Thu. Sep 21st, 2023

Prof. ST Hsieh

Director, US-China Energy Industry Forum


[email protected]

March 23, 2023

The Europe Union, EU, is in a tough spot. Specifically, the Brexit in 2020 weakened EU’s global competitiveness significantly as Britain closed ranks with the US and Australia (AUKUS.)

Since February 24, 2022, EU followed the US+UK leadership in supporting Ukraine’s war against Russia. There is no end in sight, but EU is paying the cost of Ukraine war plus the high energy cost, specifically US LNG. EU’s economy is going down hill fast. However, EU still has to pay her share of NATO defense expenses, which is dominated by the US. After the Ukraine war, EU has to support the rebuilding efforts which could take decades.

The Ukraine war also facilitated a close China and Russia partnership which will not be friendly toward EU. So essentially, EU has to compete with AUKUS, not just the US alone, as well as China+Russia and not just China alone, all at the same time. The US is also positioning her allies to contain China in Indo-Pacific.

The new global order being mainly shaped by the US and China competition for the top will leave the EU behind.

  1. EU’s energy security will be costly and overly dependent on the high-cost US LNG.
  2. The US is taking the “US First” pathway to Make America Great Again. It means that the US is focusing on rejuvenating the US domestic manufacturing base, but the US is also closing-in on her domestic market from foreign suppliers. China will follow the US practices even more aggressively.
  3. It all means that even EU could excel in “green and digital technologies” industry as compared to the US and China, the “EU single market” will not have much market accesses in the US and China.

EU leaders set to back steps to compete with US, China

Philip Blenkinsop

Wed, March 22, 2023 at 11:00 PM PDT

BRUSSELS, March 23 (Reuters) – European Union leaders are expected on Thursday to back a revamp of the single market, simplified regulations and other steps to ensure the bloc can compete with the United States and China as an industrial leader in green and digital technologies.

High energy prices and U.S. President Joe Biden’s Inflation Reduction Act, which offers $369 billion of green subsidies that often only apply to products made in North America, have raised EU fears of an exodus of European industry.

Europe’s competitiveness in relation to the world’s two biggest economies has become a major concern 30 years after it created an internal market, which is largely seamless for goods, but falls short for services.

“This failure to complete the single market needs to be addressed,” one EU diplomat said on condition of anonymity.

EU leaders, meeting in Brussels from Thursday for a two-day summit, are expected to say the single market is essential to future economic growth, while highlighting areas for improvement.

“The European Council calls for ambitious action to complete the single market, in particular for digital and services,” draft conclusions of the summit say.

The draft conclusions also call for progress in areas to improve competitiveness of the European Union beyond 2030.

These include simplifying regulation and reducing bureaucratic burdens, such as by accelerating procedures for granting permits for green or digital projects.

They are also set to urge the completion of a capital markets union to ease access to private investment, more spending on research and innovation and moves to increase the take-up of digital tools across the economy.

One issue of potential division is the extent to which state aid rules should be relaxed to allow public funds to be pumped into clean tech, although leaders are not expected to reach a conclusion on the topic at this summit. (Reporting by Philip Blenkinsop; editing by Barbara Lewis)

It is just a matter of time before the U.S. and Europe go separate ways. The major U.S. trading partners are now in Asia, not Europe. The U.S. population is becoming a population of color with virtually no cultural or ancestral ties to Europe.

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