If the EU Wants to Save The JCPOA, Europe Must Open Its Market to China

Multiple European leaders including Angela Merkel have used Donald Trump’s exit from the JCPOA (aka Iran nuclear deal) as a means of trying to assert European independence vis-a-vis the United States, particularly in matters of foreign policy and geopolitics. With EU leaders intent on working with Iran to preserve the JCPOA without US participation, the elephant in the room remains the EU’s scepticism about opening up its markets to China.

While Donald Trump remains more brazen than any leader in recent memory when it comes to linking security agreements with trade agreements, in reality, there is no altruism in geopolitics and ultimately money speaks louder than grandiose rhetoric about peace. In so far as this is the case, one of the clear reasons why Trump remained so unmoved by his European partners effectively begging him not to withdraw from the JCPOA is due to the fact that Brussels and Washington remain at loggerheads over trade agreements with Trump insistent that the EU open its markets to more American goods and/or face tariff barriers to further trade. Thus far, EU officials have seemed unwilling to budge from the status-quo that Donald Trump calls a “rip off”.

At the same time, more EU officials have been speaking with their Chinese counterparts about loosening trade restrictions, but thus far there has been little to show for these discussions. In reality, China and the EU are ideal trading partners. As Chinese purchasing power increases and with China already being the world’s biggest single domestic market, Chinese consumers are hungry for European luxury goods that in many cases are becoming too expensive for Europeans to afford. Just as European wages stagnate while prices continue to increase, Chinese goods which are on the whole far more affordable than their EU, Japanese or US equivalents, would be desirable to European consumers who are looking for better values on necessarily items.

In this sense, a deal to open up Chinese markets to European goods while opening European markets to Chinese goods, could potentially be a very substantial win-win for both sides. Crucially, if the EU wants to gain its coveted political independence from the US – something which typically happens whenever a brash Republican is in the White House, the only way for Brussels to put its money where its mouth is, is to use China as a means of leveraging Donald Trump’s threats in what could be a protracted trade war with the protectionist White House.

If the EU remains at odds with the world’s most dynamic economy, it will have little to show for its policy independence which is necessarily contingent upon a more diverse set of trading partners. An EU-China economic partnership could give Europe the leverage it needs to then give Iran the necessary guarantees of economic sustenance in a post-US JCPOA. China and Russia are clearly ready to up the stakes in terms of economic cooperation with Iran, but Europe remains compromised in this respect.

Because the JCPOA was supposed to act as an economic bridge for Iran into western economies that had typically followed the US path of sanctions and suspicion, without European participation, a post-US JCPOA would likely fail and be replaced by intensified Russo-Chinese cooperation with Iran, a stronger Iran-Turkey partnership next door and a pan-western sanctions war against Iran. This is the case because if the EU remains overly reliant on US markets which under Trump are becoming increasingly hostile to European imports even before taking the  trans-Atlantic JCPOA row into account, Brussels may have no choice but to capitulate to US threats of sanctions if European businesses continue to work with Iran, for the very reason that the EU would have no means of leveraging these US threats without a Chinese trading partnership as a means of balancing the EU’s relationship with Washington.

While many European leaders remain suspicious of China for the most simplistic reasons imaginable, the reality is that Europe cannot have its cake and eat it too. The EU must decide if it wants to be a truly independent economic bloc or whether it wants to perpetually be a vast market living in the shadows of the United Sates. Without China, Europe will be little more than a more over-regulated version of America that prices itself out of its own ideal markets.

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