Wednesday 17 November, A Fabian EU in a G2 World seminar

Speakers: Rt. Hon Vince Cable MP (Secretary of State for Business, Innovation and Skills); Iain Begg (Chatham House, European Institute & London School of Economics); Chair: Sunder Katwala (Fabian Society).

On Wednesday 17^th November 2010 the Fabian Society, in partnership with Business for New Europe, Friedrich Ebert Stiftung, ICAEW and TheCityUK convened a number of high-level panelist’s and delegates in Westminster to examine the role of the European Union in a world increasingly dominated by US/Chinese.

The discussion was kindly hosted by the Institute of Chartered Accountants of England and Wales.

The session was attended by a number of high-level delegates. It followed a similar discussion held in Brussels; which focused on examining the opportunities and potential strategies towards building a more cohesive European economic policy. In comparison with the previous seminar, much of the London discussion addressed the changing narrative of 21^st century super-powers, and how post crisis strategies have strengthened the European Union’s global presence.

In relation to a G2 world scenario, the fast movement and growth within the Chinese economy was seen to be threatening the position of the United States as the richest nation in the world. In the past 10 years, the understanding and agreement of an international role has been found within China; best demonstrated within its presence in multilateral fora such as the World Trade Organization and G20.

The session also examined how the EU was best placed to respond to this emerging global political order. It was argued that Britain should work to make its place at the very centre of Europe and sidelining ourselves within the EU could damage our global positioning as well compete with our national interests. More importantly, with the prospect of India and Brazil emerging as future economic powers, the EU and Britain must too have a strategy in place for moving onto the centre stage if it is to remain a competitive marketplace.

 However, given the levels of expectations on Chinese global dominance, domestic pressures were also seen to be risking high-levels of future growth. It was observed that there are “two Chinas” – the prosperous coastal regions of China like Shanghai, and the interior China with a growing ageing population. The latter has forced the Chinese Government to save assets rather than invest, allowing other established economies a chance to overtake China in the future. Moreover, Chinese investment was seen to remain in markets that they could not provide for internally, but Europe’s effectiveness as a supplier to the Chinese market was seen to be limited, and for some a lost opportunity.

A European problem

It was argued that the problems within internal EU structures must be ironed out in order to progress towards total European cohesion. The move towards a single market, single currency and further enlargement strategies to the South and the East of Europe represent the extraordinary achievements that the EU has already made.

Europe also remains the second largest economy in outward and inward investment although China did form much of the world’s economy during the second half of the 19^th century; it was now regaining its presence on the global economic stage, but still a lot of work to do before it could overtake the United States and the EU.

Within Europe, government surpluses and deficits could help to offset each other – making the outlook seem more favorable than the micro-images among some member states including Ireland, Portugal and the UK. Therefore it was agreed that European countries will need to work more cohesively on this.

Delegates also indentified climate change as a policy area where Europe is seen to be a global leader. It was argued that, to address this, the EU and China should work together on clean and renewable energy options and towards ensuring energy security for years to come. As a domestic level, the UK should begin to look at its strengths in the renewable energy market and should perhaps consider specializing in research within this sector.

Internationalism and cooperation

It was agreed that Europe has set the agenda on labour standards. There was no agreement in how this could be a global agenda rather than a narrative within Europe itself. In respect to China, it was seen that public scrutiny of Chinese labour standards could run the risk of impacting European trade to the region.

On China’s foreign policy, the West must decide how to react to the conflicts between ‘theirs’ and ‘ours’. Europe too must take action on the interests of member states in relation to the interests of the partnership, if it is to compete as a super-power in the future. The defence partnership between the UK and France was referred to as a case of greater European cooperation and a signal of greater coordination and security cohesion.

Looking back at the example of China’s ageing population; Europe’s influence was evident in influencing China’s response. With greater pressures on devising a social protection system for the aging population; China was looking to Europe for its plurality of private and public social care systems.

Conclusion

The need for greater European cohesion was also underlined throughout the discussion. A unified sense of identity and better organisation will contribute to a stronger European Union, and in turn a more competitive trade bloc in a G2 world. It was asserted that Britain’s position, particularly with the influence of Baroness Ashton’s position in the EU, must be sold to the City if we are to compete in the China/US dominated market. In the future, there may be an interest in exploring an Atlantic free trade area. America’s inward looking approach to production may not be enough to sustain their global position in years to come, and this is an area where EU coordination was seen to be a perceived asset.

This series was kindly supported by