A/B Voting Contrib A/B Share Share Share Share By end of 1972 By end of 1982 Japan U.S China European ABD members The Netherlands

20,2 8,4 2,1 15,0 1,0

30,4 11,3 1,4 14,2 0,9

0,7 0,7 1,5 1,1 1,1

13,6 13,6 1,5 17,2 1,2

35,0 20,1 0,4 20,9 1,7

0,4 0,7 3,8 0,8 0,7

* Contributions here include paid-in portions of subscriptions for Ordinary Capital and cumulative excluded. Note: Voting shared and contributions shares reported as percentages of total voting rights and total Source: Calculated from ABD Annual Reports, various years.

United States, Canada, Norway, Switzerland and Turkey, as well as 14 European Union member states—Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom. Japan and the United States have the largest share of voting power, each holding 12.78 %. Next in terms of voting power and corresponding capital share are the People’s Republic of China (PRC, hereafter China) and India, with 5.45 and 5.36 per cent, respectively. Non-regional members currently hold 35 per cent of voting power, while ADB members who are also members of the Organization for Economic Cooperation and Development (OECD) hold 58 per cent. Non-borrowers traditionally make up more than 50 per cent of total voting rights. As per the ADB Charter, voting rights are largely determined by the number of shares of the Bank’s capital stock that a member holds. The power of influence in this respect thus depends on a country’s capital subscription rather than on the total sum of contributions to the Bank’s operations, including also to special funds. Taken together, this means that the distribution of voting power within the ADB does not accurately represent the countries’ engagement with the Bank. Take, for example, Japan and the United States. They are the largest contributors to the ADB’s capital stock, with respectively 15.61 and 15.60 per cent of the total subscribed capital and 12.78 per cent of voting

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Key Members (A) (B) Voting Contrib Share Share By end of 1992

13,5 13,1 5,8 17,9 1,2

46,4 11,6 1,0 23,1 1,9

(C) A/B

(A) (B) Voting Contrib Share Share By end of 2002

(C) A/B

(A) (B) Voting Contrib Share Share By end of 2012

(C) A/B

0,3 1,1 6,1 0,8 0,7

13,0 13,0 5,6 17,2 1,2

0,3 0,9 6,2 0,7 0,5

12,8 12,8 5,5 17,6 1,1

0,3 1,1 4,1 0,7 0,5

46,5 14,3 0,9 24,0 2,1

45,0 11,6 1,3 23,8 2,1

 donations to the Asian Development Fund and Technical Assistance Special Fund. Other funds are contributions.

power. What these numbers do not show, however, is that Japan’s total contributions far outweigh those of the United States. As the main financier of the Asian Development Fund as well as several other funds,8 Tokyo has provided 45 per cent of all contributions to the ADB, while Washington DC’s total contributions represent a share of less than 12 per cent. Clearly, and as illustrated in more detail in Table 15.1, ADB regulation is more favourable for some members than for others. Also, change will only happen very gradually, as a majority of 75 per cent is needed for a country to increase its authorized capital stock.9 While such impediments to change pose a challenge to emerging countries that seek a larger share of voting rights, it should be emphasized that seen from this perspective, China appears today to be one of the biggest beneficiaries of the system. It is Japan and European members

8  The ADB’s lending comes from its ordinary capital resources (OCR)—offered at near-market terms to lower- to middle-income countries—as well as from Special Funds. The Asian Development Fund (ADF) is largest of these special funds by far, offering concessional loans at very low interest rates and grants that help reduce poverty in ADB’s poorest borrowing countries. 9  Article 4(3) and Article 5 of the ADB Charter.

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whose influential power—calculated as the voting share divided by contribution share—is the smallest. European Members: Between Ambivalence and Disengagement European countries display certain ambivalence towards the ADB, but in ways that differ substantially from Washington’s mixed approach that is characterized by a detachment from daily operations and at the same time resistance of any one member adopting a dominant role.10 The European nations’ engagement with the ADB has commonly been largely limited to financial matters— contributions and the financial soundness of the Bank—and the social, normative context of the ADB’s undertakings. This is illustrated by the fact that the vice-president responsible for financial matters traditionally comes from Europe. The normative approach is apparent from the critical stance that is adopted towards upholding social standards and issues in ADB projects, especially in Board meetings. This includes attention for human rights and labour conditions, as well as for ‘soft’ social projects—in contrast to ‘hard’ infrastructural projects—more generally. EU members plus Canada, Norway, Switzerland and Turkey account for 23 per cent of the voting power and three of the twelve seats in the ADB Board. Representatives of these countries gather every Monday morning in Manila for an informal meeting, and aim to enlarge their influence by way of forming coalitions. Their combined influential power is said to be big enough at least to limit the room for manoeuvre of the ADB Board and the President.11 It has been noted that while European countries had become a more crucial source of financial contributions than the United States by the mid-1980s, they were less interested in the region and were divided among themselves. This is partly explained by the fact that these European countries generally lack the profound engagement that the United States holds with more than a few countries in East Asia, especially in the security sphere.12 That being said, the fact that European countries have fewer tools to engage countries in the East Asian region in the first place constitutes a strong incentive for them to make more of their ADB membership. Since the 1990s, the Japanese and the ADB’s management have adjusted the ADB’s policies and institutional management in exchange for support from the United States and European countries, which have become less 10  Wan, M. (1995). ‘Japan and the Asian Development Bank’, Pacific Affairs 68(4): 509–528; Wesley, M. (2003). The Regional Organizations of the Asia Pacific: Exploring Institutional Change, New York, NY, Palgrave Macmillan. 11  Interview with an ADB Executive Director, 18 October 2013. 12  Wan, M. (1995). ‘Japan and the Asian Development Bank’, Pacific Affairs 68(4): 519.

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willing to offer foreign aid.13 This resulted in a 10 per cent increase in loans for social issues such as education, health and population, urban development and the environment, to 40 per cent of the ADB’s total loans. While this was a victory for developed, non-regional members, the new emphasis on social issues caused much resentment among the developing nations, led by China and India, as the chief request on the part of developing members was for loans for their infrastructure. Value-oriented Approach versus Pragmatism Some European countries—including the Nordic nations, the United Kingdom and the Netherlands—have primarily engaged with the ADB from a value-oriented mind set. The United States has at times adopted a similar role, for example when voting against the adoption of Strategy 2020 in 2008.14 Concerns were raised about the excessive focus on middle-income countries that are reducing their reliance on donors, at the expense of the region’s poorest nations.15 This ‘outside force’ has generally been welcomed by the ADB—not least by the Japanese, as it solidifies some of Tokyo’s preferences without direct Japanese involvement. At the same time, the value-oriented mind set serves as a counterweight to countries that hold opposing views. That being the case, an analysis of the effectiveness of the UK aid agency’s engagement with the ADB took a rather critical stance of the sometimes disproportionate emphasis on (European) values. It was noted that the United Kingdom ‘has sometimes been overambitious and shown insufficient evidence of taking political risks into account in project design’.16 Other European countries—including Spain and Portugal—have taken a more pragmatic approach, focusing on making the most of the direct economic opportunities provided by the Bank. Contrary to the general downward trend in the number of procurement contracts awarded to European countries, Spain has experienced an increase. In 2012, Spain received 7.1 per cent of the value of all ADB procurement contracts and 4.45 per cent of all consulting services.

13  Ibid.: 524. 14  The United States stood alone in its flat rejection of the document, while others—including the United Kingdom abstained, and representatives from several countries that voted for Strategy 2020 expressed some reservations, even if in muted diplomatic tones. 15  Fujita, S. (2013). The World Bank, Asian Development Bank and Human Rights: Developing Standards of Transparency, Participation and Accountability, Cheltenham, Edward Elgar. 16  Independent Commission for Aid Impact (2012). The Effectiveness of DIFD’s Engagement with the Asian Development Bank, Report, 13 July: 1.

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Since the supply of goods and civil works is left largely to local companies in the ADB’s client countries, the broadest opportunity area for many European companies is the provision of consultancy services.17 Since its establishment, the ADB has sourced most of its expertise from the private sector through consultancies. This continues to be the case today, and the Bank has recognized Europe’s added value in transferring knowledge to the region through investments.18 The share of European consulting services has decreased dramatically over time, however, as local companies have gained strength and because current procurement rules place European companies’—with higher prices and higher-quality services—at a disadvantage.19 The downward trend is illustrated in Table 15.2. Taking the Netherlands as an example, during the period 1987–1996 Dutch businesses captured 5.45 per cent of all consultancy services’ contracts. This can be considered a significant share, considering the Netherlands’ 1.2 per cent stake in the Bank. In 2009 and 2012, however, Dutch consulting services constituted a mere 0.08 and 1.5 per cent respectively. The Netherlands is not alone in facing this decline, as other European countries have experienced a similar downward trend. One aspect that contributed to the decrease of European success in procurement is the relative rise of regional Asian (and Pacific) members and the subsequent deterioration of European competitiveness. Years of substantial economic growth in Asia, combined with knowledge gained from their European counterparts, enabled local Asian firms to enter increasingly competitive bids on projects. Table 15.2 illustrates this in more detail. Outsourcing most of the work to freelancers—in order to minimize staff size and overhead costs—allows local companies to undercut the prices of European firms.20 Non-regional firms are challenged to compensate for their higher prices with higher-quality services. Another reason why non-regional firms have become increasingly cautious about bidding for ADB projects that involve government loans are governance issues. The risk of getting involved in corruption in the client country, even if not directly responsible, has led many firms to opt out of procurements. 17  The ADB uses consultants for technical assistance work, sector studies, economic research studies, project preparation/feasibility studies, procurement assistance, construction supervision, project management, and the evaluation of completed projects. 18  Comment by ADB President Nakao during his visit to the ADB European Representative Office in Frankfurt, Germany, on 2 July 2013. 19  This is elaborated upon below. 20   Interview with Ian Makin, ADB Senior Water Resources Management Specialist, 19 November 2013.

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Corruption can be a challenge to delivering a project properly and on time, while at the same time posing a severe risk to a firm’s brand name and public relations. Governance issues and corruption often originate in the fact that a recipient government is in charge of the recruitment process. Local bureaucrats favor domestic firms by lowering the price–quality ratio, even when it concerns more demanding projects. This is not the case with technical assistance projects, as the ADB itself is responsible here for recruitment. A business representative put it rather bluntly by stating that firms feel more secure knowing that they can work ‘in a region rife with corruption without having to deal directly with fraudulent governments’.21 In addition, ‘merely the association with development banks is enough for our business partners to assume that we must engage in fraudulent activities’.22 Allegations of this sort clearly pose a challenge to MDBs, including the ADB, even if they represent a simplified picture of reality. They provide further stimulus for the ADB to strengthen guidelines, as well as to toughen its anti-corruption measures and to reinforce governance policies. This is exactly what happened in 2012, as complaints of fraud and corruption—the majority of which came from ADB staff—reached a new high.23

Change on the Horizon?

The distinction between the more value-oriented European countries versus the pragmatists is bound to change in the years ahead. The development policies of a number of European countries are undergoing significant change and are largely overcoming the taboo of openly linking assistance policies and business interests.24 Growing financial constraints and the criticism of the ‘aid industry’ that has emerged over the past decade are contributing to renewed attention for economic diplomacy.25 Change is also evident in the international context, mainly driven by the growing importance of a number of Asian 21  Interview with a representative from the Dutch private sector, 30 October 2013. 22  Comment by a participant in the seminar ‘The Asian Development Bank: What’s in it for Europe?’, held at the Clingendael Institute, The Hague, on 21 November 2013. 23  Asian Development Bank (2013). Report to the President: Office of Anticorruption and Integrity: Annual Report 2012, Manila, ADB. 24  The Netherlands is a case in point. For an outline of new policies, for example, see MFA of the Netherlands, 2011 and 2013. 25  For example, see Polman, L. (2008). De Crisis Karavaan: Achter de schermen van de noodhulpindustrie [The Crisis S how: Behind the scenes of the humanitarian aid industry], Amsterdam, Balans. For a broader analysis of trends in development cooperation, see

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Table 15.2 Procurements and consultancy services in the ADB Procurements* and Consultancy Services** in the ADB (of Selected Members) (in % of Total) 1967–1976 1977–1986 1987–1996 1997–2002

Goods Japan United States China Indonesia Germany United Kingdom The Netherlands Spain Denmark Total Value of Contracts ($ millions)

Consulting Goods

41.67 11.44 6.27 31.13 0.00 0.00 0.00 0.00 8.87 14.00 4.57 3.38 2.08 3.20 0.00 0.00 0.11 1.64 1412.6

93.3

23.65 7.66 0.00 6.11 4.89 3.97 1.01 0.00 0.45 7454.3

Consulting Goods 13.42 19.55 0.00 7.09 3.48 14.31 2.48 0.00 1.97 482.8

9.52 6.46 8.12 12.60 4.98 1.70 0.95 0.15 0.21 27069.0

Consulting Goods 5.78 10.54 0.00 19.14 5.86 11.35 5.45 0.00 1.80 1393.8

5.95 6.26 16.02 10.91 2.61 1.33 0.37 0.21 0.25 25687.2

Consulting 6.16 10.99 0.19 10.55 3.78 11.59 2.97 0.00 1.84 952.8

* Goods, related services and civil works. ** TA (technical assistance) is included in consulting in the years prior to 2006. Note: Voting shares and contribution shares are reported as percentages of total voting rights and total contributions. Source: Calculated from ADB Annual Report, various years.

and other emerging countries in international politics and economics. This group of players is strengthening its role and influence, and is not inclined to adhere to more traditional approaches to development assistance that have been adopted by European countries and members of the OECD Development Assistance Committee more broadly. Taken together, these developments spur the on-going ‘economization’ of development cooperation at the bilateral, regional and multilateral levels. They also provide fresh impetus for European countries to take another look at the ADB. Woods, N. (2008). ‘Whose Aid? Whose Influence? China, Emerging Donors and the Silent Revolution in Development Assistance’, International Affairs 84(6): 1205–1221.

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2006

2009

Goods

Consulting  TA

0.31 4.76 21.35 3.81 0.22 0.14 0.05 0.08 0.07 3949.8

4.68 7.62 0.60 10.48 5.36 4.65 0.67 0.00 0.00 202.9

1.56 16.03 2.82 2.45 2.75 8.03 1.76 0.87 1.76 155.7

Goods 0.86 0.42 26.06 3.62 0.79 0.07 0.01 0.17 0.00

2012

Consulting  TA 2.20 2.53 0.11 8.90 3.39 2.35 0.08 8.70 3.69

5558.71 256.03

5.28 8.28 4.74 1.49 2.03 9.78 4.73 1.34 0.34

Goods 0.95 0.13 28.29 2.54 0.93 3.19 0.00 7.07 0.00

183.40 5591.6

Consulting  TA 5.57 5.36 1.49 1.93 2.46 2.31 1.50 4.45 0.00 306.4

1.58 8.89 3.57 2.43 3.88 9.81 2.91 1.89 1.85 177.3

Cumulative Distribution (as of 31/12/12) $ million % 8831.93 7952.39 23104.89 9173.08 3647.37 2609.79 890.89 758.86 372.60 128983.1543

The Netherlands is, in a sense, a typical example of European countries that are undergoing change in the field of development cooperation. Confronted with financial constraints and domestic pressure to improve efficiency of its assistance policies, Dutch economic interests now also feature high in the Netherlands’ development assistance policies.26 In addition, multilateralism is increasingly preferred over the bilateral channel, provided that international 26  Also, interview with an official of AgentschapNL, The Hague, 29 October 2013; see also Ministry of Foreign Affairs of the Netherlands (2013). Wat de wereld verdient: Een nieuwe agenda voor hulp, handel en investeringen [What the world earns: A new agenda for assistance, trade and investment], The Hague, MFA, 5 April.

6.85 6.17 17.91 7.11 2.83 2.02 0.69 0.59 0.29

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agencies work effectively and efficiently. Significant contributions to the ADB notwithstanding, the Bank has hardly been on the agenda of Dutch politicians and policy-makers alike—either at the Ministry of Foreign Affairs or the Ministry of Finance.

Relevance for Europe

The importance of the ADB for European member states may be considered in three ways—that is, in economic, political and geostrategic terms. In the economic sense, the fact that the ADB’s regional member states represent an ever-growing share of the world’s economic market is obviously significant. It is not without reason that the ADB has been referred to as the ‘Bank for half of the world’.27 Politically, the ADB’s activities in specific Asian countries serve as a complement to the bilateral assistance of European nations with those countries. Creating linkages between bilateral development ties and ADB priorities is likely to reinforce outcomes. Finally, from a geostrategic perspective, what stands out is that membership of the ADB provides access and opportunities to engage with fast-growing countries in the Asia–Pacific region—both multilaterally and bilaterally. Each of these aspects is worthy of closer scrutiny. The Economic Angle European economic interests in the ADB manifest themselves in several ways. The most tangible economic benefit lies in the involvement of European businesses in projects that are financed or co-financed by the ADB. The more indirect and—in the eyes of many within the Bank—more important way by which the ADB adds economic value is that it uses public investments to ‘leverage’ additional investments from private actors. By providing public goods and services, the ADB is also instrumental in improving the investment climate and, quite literally, in paving the way for European companies to invest in these markets. As Table 15.2 demonstrates, the direct gains that European firms get from the ADB through procurement contracts have steadily decreased. Today, they are merely a fraction of the level of the 1970s and 1980s. Declining competitiveness has forced many large non-regional consulting firms to reconsider their strategies. The companies that remain active operate mostly through local 27  Wilson, D. (1987). A Bank for Half of the World: The Story of the Asian Development Bank, 1966–1986, Manila, ADB.

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offices, allowing them to enter cheaper bids under the flag of a developing member country. The challenge is to stay up to date, to determine and demonstrate comparative advantage. Firms also need to develop, maintain and innovate a network of relationships and non-technical expertise of working in the region. While some European businesses have been forced or have opted out of this more competitive environment, others have still proven themselves to be successful.28 Interestingly, some firms that left the region earlier have returned in recent years, recognizing the value of creating networks through procurement projects for their long-term engagement in the region. In other words, while ADB projects themselves may not be particularly profitable, they provide a chance for future operations on a commercial basis. While firms are adapting to the changing environment, the ADB is also working to improve the tendering process. Recognizing the long-term limitations of overly focusing on price versus the quality of undertakings, the World Bank is currently undertaking a revision of procurement guidelines. The ADB is likely to follow these new policy recommendations when they are published. That being the case, there can be little doubt that it will be difficult for Dutch and European companies to regain their footing as regional members continue to grow and as local Asian companies continue to acquire more technical expertise. Overly focusing discussion about the ADB’s economic merits on procurement contracts, however, is to overlook what is perhaps the most important point about the ADB’s purpose. By engaging in policy-based loans, the ADB is creating a more favourable investment climate, thereby paving the way for companies to invest in those countries. In the eyes of most people that are directly involved with the Bank, this is the most significant value that the ADB’s undertakings offer—not just to client states but also to any private-sector party that wishes to operate in the region. A focus on procurement may be understandable from a political perspective, since procurement is an easier selling tool than a target such as private-sector development. After all, the gains of procurement contracts are immediate and measurable, while the added value of transparent, healthy, political–economic systems that further private-sector activities for years to come is largely indirect. To take this narrow view, however, is to overlook the real added value of the ADB’s undertakings, which is to create new markets by sharing knowledge and to improve infrastructure and governance. 28  Interview with a former ADB employee, 12 November 2013.

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Political Interests: Link to Bilateral, European Development Assistance The ADB’s expertise about Asian countries and regions, as well as its presence throughout the region, are two of the Bank’s important strategic assets. These knowledge and access functions are also of interest for European members, especially in Asian countries with which bilateral ties also run deep and in countries where bilateral ties are scaled back. More generally, the ADB’s activities are of political interest where they contribute to regional stability, both by managing potential conflict and in addressing environmental challenges. Also of concern are potential spill-over effects of an economic set-back in Asia, which would have profound consequences in the fields of trade, investment and finance for any country that has business interests in the region. In recent years the Dutch—as well as other European governments— have singled out several countries as particularly interesting markets for their companies.29 In Asia, this includes Vietnam, as well as Indonesia and Bangladesh. Even though Indonesia and Bangladesh remain on the list of ‘partner countries’ that still qualify for development assistance, development assistance to these countries will decrease. Funding is, however, still focused on the Dutch ODA spearheads of water, sexual and reproductive health and rights, food security and security, and the legal order. This is not the case for Vietnam, which is regarded as a transition country with which the relationship is to turn from ‘aid to investment’.30 ‘Donor money’ is making way for a more mature, market-based bilateral relationship, and remaining public funds are used to support trade and investment, to improve the business climate and to increase the size of (sustainable) trade, investment and services by Dutch companies. This approach in many ways resembles that of the ADB, which has a long track record in Vietnam, as well as in Indonesia and Bangladesh. The potential benefits of partnering—or, at the very least, exchanging information—are evident, all the more since water and the water business are major concerns for all stakeholders. The Netherlands’ focus in Afghanistan is on working simultaneously to achieve security, legitimate governance and socioeconomic development—the so-called integrated approach. The Dutch government has deployed financial and military resources since 2001 and now contributes through a police training mission for the 2011–2014 period, among others. The withdrawal of Western 29  A first step in this new direction is elaborated upon in MFA, 2007. 30  Ministry of Foreign Affairs of the Netherlands (2011). Focusbrief Ontwikkelingssamenwerking [Letter to the House of Representatives presenting the spearheads of development policy], The Hague, MFA, 18 March.

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troops in 2014 can also be expected to spur a reconsideration of the Dutch contribution to Afghanistan’s development in the years to come. In this context, it is important to realize that the ADB has been an important player in the reconstruction of Afghanistan. In terms of overall donor pledges from 2002–2013, the ADB ranks as Afghanistan’s fourth largest donor after the United States, the United Kingdom and the World Bank.31 The ADB implements the Afghanistan Reconstruction Trust Fund in cooperation with the World Bank, which could form the basis of a future multilateral forum for assistance to Afghanistan. After a suspension of fifteen years, the ADB resumed operations in Myanmar in 2013 with an assistance package for social and economic development. The opening up of Myanmar since 2011 has created new possibilities for improving regional links, also in South and South-East Asia. Connectivity with neighboring countries is one of the priority areas of the ADB’s short-term focus in Myanmar. The Bank aims to assist Myanmar in taking advantage of its abundant natural resources and its strategic location between China and India, as well as of its long Indian Ocean coastline. To this end, the ADB is also assisting in the creation of a development vision and goals, which aim to accelerate inclusive and sustainable economic growth and reduce poverty. The sudden inflow of large numbers of donors and actors that want to be active in Myanmar, combined with the limited institutional capacity of Myanmar’s government, is posing both challenges and opportunities for the impoverished country. There is a need for a more coordinated response and—for good reasons—questions have been raised as to whether the ADB should play a facilitating role in this regard. Strategic Relevance For a continent that is famous for successful regional integration and known to be eager to showcase this experience in other parts of the world, the EU and its member states—which includes more than a few ADB members—have shown surprisingly little interest in the ADB and the role that this institution plays in fostering regional integration in East Asia. Questions about the ADB’s relevance and the Europeans’ lack of attention are becoming more immediate today. The reasons are diverse and obvious, and include the rise of new players in the field of development assistance, the growing challenge of nontraditional security challenges in Asia, and the challenge to established rules of the game and the issue of the ADB’s legitimacy and relevance.

31  Asian Development Bank (2010). Asian Development Bank and Afghanistan: Factsheet (As of 31 December 2009), Manila, ADB.

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One interest of European members in the ADB relates to the emergence of new players, many from Asia, that are challenging the OECD or Western ‘consensus’ on development cooperation. The ADB sheds interesting new light on the evolving strategy and style of a group of Asian countries in this field, whose practice is quickly gaining attention. Also of interest is the ADB’s longterm practice of linking development assistance with trade and investment. While this was largely criticized until relatively recently, European countries are now increasingly willing to admit that commercial activities and development cooperation can, or indeed should, go hand in hand on many occasions. ADB projects are of relevance in the context of non-traditional security challenges that are increasingly on the agenda in East Asia. First and foremost, this includes water and food security. While there can be little doubt that individual countries within and outside East Asia play an important role in these fields, the ADB’s role can be of particular significance. As already noted, the ADB regularly operates as a co-financer of projects that cross borders. Such projects thereby not only target one specific country, but also contribute to regional stability. European and other non-regional countries have reason to nurture the ADB, since they will most likely not be as vocal in any future multilateral initiative, including the Asian Infrastructure and Investment Bank that the Chinese government proposed in 2013. Moreover, alternatives to the ADB are likely to undermine the Bank’s legitimacy and operation, at least to some extent, thereby indirectly reducing the voice of Japan and most non-regional members in Asia. It is in this context surprising that European governments have generally neglected the ADB’s political and geostrategic relevance, while trying to gain seats in other regional organizations, including the East Asia Summit. As succinctly noted by Kunihiko Miyake, a former Japanese diplomat and close aide of Japanese Prime Minister Shinzo Abe, ‘membership of [East Asian] institutions ought not to be a goal in itself but, rather, follows from continued commitment and engagement with the region’.32 Increased European activism is likely to be welcomed by more than a few countries in the region for various reasons. For one, many countries in East Asia are wary—to various degrees—of growing Chinese assertiveness and generally appreciate the counter-balance provided by the ADB. This is in a sense reminiscent of the early 1990s, when regional members were critical of US policy and sympathetic to Japan, but did not want Japan to monopolize the ADB and were eager to keep the United States in Asia.33 This strengthened 32  Interview with Kunihiko Miyake at the Canon Institute for Global Studies in Tokyo, 1 July 2013. 33  Wan, M. (1995). ‘Japan and the Asian Development Bank’, Pacific Affairs 68(4): 523.

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the bargaining position of the United States. Similarly, European members today are likely to have their voices heard, if and when they take a more strategic view to issues confronting the region and dare to make their voices heard. Second, the Japanese clearly welcome the value-oriented agenda that is promoted by the Europeans, if anything because this strengthens Japan’s own position as a middle player. Third, there is room for European expertise, for example in water management, provided that the public and private sectors bind forces in a smart strategy that includes continuous engagement at multiple levels. After all, a strategic vision and continuous investment of effort are needed to be successful in this continuously changing region. Conclusion Not adapted quite yet to the fact that Asia has changed, European countries still regard the ADB mostly as a development organization. They are to a significant extent detached from the Bank’s daily activities and lack a strategic vision on how to make more of ADB membership. This is illustrated by the fact that debates about the ADB—to the extent that they take place at all—largely revolve around simplistic ideas about economic opportunities that the Bank offers to European companies. This analysis has shown that European members thereby fail to recognize the opportunities that the Bank offers for their relations with Asian countries. These benefits are at least threefold and span the economic, political and strategic field. First, the ADB’s activities contribute to economic diplomacy interests—not just in terms of procurement but, more importantly, also by facilitating the creation of rules-based, transparent and fair markets in the region. There is a convergence of interests between the ADB and European countries, as the basic interest of the ADB in contributing to poverty reduction matches Europe’s search for new markets and improved ties. The Bank’s chief added value is to contribution to increase the pie as a whole and to good governance, addressing corruption and preparing countries for foreign direct investment and privatesector development. Second, the ADB provides an additional channel to interact with an increasingly important group of Asian countries—both within the institution itself and through the many local projects it supports. It provides a platform for multilateral discussions that complements bilateral ties with countries in the region. The ADB is thereby a valuable tool for European member states that have only limited tools to engage countries in East Asia and that are increasingly downscaling development assistance efforts to countries in this region. The fact that the ADB conforms relatively well—and increasingly more so—to

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the strategies, norms and values of Western countries in the field of development is certainly helpful in this regard. Third, the ADB’s relevance should be seen in the wider context of its geography and global power shifts—that is, as an environment where in a nonWestern diplomatic style is the norm in both normative and practical terms. Membership of this institution provides valuable opportunities to engage with players that are quickly strengthening their role and influence in the changing world of international politics and economics. This requires an open stance to the call from certain regional member states, including China and India, that their rising economic power must be reflected in the ADB. At the same time, this involves recognition that the ADB is an important venue for engaging these countries in the existing system with specific norms on governance, transparency and rule of law. One challenge facing the ADB for the future is how to maintain legitimacy at a time of shifting power balances in the Asia–Pacific region and globally. The urgency of this matter is highlighted by the fact that China, in particular, is already creating alternatives that will in the long term reduce the relevance of the Bank. This includes the establishment in July 2014 by the BRICS countries of the New Development Bank, the creation in October 2014 of the China-led Asian Infrastructure and Investment Bank, and the vision of Chinese President Xi Jinping of the Silk Road Economic Belt and Maritime Silk Road. The consequences of this for the ADB and its member states are of a practical–institutional as well as of a strategic character. On the practical front, it is important that the ADB listens to its members and remains open to change—for example, when it comes to accepting changes in voting rights and the appointment of high-level officials. Taking a more proactive stance in making other countries—most notably China—feel sufficiently welcome is a necessary step in ensuring that the ADB remains relevant and that European countries maintain access and influence. At the same time, the Bank needs to reconsider its niches and refocus on new areas of interest. Addressing non-traditional security challenges and protecting the established rules of the game, while not being afraid to adjust to the changing environment, may well be the two overarching issues in this respect. The emphases on intellectual support, the fight against corruption, inequality and climate change, and contributions to stability by furthering regional cooperation prove that the ADB is well on its way in this direction. More active support from the Europeans could help to stimulate this process further. Herein lies a parallel interest of the ADB and its European member states, as both stand to lose if the ADB’s role in fostering regional prosperity and stability diminishes.

CHAPTER 16

Concluding Remarks Jan van der Harst and Tjalling Halbertsma

Recent and Ongoing Developments

Developments in East Asia are currently both swift and far-reaching; this book will therefore be appearing in the midst of a number of new and important initiatives in Asia, which could not be covered in the present publication. The signing in 2016 of the Trans-Pacific Partnership (TPP) by twelve Pacific Rim countries is but one example. The US-led trade agreement has been signed by Japan, and South Korea has expressed interest in doing so at a later stage. China’s position towards TPP remains undecided, but in 2013 it launched its own ambitious and forceful “One Belt One Road” (OBOR) initiative, and founded a number of related financial institutions, such as the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. The initiative—also labeled a strategy or program—and the financial institutions, particularly the AIIB, have already demonstrated their far-reaching implications for the East Asian region and the wider world, and will undoubtedly continue to do so in the years to come. As such, OBOR and AIIB deserve special mention here. The “One Belt One Road” initiative was launched by Chinese President Xi Jinping in September 2013 during a state visit to Kazakhstan, when he proposed a ‘Silk Road Economic Belt’ across the Eurasian continent to facilitate economic cooperation and connectivity. A month later, in Indonesia, the Chinese leadership introduced a ‘Maritime Silk Road of the 21st century’ to connect China to South East Asia and beyond. Packaged together as the ‘One Belt, One Road’ initiative, the two projects have become cornerstones of Chinese foreign policy with a focus on economic cooperation, investment in infrastructure and connectivity, and, as a corollary, friendly political relations and people-to-people exchanges. Following OBOR’s launch in 2013, China’s National Development and Reform Commission (NDRC) further outlined the initiative in its 2015 policy document ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21stCentury Maritime Silk Road’.1 Emphasizing the commitment of the Chinese 1  N DRC, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” First Edition, March 28, 2015. © koninklijke brill nv, leiden, ���7 | doi ��.��63/9789004291430_017

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leadership to the initiative, the policy paper was jointly issued by the NDRC, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, with State Council authorization. The founding of the Asian Infrastructure Investment Bank (AIIB) in 2015 is frequently considered to be the institutional incarnation of OBOR, with a membership base ranging from East Asia to Western Europe. Initially understood as an alternative to other development banks in the region, AIIB has swiftly signed various cooperative agreements with other development banks such as the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD) for the co-financing of development projects, for instance, in Pakistan and Tajikistan. In 2016, it also signed a first co-financing framework agreement with the World Bank.2 China’s ambivalent position towards the US-led TPP is offset by the US’s unambiguous position towards the AIIB. The US has not joined the AIIB and has actively—yet unsuccessfully—lobbied to keep its allies, including various EU members, from joining the new development bank. In East Asia, only Japan has refused membership in the AIIB. Naturally, the potential for enhanced trade and investment flows, infrastructure development in underdeveloped regions, and more dynamic growth in general have made OBOR a widely debated initiative. In addition to the economic dimension, it has also been read as the most concrete expression so far of China’s rise, and its desire to shape international affairs in accordance with its own ideas and interests. Understood in this light, OBOR carries political significance as an instrument for strengthening Chinese influence in the participating countries and regions. From a geopolitical perspective it can be interpreted as a reaction to the US ‘pivot to Asia’ or as an effort at counter­ balancing the US, while grooming other power centers for a future multipolar world. Although President Xi chose to launch OBOR during visits to Asian states, the project is of great importance for states in Europe and the European Union. After all, seen from China, the endpoint of a Eurasian ‘Belt’ consists of the member states of the EU, and the extension of the ‘Maritime Silk Road’ to South Asia, the Arabian Peninsula, East Africa, and the Mediterranean has also brought it to the doorstep of the European integration scheme. To some extent, the effects for Europe are already tangible with Chinese participation in the European investment fund launched by Commission President Jean-Claude Juncker, separate cooperative initiatives like the ‘16+1’ scheme involving China 2  Press release, World Bank and AIIB Sign First Co-Financing Framework Agreement, World Bank, April 13, 2016 .

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and several Central Eastern European states, and also concrete projects like the growing Chinese investment in the Greek port of Piraeus. Vice versa, AIIB membership on the part of a number of EU members, despite explicit US lobbying against such participation, can be seen as an indication of the EU’s increased engagement and interdependence vis-à-vis China and East Asia. According to some analysts the innovative aspects of OBOR and AIIB lies in the development of new overland routes between East Asia and Europe as well as linkages between the maritime and land routes: The main difference between the Maritime Silk Road and the Silk Road Economic Belt is that the shipping routes between Asia and Europe are already heavily used, while shipping overland by train is still limited and has yet to enter the high-speed phase. More importantly, the Chinese port and railway programs are closely linked and tend to stimulate each other.3 In fact, the OBOR initiative has already yielded a number of tangible results in this regard, with the operation of new railway lines connecting China and the EU through Central Asia, Russia, and Eastern Europe. The new connections reduce the number of days for freight transport between China and the EU significantly, though the vast majority of freight will continue to be shipped along existing maritime routes. The new overland connections may, however, constitute a ‘game changer’, both economically and politically. Indeed, the follow-up workshop to the conference of the Centre for East Asian Studies Groningen, which has resulted in the present volume, has focused on OBOR’s implications and opportunities for China and the EU.4

Final Remarks: China Tips the Scales

The launch of the OBOR and AIIB schemes, as sketched above, has reinforced the notion that China has seized the initiative in the management of its relationship with the EU, Asia, and the world. This book has highlighted two trends in particular, both of which have a far-reaching impact on regional and 3  Frans-Paul van der Putten and Minke Meijnders, China, Europe and the Maritime Silk Road, Clingendael report, March 2015. 4  C EASG Workshop “One Belt One Road: China and the EU,” September 12, 2016, University of Groningen, the Netherlands.

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inter-regional relations. The first is the ever-increasing Chinese preponderance in East Asia, which manifests itself clearly in the region itself but also in the latter’s dealings with Europe. Many chapters of this volume were drafted with the original intention of covering East Asia in terms of a multilateral setting but ended up with a specific (bilateral) focus on China. Apparently, China is the indispensable actor to watch and zoom in on, when addressing inter-regional contacts between East Asia and Europe, no matter whether the approach is political or economic, and the perspective European or East Asian. The second conspicuous development is that the relationship between the EU and China seems to have become more unbalanced than it was previously.5 Europe today stumbles from emergency to emergency—over refugees and migration, Brexit, terrorism, the euro, the rise of Eurosceptic political parties, difficulties surrounding the Transatlantic Trade and Investment Partnership (TTIP) negotiations, etc. All this is draining confidence and energy from the EU, causing European governments to look inwards and endangering the Union’s integration development. As a result, with regard to China and East Asia, Europe increasingly finds itself in a reactive and sometimes even submissive position. Unlike the US, it has neither a unified foreign or defense policy, nor a proper security stake in East Asia. The EU is still a significant force in global trade, international finance and soft power resources. However, due to the various crises, it has to be watchful not to lose prominence in these latter domains as well. From this volume’s chapters, it has become clear that China’s priorities visà-vis Europe are essentially threefold: to avert EU anti-dumping measures, to secure a stable environment for Chinese investments, and to counterbalance US influence in the East Asian region. In turn, the EU’s main aims are to open up China’s market, to subject the market to more solid rules, and to attract Chinese investments. All this could be done much more successfully if Brussels managed to speak with one voice—which in practice turns out to be difficult due to intra-European rivalry. Such rivalry has subjected the EU to divide-andrule tactics on the part of Beijing, which the latter has proved adept at utilizing. Currently, Germany, Britain, and the Central and Eastern European countries seem to be the most successful in the EU members’ scramble to receive preferential treatment from Beijing. However, one may wonder whether, in the longer run, this fighting over pieces of the same cake is a viable strategy. To paraphrase a nineteenth-century British statesman: China has no permanent friends or allies, only permanent interests. According to De Jonquières, 5  Guy de Jonquières, “The EU and China: Redressing an unbalanced relationship,” ECIPE 1 (2016), p. 1.

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Chinese investment decisions are determined by prospective returns and commercial gains, which are generally considered more important than political calculations.6 This is not to say that China’s position vis-à-vis Europe is unassailable. Beijing’s recently slowing growth rate, rapidly rising debt, and structural problems in its economy, all raise doubts about its future well-being. If troubles continue to mount, this could very well affect the current agenda-setting powers of the Chinese government. However, in the short run, the prospects are gloomier for Brussels than for Beijing. Europe’s weaknesses are, for a large part, self-inflicted. What the EU member states need to do is to step up efforts to overcome internal divisions in order to prepare themselves for the future, starting with three crucial negotiations that are presenting themselves, all involving China: on Market Economy Status, a free trade agreement, and a bilateral investment treaty.7 Policy coordination is required, more so than ever before. The worst that could happen to Europe would be to fall back into a situation of ‘weak politics, weak economics’.

6  De Jonquières, “The EU and China,” pp. 2–3. 7  Insa Ewert, “The EU-China Bilateral Investment Agreement: Between High Hopes and Real Challenges,” Security Policy Brief, Egmont Royal Institute for International Relations, no. 68 (2016), pp. 1–6.

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Index Abe, Shinzo 15, 16, 23, 24, 26, 268, 288 Air Defense Identification Zone (ADIZ) 7, 203–214 Alliot-Marie, Michèle 105 Andreotti, Giulio 124–125 Ashton, Catherine 2, 167, 181, 211–212, 226 Asia-Europe Meeting (ASEM) 1, 8, 25, 191, 193 nn. 22, 220, 227, 233–242, 245–246, 248–252, 278, 282, 284, 287–289, 293 Asian Development Bank (ADB) 8–9, 11, 253–262, 264–270, 272, 278, 282, 297 Asian Infrastructure Investment Bank (AIIB) 10–11, 53–54, 271–273 Asia-Pacific Economic Cooperation (APEC) 191 Association of Southeast Asian Nations (ASEAN) 1–2, 8, 43, 47, 74, 87–89, 129 n.1, 130, 132, 134 n.23, 136, 143–146, 148, 151, 182, 188 n.7, 190–191, 202, 218–233, 237–238 n.24, 240 n.33, 241, 245, 277–278, 280–283, 289, 293, 295, 297 Barroso, José-Manuel 167 Blair, Tony 77 Cai, Fangbo 114–115 Cameron, David 83–84 Campbell, Kurt 176, 181 Chinese Communist Party 135, 142, 162 Chirac, Jacques 106 Clinton, Hilary 181, 217 n.1, 280 Council of Security in Asia Pacific (CSCAP) 191 Craxi, Bettino 124 Cui, Tiankai 174, 180 Dawkins, Richard 20 De Gaulle, Charles 114–115 n.7, 119 De Gucht, Karel 52, 109–110 De Michelis, Gianni 124–125 Delors, Jacques 31, 278 Democratic People’s Republic of Korea (DPRK) 170 Deng, Xiaoping 78, 87, 124 Draghi, Mario 31

East Asia Summit (EAS) 1, 191, 227–228 European Central Bank (ECB) 17–18, 25, 29, 31–32 European Economic and Monetary Union (EMU) 31, 278 Fair Trade Commission (FTC) 66 Fu, Ying 33, 82–83, 85 nn. 29, 284 Gardini, Walter 122 Hallstein, Walter 31 Hayek, Friedrich von 20 Hu, Jintao 163, 164 n. 41, 172, 197 International Civil Aviation Organization (ICAO) 204, 207, 214 International Covenant on Civil and Political Rights (ICCPR) 136–137 International Labour Organization (ILO) 56, 58, 66–67, 69–70, 287, 298 International Monetary Fund (IMF) 10–11, 15, 17, 19 n. 4, 27, 34, 53, 160, 247–248, 277 Juncker, Jean-Claude 272 Keynes, Milton 20 Koizumi, Junichiro 17, 26 Kuroda, Haruhiko 255, 288 Li, Keqiang 53, 74, 77, 81, 86, 89, 289 Mao, Zedong 78, 87, 114 n. 2, 119, 124, 127, 139 n. 46, 290, 292 McCarthy, Joseph 119 Merkel, Angela 110 Mogherini, Federica 2 Moro, Aldo 115, 122 n. 26, 291 National Development and Reform Commission (NDRC) 64–65, 271–272 Nazarbaev, Nursultan 151 Nenni, Pietro 114 n. 3, 115, 120 n. 19, 290–291 Noda, Yoshihiko 23

300 North Atlantic Treaty Organization (NATO) 158–160, 168, 179, 193–195 Obama, Barack 2, 172, 181, 217, 229 One Belt One Road 10–11, 53–54, 271–273 Organization for Economic Co-operation and Development 27, 45, 255 n. 7, 256, 262, 268, 291 Ortona, Egidio 114 n. 3, 115, 291 Patten, Chris 106 People’s Liberation Army Navy (PLAN) 194 Pini, Mario 18, 114 n. 2, 115, 119 nn. 16, 121 n. 23, 122, 123 n. 27, 292 Prodi, Romano 104 n. 31, 105 Qin, Gang 189 n. 13, 200 n. 50, 209, 292 Raffarin, Jean-Pierre 105 Renzi, Matteo 128 Russel, Daniel R. 181, 182 n. 27 Schröder, Gerhard 44, 105–106 Sforza, Carlo 119 Shanghai Cooperation Organization (SCO) 5, 129–130, 135–136, 145–152, 277, 294–295, 297

Index Shirakawa, Masaaki 24–25 Solana, Javier 106 South Asian Association for Regional Cooperation (SAARC) 188 n. 7 Stalin, Joseph 119 Trans-Pacific Partnership (TPP) 271–272 United Nations Commission on Human Rights (UNCHR) 138 Verhofstadt, Guy 106 Wang, Hui 77 Wang, Yi 172–173 World Food Program (WFP) 192 World Trade Organization (WTO) 4, 43, 51, 53, 55–56, 58–64, 70, 92, 98–99, 104, 108, 220, 222, 246–247, 250, 285, 292–293, 297 Xi, Jinping 4, 10, 53, 74, 77, 81, 83, 85–89, 172, 173 n. 8, 179–180, 270–272, 278 Zhou, Enlai 119 Zhu, Rongji 104, 116 n. 12, 156 n. 5, 166, 280, 298