Soft-balancing the United States, forum-shopping or prestige diplomacy? : explaining the rise and expansion of EU-China trade relations

Abstract

Since 2003, China and the EU have engaged in a Strategic Partnership with trade as its main pillar. As the Partnership develops, it deals increasingly with subjects that overlap with World Trade Organization negotiations. Furthermore, the two entities address a growing number of trade disputes at the bilateral level, diminishing the use of the WTO dispute settlement mechanism. The development of this strategic partnership as a competing negotiation and dispute settlement forum to the WTO is particularly puzzling because of the two entities’ opposing regime types, geographical and cultural distance, and lack of reciprocal strategic interest in each other’s regions. This research investigates two questions: What are the rationales behind the EU’s and China’s bilateral and multilateral spheres of negotiation? The empirical findings with regard to this question allow us to infer answers to a wider question: Why do such 'unnatural' partners as the EU and China develop and consolidate such a strong trade relationship? This dissertation applies three theories stemming from major schools of international relations – soft-balancing, forum-shopping and prestige diplomacy – to four cases in order to explain the rationale behind the EU and China’s choice of forum in both regular negotiations (food safety and geographical indications) and in times of disputes (textile and solar panels). It then infers the motives behind the widening and deepening of the EU-China relationship from the reasons guiding the two actors’ preference for the bilateral channel. The empirical research finds that efficiency factors (forum-shopping) combined with the two entities’ prestige maximization strategies explain their choice of forums. In other words, the dramatic widening and deepening of the relationship in this short timeframe is due to a wish to maximize their absolute gains, as well as a desire to limit the potential loss of prestige they might suffer in the WTO (for example, by losing a case). This thesis employs original and exceptional data from interviews carried out in Beijing and Brussels in Chinese, French and English with policy makers currently overseeing the cases under scrutiny. The data is then triangulated, when applicable, with European strategic papers.