The EU's trade relations with China, 1975-2008: a linkage power at work ?

A Linkage Power at Work?

(Summary)

The central aim of this thesis is to improve our understanding of the EU’s power, in particular in its external trade relations/negotiations. Our hypothesis is that the EU is a distinctive kind of linkage power, defined as an actor relying on linkage as a crucial modus operandi in its external relations. We explored how, to what extent and in which distinctive ways the EU is such a linkage power.

Our analysis was based on three logically interrelated concepts – power resources, linkage and linkage power. Linkage refers to a leveraging strategy, with an aim of packaging relevant power resources, so as to increase leverage in bargaining, or more generally attain a policy objective. I identified seven types of linkages that the EU used: political-economic issue linkage, economic-economic issue linkage, conditionality, contextual linkage, linkage with a third party, cognitive linkage and synergistic linkage. Linkage can hardly work without proper power resources. The latter, as Dahl (1970) defined, refers to all the resources-opportunities, acts, objects etc – that an actor can exploit in order to affect the behaviour of another. So, linkage is a bridge between power resources and impacts – meaning affecting or changing the behaviour of another party. By putting linkage and power together, we created a new term – “linkage power”, referring to a power based on linkages. The EU, the US, China or any other power can all be such labelled, though these actors may diverge in power resources, linkage strategies and the variables affecting linkage effectiveness. When applying such an analytical framework to the EU, we gave particular attention to the implications of the EU’s sui generis nature on its linkage power.

Our case study is the EU’s trade relations with China (1975-2008), which were punctuated by two critical historical junctures – the Tian’anmen Square Incident in 1989 and the EU-China Textile Crisis in 2005. In 1975, The EEC’s successful strategy by linking political issues (Europe-China balancing the Soviet Union and recognising China’s sovereignty over Taiwan) with economic issues (signing the EEC-China Trade Agreement) played a crucial role in securing the establishment of diplomatic relations between the EEC and China. Different types of linkages were then applied to the EEC’s negotiations with Beijing on the 1978 Trade Agreement and the 1979 textile agreement, which effectively prompted the Chinese side to agree to the EU’s terms.

Immediately after the 1989 Tian’anmen Square Incident, the EC imposed economic sanctions with an aim of coercing China to accept Western world’s human rights conditions. This linkage did not last long or pay off due to divergent political and economic interests among the Member States and the EC’s institutional handicaps (foreign policy competence was largely in the hands of Member States, collective foreign policy action was non-binding), and soon de-linked.

Having realised that confrontational approach did not work well, the EC/EU and its Member States started to change their China policies in 1993-95. The period of 1993-2004 witnessed the EC/EU’s power through partnership. The strategic partnership was seen as a complex of different pairs of issue linkages, ranging from political-strategic issues to economic and human rights issues. The partnership, once established, had fostered new linkages and consolidated old ones. China’s WTO accession was seen as a once-in-a-century opportunity for the EU to exercise linkage through conditionality, so as to extract market access concessions from the Chinese side. Moreover, by linking with China could the European Commission garnered international support for advancing the Galileo project within the Union and ward off some of the US pressure in 2003.

The Year 2005 was singled out since an unprecedented trade row on textiles broke out, confronting the EU against China’s export prowess resulting from globalisation and China’s WTO accession. Linkages were used as a predominant strategy to help the EU to persuade and press the Chinese side firstly accept voluntary export restrictions and then share the burden of allowing the blocked textiles in European ports to be released. In 2006-08, the trade deficit problem emerged, coupled with a series political spats between Europe (France and Germany) and Beijing on the Tibet issue. As the EU-China honeymoon was over, the Commission toughened its approach towards China. Although linkage was again used to redress the trade deficit, its effects were not satisfactory, as the EU power resources were eroded.

Our conclusions are (1) linkage is a crucial modus operandi in the EU’s internal bargain and its external relations with China; (2) Linkage was generally effective vis-à-vis China, but with variations, either over time or across different linkage types; (3) The EU is a sui generis linkage power, resulting from its institutional characteristics and heterogeneity of interests among the Commission and Member States. We find that the EU’s increased institutionalisation (both regional and bilateral) and competences generally facilitated its use of linkage strategies. The EU’s sui generis structure and its internal interest divergences have mixed implications on its linkage effectiveness. On one hand, the EU’s linkage power was weakened accordingly. But on the other, the Commission could tactically make use of some Member State government’s row with Beijing and advance its own economic agenda (such as the EU-China High-level Economic and Trade Dialogue, HED). Moreover, our research also confirmed Andrew Moravcsik’s argument that issue linkage is more easily made within an issue-area than across issue-areas. But we differ from him on the reason behind that. We find that this was largely attributable to the EU’s pillar structure and competence divisions.

The theoretical contributions include: (1) Linkage power provides a distinctive prism to look into the EU’s concrete strategies in internal bargains, and external commercial negotiations. Linkage serves as a crucial strategy for the EU to handle its relations with a far-abroad country like China, including establishing diplomatic relations, negotiating trade deals, forging strategic partnerships and holding high-level dialogue. (2) Giving some insights to the EU’s actorness. We find that the EU, though institutionally not a unitary actor, was somehow able to present its power to the extent like a sovereign state on some occasions using linkage strategies. (3) Contributing to the understanding of the EU’s means to spread its governance model. We find that the EU’s norm-setting goals have often been achieved through non-normative ways – such as interest exchange and trade-off, and other deliberate ways of persuasion and even coercion, mainly based on linkage. (4) Shedding light on the interactions between the Commission and the Member State governments and on the Commission’s autonomy in external trade relations.

Two future directions of research have been identified: (1) comparative studies: the EU’s linkage practices vis-à-vis the US, Russia and middle powers, or other actors’ linkage strategies vis-à-vis China; (2) post-Lisbon linkage strategies used by the EU.