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1 1 (February 14, 2022)

handle is hein.crs/goveggs0001 and id is 1 raw text is: Congressional Research Servi informing the IegsIlative debate sinco 1914 The European Union and China The European Union (EU) Strategy for Cooperation in the Indo-Pacific, published in September 2021, outlines an agenda to expand economic, security, and political partnerships in a region that is rapidly becoming a key player in shaping the international order. The 27-member EU's increasing attention to the Indo-Pacific unfolds in the context of transatlantic discussions about the direction of relations with the People's Republic of China (PRC, or China) and the implications of U.S.-China tensions for Europe. Many Members of Congress have expressed concerns about China's influence in Europe and the EU, as well as interest in policy options for greater U.S.-EU cooperation regarding China. In recent years, EU views on China appear to have hardened and now mirror more closely U.S. concerns about China's global influence. In a 2019 position paper, the European Commission (the EU's executive body) described China as simultaneously ... a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance. Many saw the paper's uncharacteristically sharp tone as indicative of mounting frustration with China's trade and investment practices, its aspirations to become a global technology leader and standard setter, and its promotion of a governance model at odds with core EU values. Notwithstanding initial suggestions that China's Coronavirus Disease 2019 (COVID-19) facemask diplomacy and vaccine diplomacy could build goodwill, many analysts assess that the pandemic and other recent developments have further strained EU-China relations. An exchange of sanctions in March 2021 stemming from EU concerns about human rights in China reflected what some observers have described as a low point in relations. Economic Issues Although many European policymakers seek to sustain or deepen economic ties with China, they appear to share U.S. concerns over China's industrial policies, which have led to asymmetric trade and investment advantages for China, as well as China's growing control of certain global supply chains. EU officials also have expressed concern regarding China's use of economic coercion for political objectives. Trade and Investment Asymmetries. The EU for some time has sought to increase market access in China for European firms and investors amid Chinese industrial policies that limit foreign investment and subsidize domestic firms in strategic sectors. The EU has worked with the United States and Japan to develop approaches to counter China's subsidies, but the group has not moved to Updated February 14, 2022 implement any specific proposals. The EU and China concluded negotiations on a bilateral Comprehensive Agreement on Investment (CAI) in December 2020, but the European Parliament (EP) suspended ratification of the CAI in May 2021, following China's use of economic coercion against EU member states, firms, and institutes. Supply Chain Measures. In September 2021, the United States and the EU launched a new Trade and Technology Council (TTC) to address a wide range of trade and technology issues, including enhancing cooperation in sectors where China controls key supply chain inputs, such as clean energy and pharmaceuticals. Additionally, the European Commission in December 2020 published a regulatory toolbox for 5G network rollouts that many analysts contend could limit the ability of Chinese firms to meet the standards for participation. Several European governments have adopted various measures that limit and in some cases exclude Huawei's participation in the buildout of their 5G network infrastructure. Response to PRC Economic Coercion Some European policymakers have expressed concerns about China's use of economic coercion to advance certain geopolitical objectives. The EU is currently considering a proposed anti- coercion instrument that could allow the EU to respond as a bloc against economic coercion of a single member state, among other tools, but divergent views among member states could complicate its finalization or deployment. In 2021, China imposed a de facto trade embargo on Lithuania and European firms that source from Lithuania after Lithuania announced it would open an office in Taiwan. In response, in January 2022, the EU initiated a trade dispute case at the World Trade Organization, and some experts contend that China's continued pressuring of Lithuania could increase support for the proposed anti-coercion instrument among member states. Human Rights and Polital kssues European criticism of human rights and political issues in China, and China's reaction to such criticism, has been a growing source of tension. Many EU and member state officials have expressed concern about human rights violations of the Uyghur Muslim and other Muslim populations in China's Xinjiang region. The EP and national parliaments in several member states have passed resolutions criticizing human rights violations of Uyghurs. In March 2021, the EU sanctioned four officials and one entity in Xinjiang under the bloc's Global Human Rights Sanctions Regime. The designations were coordinated with sanctions imposed by the United Kingdom, Canada, and the United States. China countered with retaliatory sanctions against selected EU entities, nongovernmental organizations, and scholars. Many saw China's response as

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