 Welcome back to Think Tech. I'm Jay Fidel. It's Monday morning. Okay, we're talking about the middle way, not the middle kingdom, although that's relevant to this discussion is the middle way. And we're talking about, you know, current events, important current events. And we've entitled the show China EU deal the China EU deal what it means to the US. It opens up all kinds of other issues. And we have Russell, you, he's our regular contributor, and Alexander Horawa. I get that more hour. Sorry. Alexander is the lawyer in Phoenix, Arizona where it gets hot. Okay. All right. Russell, up to you now as our regular contributor here to introduce Alexander, and to introduce the subject of our discussion. Good morning, everyone. Good morning, Jay. I'd like to introduce Alex Marawa. Alex comes with a very, very interesting background. Alex is a international law professor. He teaches in the faculty in Europe in Vienna. He's also teaching in Washington, D.C. is the American law professor. And he's also taught and lectured in China, just like myself. And today we're going to hear from Alexander and in this discussion, really about the EU-China investment deal. It's made really big news, especially in Europe and China, maybe not so much. It's hidden on the radar in the US. One of the things that President Biden had promised to do after the Trump years was to build a coalition of like alliance with the EU in dealing and tackling with some of the problems, such as investments in China, intellectual property protections, so forth. However, it's interesting that just before Biden came and stepped into the office, the deal was signed. It was not signed, but it was concluded between the EU and China. And the interesting part about it is that the US is nowhere in sight. And so now President Biden has a formal task of figuring out how to restructure the relationship with China after the Trump years, without the EU's coalition and support. It might make it very interesting, and maybe it complicated. So we're going to talk about how this EU-China investment deal, how does it affect the US? How does it affect President Biden? So Alexander's going to give us some thoughts about it, and we're going to hear about what is this agreement about. Maybe I'll turn it back to you, Jay, if you have any questions or Alex, and talk about just what is this agreement? Yeah, let's start with that, Alexander. I mean, you know, that happened clearly as a reaction to the US, to the Trump unwillingness, the Trump isolation, the Trump turn your back on Europe, turn your back on Asia. But, you know, what is the significance of it? And also, let me add, what is the significance of it, that it was inked just before Biden was inaugurated? Thank you, Jay. That's all very good questions. This has been in the making for quite a while, and the negotiations been running for about seven years. So it predates Trump, actually. So it's not an exclusive reaction to the Trump four years. But as you said, it's certainly remarkable that it happened late December of last year after the elections had been won. I guess we all agree that it has been won actually November 7th or so. The timing is quite remarkable. I believe it was intended to be concluded before Biden enters into office, and that's for political reasons as well. I do not think this is an intentional European affront against the United States. It certainly follows European interests in this respect. You also see quite a lot of differences really between our framework number one agreement that we concluded with China about a year ago. And this one structurally, as far as how the mechanisms operate, but also with what is covered. I mean, this is basically a liberalization agreement. It doesn't qualify as a trade agreement in the traditional sense. So there is no exchange of goods that's been talked about. It just allows EU companies and trainees companies to operate more freely and with fewer barriers in the respective other markets. What it adds and framework one doesn't have much of that it adds mechanisms for implementation and mechanisms for conflict resolution, which is quite remarkable here. It's lacking if you if you go and review what commentators have said recently, human rights is an issue, labor standards is an issue. The environment is mentioned, which is quite remarkable, but not necessarily in the form of binding arrangements more aspirations and intentions in the agreement itself. It refers to existing international law including the Paris Agreement, but in itself the agreement speaks more of intentions in this area. Well, you know the thing about it is over time, whether it's Trump or Biden or for that matter any American president. Over time, we lose our primacy by virtue of this agreement. And maybe it was long and coming as you say. But over the years, the EU, which needs trading partners, especially in view of Brexit, you know, they probably hungry to make trading arrangements everywhere and and China fell right into that seems to me that over time this will this will actually undermine the US primacy that primacy we used to have in global economics. So you think we use the term middle kingdom I think it increasingly becomes a kingdom that is truly in the center of global trade and global business. So now the US China agreement is one of several that China has with others previously it was the United States in the middle that have various agreements with others. And the United States alone shows that China certainly maneuvers towards a center of international economic exchange and then political realities there to this not just economic this is to you political as well. Yeah, and this just takes me to a thought I've had for a long time and that is, although you know there were processes and no ongoing processes before Trump. So he got into office and first thing he did is you blame them for the virus he called it the China virus, and then he got to a trade war which seemed to me to be completely unnecessary. What I'm saying is that while Trump was in the office he was doing like everything he could seem to me just as an observer to alienate China to put stress and tension into the relationship, without any significant thinking of a single benefit. Meanwhile, you know everyone said well you know Xi Jinping is a very smart guy, and the Politburo knows how to act as one will under Xi Jinping. And so they said, Okay, this is really an opportunity every every, you know, kind of disruption like this is an opportunity. So we are going to do everything we can. While Trump is standing still are going backward in terms of national management in the US, we're going to do everything we can to advance China's interest. And this the deal with the EU is one of them the race of deal in Asia is another cut the US out. And last night on 60 minutes it was it was clear that they have gone ahead of us in biotech. For many reasons, they have gone ahead of us in 5G, Russell sent an article about Megalith trains that run that will run Beijing to Shanghai in 3.5 hours. And they have taken the opportunity. Maybe while Trump wasn't watching if you ever was watching to advance their interest way ahead of ours is no single issue no single initiative that I can think of where they have not done remarkable things, even in the last four years. What do you think Alexander. I agree I certainly the kind of agreements that are concluding and the kind of political stance they're taking is based on a solid foundation of technology, economic strength and and also in many ways dealing with catastrophes in a way that is significantly more effective than we are co with the co would respond certainly was not a prime example and predicting individual rights in China but it was effective as far as controlling the pandemic was very Chinese solution in a way. I would agree that whatever the intentions of the US were in dealing with China for the past four years, the way the conversation was going was in every single way alienating China you don't bully China you negotiate in China. You show respect and allow people to preserve the face when you negotiate. China is an agreement in China is really the starting point for further agreements and ultimately a relationship. And if you just come in bullying that's not going to that's not going to work but I agree with you it's certainly a position of strength I mean China is now considering itself a valid partner for many others. I will stand it's I'm not an economist but many people say will surpass the US and in significance as a hub of trade and innovation and technology very soon. So, absolutely, they can afford that. There are certain elements of this that are that I don't think the American public realizes, for example, AI is a new technology I mean is it 10 years old is it 15 years old. China saw that and China moved ahead and China is ahead of us in AI, and some people feel that AI will ultimately rule the world, because you can you can do so much management with AI. You can manage companies you can manage cities you can manage states you can take the burden off officials who may not be up to the task. It's the way, it's the way computer science can actually run our world at least in substantial part, and they have an advantage and in biotech pursuant to the 60 minutes article yesterday they're, they're ahead of us in biotech and we don't know the implications of what that means. And then you know and dealing with virus and the genome dealing with not only coronavirus but any other virus that comes down the pike. So, you know, it's not just that Trump has alienated them, and it's not just that they have moved ahead on so many fronts, accelerating in the Trump years. It's not just that a lot of these things they have done puts them ahead of the US, and they're not only competitive, you know, in a, in an economic sense, they're competitive in a competitive sense with the US. They've taken individually and certainly taken collectively mean that they are ahead of us, and that they can, they can beat us and beat us up in the national global trade arena in the technology arena. And, you know, and people say, for example, that their prowess in computer science makes them the best national hacking organization in the world better way better than Russia, for example. So in a competitive world in a hostile competitive world, they have taken this opportunity to get ahead of us. And this creates a problem and I'm going to Russell's outline so I should address this to him. So, you know, in your outline, you suggest that you cannot be competitive with China, rather you cannot negotiate with China. Go to your last point. You know, in a global sense, if you are not competitive, because you don't have the competitive advantage you don't have the negotiating leverage. And because we have lost the negotiating leverage, our negotiating position is, is way less than it was 10 years ago. What do you think about that Russell, you've embraced that idea, what do you express it. The problem that we're facing is more than just surface. It goes really deep. It goes back predates the Trump years for many years where what the Chinese saw as an opportunity to build the infrastructure, to build their stem, to build all the background that they needed to accelerate. And they knew that technology was going to be a key ever since the internet was made available to them the late 90s. And so the problem that they saw the opportunity is that the the friction in our own governing bodies means that the Republicans and Democrats can't work together to do infrastructure projects. They're going to be opposing each other. China has been able to put up a high speed rail through the countryside, so that goods things will not only just be in the board but going through the middle of the country. They've set up their communication system. So everyone, even the people in the rural areas have access to smartphones. So in other words, they built an economy based on investing infrastructure based on having an a stem push through their country in the in the education in the colleges. So now what we're seeing is a result of that investment. So the big challenge Biden faces again is, we're way behind because we didn't do these things. We've been parties have been fighting each other politically. I think that's what the EU saw. What they saw was a last straw. When they saw that when President Trump came in, the alienation parties they can't work together. So in other words, the US is not going to help us. It's a loss of confidence in the US and justified is completely justified at least at this moment I mean through the Trump administration. But Alexander have you know how does this affect American investment in China. You know, if you if you go back a few years say they take 20 years ago, in the beginning of the, you know the century, you find an excitement Russell was there, you know, you find an excitement about American investment. There are limitations that Chinese and had all this control of foreign investment in the, in the woofy and the partnership arrangements they set up. And clearly they want to get our IP and all that. How is it now, how is it changed. If I'm a multinational or even a medium sized company, what are my prospects and in having a successful investment relationship in China. That would be the framework that we have in place now for doing investments in China I think a European corporation probably has on a damage because of this agreement. Be in mind disagreement is still a draft it has not formally been ratified so that it might be ratified. Some people say it might not be ratified, but the mere fact that it's there it has been negotiated to a certain extent boost the chances of European corporations. So be in mind apart from the economic side there is a corporate responsibility aspect that is growing when you look at multinationals that comes from sustainability very very strongly but also from the area of labor rights, labor standards, and human rights The fact that the European agreement has those elements in there again as I said initially in a pragmatic and programmatic form not necessarily as binding obligations gives those companies a boost as well when it comes to their own stakeholders and shareholders. So I think it's a moral boost as much as is an economic boost in many ways. The fact that we in the European Union now we have a centralized agreement that kind of replaces or at least mostly replaces the plethora of bilateral investment agreements will certainly help streamline the coordinated approach as well and European companies now have this foundational agreement to work together when it comes to investing. Of course Europe also opens the doors now to Chinese investors specifically in the renewable energy market area so China will have advantages there as well. Some economists that I've read suggest that the EU actually has a better end of the deal in many ways. I mean they get more immediately out of that agreement when it comes to opportunities of investing because China already was massively invested in Europe while the other way around the world more limitations that's correct. On the other hand I think it kind of levels the playing field now so now we have a level playing field between the Europeans and the Chinese, and we have something not quite level when it comes to the relationship between US corporations and, and the Chinese so that puts a set of disadvantage here for sure. There's more element in and that's the race up agreement in Asia Chinese did the same thing a little earlier, and they cut us out or we cut ourselves out more likely. And now they have, I guess it's similar but I wonder if you could distinguish the two, and tell us what the implication of that agreement is and how, how close that agreement is to the EU agreement. I was setting this up at a time when we were fumbling around with NAFTA and its successor basically as much as you could criticize NAFTA as being less than perfect. It still gave North America something like a free trade agreement to a certain extent at least. And there were barriers in place as well. China and that goes back to where it sees itself I believe feels strong enough to say we will be the center of another agreement that involves 14 more or less powerful economies in the region. Right. We've seen a shift that again not just economic that's geopolitical as well that they're emerging powers who are not striving necessarily to become one of the superpowers. But strive to become one of the regional powers. A good example, of course, is Turkey. Right. Turkey has a similar approach that it wants to be a force to be reckoned with when it comes to the Middle East. And as we have seen recently, it does it can go ahead to head with Turkey with Russia, and it can win a confrontation with one of the traditional countries. So I think we always have to put a great agreements like this into the overall geopolitical context and then the political context of, of course, our past administration being not very effective when it comes to dealing with any kind of partners or enemies that are out there. And I'm doing those four years will be a challenge. So the Biden international team certainly has the hands full at this point in time just to scramble to get things back on track and then it will take a while to get back. If we can get there back to where we actually want to be. Well, I want to, I want to ask you about that but first I want to ask you about one Belt Road or Belt and Road initiative. I just want to ask you how that is doing here in the, in the time of COVID and the time of such, you know, global disruptions to say nothing about climate change as well. I mean, it was a very ambitious program it is a very ambitious program. And I wonder a whether it continues at the same pace and be, you know, we talk about agreements with EU we talk about agreements with, you know, with Asia, other Asian countries but when we talk about Belt Road. We're talking about dozens hundreds of agreements that China is making smaller economic agreements for loans for development, who knows what all over continent by continent. And when you take that collectively that also has an effect on this very same process we're talking about, namely cutting out the US am I right. So I think, speaking as an international lawyer not an economist, having a more diverse portfolio of smaller agreements, some of them legally binding some of them more informal agreements. And it puts a power like China in a very advantageous position. One of the disadvantage of a large settlement style agreement like the EU China one of course is it's very prominent is being talked about all over the place. And it will ultimately be implemented in a very public fashion so if there's conflicts in the future you will have a settlement mechanism that actually decides matters like a little bit of a WTO ish kind of process. So this will be very much public and that the press will be reporting about that if you have a multitude of little individual agreements and some of them not necessarily the state, but state controlled enterprises with enterprises in foreign entities. There's more diversity and much less scrutiny sometimes. I believe China specifically looking at the other Asian countries but also Africa has done a tremendous job when it comes to exerting influence without appearing to exert influence. And that's a smart strategy. Yeah, they are smart and they're focused in the more we watch the move the more we have to stand in admiration. You alluded to it a minute ago about what what is what is Biden going to do. What are his options if you were on his team. What would you suggest he do because this is really a very significant threat. If we care about privacy but even if we don't care about privacy, even if we just care about survival economic survival in the world today about the continuation of the dollar is the reserve currency all those things. So what would you advise Biden to do to maintain our position and you know correct the errors of the Trump administration and before a monumental task I can say and if anybody had an actual answer to this I think you'd be a multimillionaire right away. But what you certainly have to do as a first step is repair the relationship with the allies. That's a crucial factor and I think first steps have been taken in this respect. The European allies or Europeans but also regional allies that are pretty much all over the place you know there's the military component of allies but there's also an ally that is cultural, economic, political, you know the democratic approach if you look at Biden's program one very strong focuses diplomacy and democracy. And that certainly puts in in contact with allies that go well beyond Western Europe or the European Union or even the Council of Europe, Europe puts you in a firm standing in Africa, Asia, Latin America and so on. So apart from facing the obvious competitors and we have to distinguish whether they're enemies or competitors that's a crucial factor too. I think going for those who are kind of on the edge you have been friendly towards the US traditionally but have become less friendly with past four years. One of the most important things your your old friends many times come back to you more easily I think once you show you good will, you're, you know neutral, but friendly leaning partners have more of a challenge when it comes to also convincing populations that now we trust the US again. So I think that would be strategy number two, and then never forget to combine very strategically combine economic interests with two political interests. 50 years ago, you could say we have, you have economic interests in one box and then political alliances in a different box and military alliances in another box. They're all in the same box now they're they're interrelated and they cannot be subdivided or singled out so you need to look at this holistically anyway. Yeah, that's the way things have turned out isn't it. So, so if I if I'm the US if I'm Biden, would it pay for me to try to negotiate a deal with the EU the very same members of the EU that works, you know, on a parallel basis, perhaps a better basis, a than the China deal with the EU. I mean would that work, could I wean them away into a separate US EU deal. We still have the EU US deal in many ways I mean the economic ties were not separate there were still in existence there were some problems in there. Again, being a lawyer not an economist I can look at this from the international legal perspective more than the economic one. I don't think there was a significant disruption of the legal relationship and the political relationship. There were dints put into it for sure. NATO being of course a very classical example here. So those are already in existence and free trade between the US and Europe is still ongoing, but now this free trade within Europe will certainly focus away a little bit towards Asia. How does the US go back into this relationship and how ideally would we rebuild a joint operation with the European Union and other partners around the world that check and balance China a little bit. We probably will not be able to stop China from becoming the economic superpower number one in the future, but we need to have something to counter that. It strikes me when you say that maybe what we have to counter that is what they touched on in the EU agreement but which they may not be able to conclude really conclude with with China and that is the morality side. What we've seen in the world today is a lot of war crimes. We've seen the eye way ways movie about human flow and 65 million people behind Bob wire in one place or another. This is a big morality issue and it's global. And what and one of the things that Trump lost and threw away, if you will, aside from his economic isolation and diplomatic isolation is the US leadership and morality. That's a special card. And I from what you were saying earlier it may be that if we play that card with our existing allies who are willing to come back to us and be a moral leader around the world. We could we could attract. We can attract a lot of people back with our special morality sauce. Don't you think. Let's hope we can get back to that and I think if you look at the EU agreement and we've been looking at it really from where an economic standpoint right now it does contain language that is very much morality based if you want to call it that from labor standards to procedural and so on and a few hints of human rights as well. On the other hand, the agreement is quite weak on that front that could have been more done in this respect as one example of provision that relates to how individual license procedures shall be handled if there's a court. Within the European Union it's clear this is a civil obligation, therefore a court is responsible for making determinations in the agreement that refers to a court or a quasi court or an administrative agency. The European Union would have been very very strongly backed by its own law if it said no we need judicial implementation of licensing decisions and of sanctions in the context of licensing licensing conditions. They let themselves be negotiated out of this and forgo in a way actually legal obligations that they already have. So they came come back and say we are not sitting on the high horse from the moral point of view because we put all this and partly it's not very strong and partly they're really backed out of things that could have very easily insisted on. And I don't think China would have had a major problem having the intermediate people's quotes make decisions on licensing issues instead of some government agency. Yeah. Well, it's a lot of ground to be covered here. But you know, Biden is a smart guy with smart counsel around him. And maybe he can figure these things out. Well he has to do is listen to our show. It'll help him. Russell Russell you know to go to your point which I think is really important is that if we are going to negotiate with China and get back into. I don't want to say normalization but some sort of some sort of negotiation of equals, so to speak, we're going to have to become an equal in many areas. And I think that's really an important point. But how do we do that now we have been declining in so many arenas. How do we do that. What would you advise Biden on that. Jay, that's a very good question. I think the problem is going back to what China looks at us. Maybe we're no longer equals because exactly is China being able to conclude a deal with the EU separately without the US. China has been able to conclude a deal with the Eastern Asian countries without the US. And I think when we go back to it. If I were the EU also and I'm looking at Biden. We don't know how you can be equal when you have so many problems at home domestically. You can't even if we get a deal we do with America, China or EU, you have a divided Congress, you know, there are many things that may not be able to get done, you know. So again, we're not at the point where we may be considered as equal anymore, because we are a very dysfunctional government that now, in many sense, you know, the January 6 domestic problem, the infighting between the two parties so nothing can get done. So that's a that's a big problem. So Biden has a big problem there. And this and get the bigger picture is, I think you have to win the trust back and credibility. Working together, for example, on climate change with China, you have to start in some area to start working together. That key is working together. And right now, China doesn't see that happening. We're not working together. It may require start finding projects where you can actually do things together. That's restoring the trust restoring the relationship so it's a big relationship problem Jay. So, so, Alexander, do you agree with that I mean it's a doable is my question, or have we passed over the Rubicon here and and will we you know for the next generation be behind the curve, whatever we try. No, I think that international relations is always comes in cycles, so I think we never crossed the Rubicon without a chance of finding a bridge drawn back across the Rubicon to the other end. Caesar would have liked that probably I'm not sure. But I think we definitely can do that would what I would recommend to the Biden team and yes they should watch this show. Probably going a little bit more aggressive when it comes to ratifying treaties that show that we are morally leaders right so ratifying for instance, the Intermarine Convention of Human Rights and becoming part of this continental system of human rights protection which has been lingering for 40 plus years now, would be a very advisable step and would not really take away of our sovereignty, it would actually give us a chance to reflect on whether we are still the leaders of constitutional right. In settling more proceedings in in in an amicable way instead of the bullying approach that we have been experiencing recently but just subjecting ourselves more to international traditional scrutiny, which again does not take away from our sovereignty, but makes us much more firm in our standing that we actually partners in the international arena would be extremely advisable. We have a 5050 Senate that has to approve every one of these initiatives we are in trouble we will probably not achieve it. So, I think Russell is absolutely right that we're in a big political conundrum here. And we need to clean house first, right we can go international and say we're good now if we're not actually showing that we are. Yeah, I mean if I'm if I'm just john Q every man or john Q every man in Europe, for example, I look at the US I say, aside from all of the squabbles. This is not efficient. This is a huge waste of time and resources. You know this is this is this is killing the country the economy, and it's collective will. That kind of inefficiency really puts us at a tremendous disadvantage, however it happened. So anyway, Russell, your time to summarize and say farewell to our discussion. Well, again, I think Alexander has brought up some really good points about this agreement how it impacts us. And I think that I don't think the agreement that was concluded hurts American interest. In fact, it, I would say that it's a leverage to say it's a starting point where America can aspire to do maybe more than the EU agreement. It's it's it's a it's a benchmark a framework, because you know, some of the things that the Chinese have agreed to is in good faith, move towards the labor conventions of more transparency, non discrimination, for example, in China, Chinese company when it procure supplies, they can't discriminate against some European companies. Well, you know, we can have the same thing with Americans. There's a there's a starting point where we can do more possibly. But again, I think I go back to it. I really think that we have to start at home. If we're going to actually show the world that we can do something. We have to be unified in many respects. Yeah, we have to take the racism out. That would that would be a really good start right now. Anyway, Russell you Hawaii lawyer who has years of experience practicing and teaching in China. Alexander Marawa, a lawyer in. I went in Phoenix, Arizona, who is an international lawyer. Thank you very much for your contributions to this conversation really appreciate you coming on. Thank you Russell for setting it up. I think it's been very valuable and I'm sending a copy of the tape to the White House. Thank you for that and for having us. It was a pleasure.