The world’s attention is currently focused on the travails of EU member states, but the European Union as a whole isn’t doing so hot either. At the moment, it is halfway suspended somewhere between an organization for regional cooperation and a functioning government. It’s a failed federation, a little bit like the United States under the Articles of Confederation. Just as the weak American confederation was treated with contempt by foreign powers, the EU is having trouble managing its interests against countries like China.Case in point: the Europe-China trade relationship. A new piece in the FT reports that the EU Trade Commission wants to impose penalties on China’s solar power industry for dumping. But Germany, the most powerful member state, wants good relations with China in order to promote its exports, so Chancellor Angela Merkel is openly criticizing the commission’s efforts:
Following a meeting with Wen Jiabao, the Chinese premier, Ms Merkel appeared to undermine the EU companies’ demands for punitive tariffs by telling reporters the dispute should be solved through dialogue – not an anti-dumping case.
China knows that it can always divide the EU like this by offering concessions and deals to individual European countries, strategically chosen.The trend toward protectionism in the EU is in our judgment not a good one. More than anything, it represents a desperate effort by poorly organized industries in southern Europe to fight more efficient competition elsewhere. Having failed to modernize their economies when times were good, naturally these countries fear and resent tough competition when their situation is horrible. Germany’s impatience with this policy line is well-reasoned.But aside from the question of whether this is smart policy, there is the question of process. Europe’s non-constitutional setup makes it extremely difficult for the EU to follow any consistent international policy, good or bad.The United States was able to solve this problem with the adoption of the federal Constitution. But it is far from clear whether the peoples of Europe really want such a centralized power system. The American states were willing to cede important powers to the center in order to build a stronger country, and ultimately all 13 of the original colonies joined the new union. Europe probably can’t get that kind of unanimity for any strong federal system.As a result, countries like China can expect to keep on gaming the European system for a long time to come.