Putting aside Washington’s rhetorical excesses, China and Europe know that the U.S. does not want to destroy the current world order. Having used, and abused, the present international trading system — and America’s unforgivable indifference to decades of its mounting debts and deficits — China and Europe should accept to rebalance a relationship that has served them so well.
South Korea has shown how that’s done. After the U.S. free-trade agreement with South Korea was signed on March 15, 2012, the year ended up with the Korean trade surplus of $16.6 billion. Over the next two years, the surplus soared to a record-high $28.3 billion in 2015.
That’s when the Koreans probably began to realize that was too much of a good thing. And, when one of the U.S. presidential candidates used colorful language during the election campaign in 2016 about America’s excessive trade deficits, Seoul saw the writing on the wall. Last year, the trade surplus with the U.S. was down to $22.9 billion, and in the first four months of this year the surplus was running at an annual rate of only $15.9 billion — 4.2 percent below its 2012 level.
Recently, one could hear the Chinese making promises that sounded like a replica of what Seoul did. But things have changed since, and there's now belligerence. Beijing is even making light of American “petulance” as Trump threatens another round of punishing trade measures that would affect $200 billion of Chinese exports to the U.S.
Trump could do that: He has the upper hand, legally and morally, in this dispute. Still, diplomacy and a bit of respectful interaction could be much better, and more productive, with the Chinese core leader.
Apart from that, U.S. trade relations with China are bound up in a web of war and peace issues where mistrust and mutual suspicions reign supreme.
That now makes it inevitable that, at some point — and the sooner the better — Trump and his Chinese counterpart will have to negotiate an agreement on bilateral trade and investments as part of a complex set of issues, including China’s contested maritime borders, peace and disarmament on the Korean Peninsula and Taiwan as a centerpiece to the sacrosanct “One-China” policies.
Things are very different with Europe. We are back to Henry Kissinger’s old quip: “Who do I call if I want to call Europe?”
The European Commission is the member countries’ technical secretariat. All policy decisions are taken by the European Council (a forum of heads of state and government) in a unanimous vote of 28 sovereign nations.
And don’t count on Germany. The country is virtually leaderless. Chancellor Angela Merkel is challenged even within her own party, and her Bavarian “sister party” wants her to step aside.
Without Germany, France cannot do anything. Its president is now embroiled in an invective-laden discourse with Eastern Europeans and Italians, and is largely ignored by countries that usually vote with Germany.
That means trade issues with Europe will have to remain at technical levels to iron out differences on market access and tariff and non-tariff barriers to trans-Atlantic flows of commerce and finance.