Wilson Briefs l December 2014

How Europe and the United

States Can Boost Cooperation
and Manage Competition in Asia
by Nicola Casarini

SUMMARY
In the early 2000s, the European Union (EU) began its own rebalance or pivot
toward Asia. The European pivot often competes with the United States in
focusing on economic, monetary, technological, and defense-related issues
such as arms sales. But the EU and its member states harmonize with U.S.
goals in boosting diplomacy, supporting multilateral security fora and regional
integration initiatives, and deploying soft power. The EU and the United States
should improve their dialogue on Asia to better understand their own interests
and priorities, identify areas for cooperation, and manage competition.

The U.S. pivot and the debate in Europe

The U.S. pivot, which centers on diplomatic, economic, and military initiatives to ensure that
Beijings rise does not upset the U.S.-led order in Asia, has generated debate in Europe about
aligning with Washingtons program. Advocates of alignment argue that Europes engagement
with Asias economies has been fostered by the protective U.S. umbrella, as the EU itself is
not capable of enforcing its own vision so far away.

Others support European autonomy, arguing that the EUs economic interests in Asia would
be better promoted through independent action, and also because, unlike the United States,
it does not have troops to protect or alliances to support there.
Most European policymakers and experts, however, maintain that EU-U.S. relations on Asia
will likely combine alignment on security issues and competition on economic matters.

The European pivot

Europes own rebalancing began in earnest in the early 2000s, following the realization
that Asia, especially China, had become central to global prosperity and to the EUs growth
prospects.
The EU-China strategic partnership, established in October 2003, exemplified the change,
expanding collaboration beyond trade to high-tech, monetary, and defense issues. Three
major initiatives accompanied the partnership: (1) joint development of Galileo, a global
navigation satellite system that could rival the U.S. Global Positioning System; (2) discussion
on lifting the EU arms embargo imposed on China following the June 1989 Tiananmen Square
crackdown; and (3) informal commitment by the Peoples Bank of China to diversify its foreign
currency reserves away from the dollar and toward the euro.

Promoting EU aerospace and defense interests

Space cooperation has been expanded to other Asian countries, too. Since 2006, the EU
has agreed on joint development of Galileo with South Korea and India, and has developed
industrial cooperation in space technology with Japan and Taiwan.
EU member states, within the NATO framework, have established defense dialogues and
military links with American allies such as Japan and South Korea. But France, Germany, and
the United Kingdom have also set up strategic dialogues with China itself, complemented by
training of Chinese military officers and high-level visits.
Europes aerospace and defense industry, increasingly dependent on exports, finds a
promising market in Asia, and commercial considerations often trump concerns over Asias
strategic balance. Asia imports almost 20 percent of its armaments from Europe and around
30 percent from the United States.

Fostering trade and promoting the euro

Traditionally, trade has been a top priority in EU-Asia relations. Since 2011, the EU has signed
free-trade agreements with South Korea and Singapore; is negotiating agreements with
Japan, Vietnam, Malaysia, and Thailand; is discussing a trade and investment agreement with

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the Association of Southeast Asian Nations (ASEAN); and is negotiating a bilateral investment
treaty with China that could foreshadow a free-trade agreement.
Eurozone members have also promoted the euro. Asia has become the largest buyer of eurodenominated assets, and euros average 25 to 27 percent of the foreign exchange portfolio of
the central banks of Asias major economies, reaching 32 to 34 percent in China, the worlds
largest holder. The euro is the second most important reserve currency in Asiaafter the
dollar, but before the yen.

Between competition and cooperation

Attitudes toward China are possibly the main difference between the two pivots. The United
States approaches Beijing in the context of an Asia policy and system of alliances, while
Europeans traditionally engage Asian countriesparticularly Chinabilaterally and without
the strategic considerations that inhibit the United States.
But recently, recognizing Chinas growing assertiveness toward its smaller, weaker neighbors,
the EU has begun a more comprehensive approach to the region, one that includes its
own role in cases of conflict. As Catherine Ashton as EU high representative for foreign
affairs and security policy and Hillary Clinton as U.S. secretary of state said in a July 2012
joint statement, the transatlantic allies have a shared interest in Asian security, especially in
fostering multilateral-based rules and standards. The EU has boosted diplomatic support for
multilateral security fora and regional integration initiatives. It belongs to the ASEAN Regional
Forum and the Council for Security Cooperation in the Asia Pacific, and will join the East Asia
Summit if invited. It consistently supports ASEAN as a partner in integration, and appointed
a dedicated ambassador to ASEAN in September 2014.
Support for Asian integration and reconciliation is an important aspect of the EUs rebalance.
The EU backs the ASEAN+3 (ASEAN plus China, Japan, and South Korea) framework and the
Trilateral Cooperation initiatives among Beijing, Seoul, and Tokyo, including the South Koreaninspired Northeast Asia Peace and Cooperation Initiative.
The EU and its member states have also deployed their soft power arsenal in the East: the
EU is the largest provider of development aid and humanitarian assistance in Asia and a
major contributor to civilian capacity-building initiatives. This offers a complement to U.S. hard
power. Moreover, the United States and the EU are also committed to promoting democracy,
human rights, and the rule of law in Asia. Federica Mogherini, Ashtons successor as high
representative, declared in September 2014 that the United States and the EU should pivot
together toward Asia.

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The transatlantic allies, set for both cooperation and competition in Asia, are often unaware
of the elements of each others rebalance. To increase understanding, identify areas for
cooperation, and manage competition, EU and U.S. policymakers should undertake the
following:

Establish a regular Transatlantic Forum on Asia where experts and policymakers can
debate issues of mutual concern.

Establish closer links between Congress and the European Parliament, in particular
between Asia-focused committees such as the Congressional-Executive Commission
on China and the U.S.-China Economic and Security Review Commission, and the
European Parliaments Delegation for Relations with China.

Establish regular dialogue between the official responsible for Asia in the cabinet of
Federica Mogherini, High Representative of the Union for Foreign Affairs and Security
Policy, and the office of the U.S. Assistant Secretary of State for East Asian and Pacific
Affairscurrently Daniel Russel.

Nicola Casarini
Public Policy Scholar
Nicola Casarini is a Public Policy Scholar at the Wilson Center and Associate Fellow at the
Institute for International Affairs (IAI) in Rome.

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