The Fluid Society

Huawei, ASML & Europe

China-USA technology battle. The world is moving up to a real technology battle between China and the US. Both powers understand that economic power depends on technological strength. Both countries are therefore making great efforts to become technologically strong and are now trying to prevent the other party from becoming too strong.

The Huawei and ASML cases are actually similar, with the main difference that one company has its domicile in China and the other in the small country the Netherlands in Europe. Why should Huawei not be allowed to deliver to the US or European countries, or ASML not to China?

Is China a rogue state? There is actually only one argument that is relevant: do we think China is a decent country to trade with, or should we consider China a rogue state? The answer should determine whether we want to use Huawei equipment from China or are willing to supply ASML technology to China. But answering that question is not easy. After all, it is about much more than, for example, the well-known human rights argument that many use over and over again. China is an extremely complex country with many different faces. And in addition, soon the largest economic power in the world. Continuing to do business with that country is therefore almost a given, given the intertwining in many fields, ranging from Chinese people studying here to the thousands of business and scientific relationships with China. If we believe that China is a rogue state and poses a threat to world peace, then we should stop immediately with many other China partnerships.

Chinese companies are connected to the Communist Party. Of course we know that all Chinese companies are tied to the Communist party. But the Communist Party is a fact and will remain so undoubtedly for some time. And after all, American companies also have to provide the government with data based on the Cloud or Patriot Act on the request of for instance the NSA (National Security Agency). We also know that China uses legal and non-legal means to master new technology. Using Huawei in Europe or the US is therefore a principal security risk for every country. Even if there is no evidence of data theft. It is known that it is technically possible and that nor promises from Huawei nor from the Chinese government can be trusted on face value. It does not matter whether it is Germany, the US or the Netherlands. It is therefore pointless, stupid and confusing if different European countries decide differently about this. Conversely, selling advanced technology to China is also a security risk. Because it is certain that China will do everything to use that technology, or to copy it, in order to strengthen its own technological or defence power. There, too, there is no fundamental difference between selling ASML equipment to China, or selling advanced technology, such as Boeing airplanes , from the US to China. How does the Netherlands get out of this Gordian knot?

China and the US have only self-interest. There is another important point in this discussion where China and the US have the same policies with regard to Europe or European countries. Both countries have only one interest, despite all discussions about world peace or multilateral cooperation, and that is their own interest. Both want Europe not to become too powerful and both want European countries to buy Chinese or American goods. Both China and the US will therefore do everything that is possible in the coming period to bind European countries, or to stimulate countries not to do business with the other. The great risk therefore arises that the technology struggle between China and the US degenerates into the disintegration of Europe in countries that choose for China or the US. Strong language is not avoided, as evidenced by the ASML debate. Ambassadors from China and the US express themselves in increasingly harsh terms about the choice that the Netherlands must make. And a small country like the Netherlands is then crushed between the interests of the major nation states of China and the US. Individual countries in Europe, even France or Germany, are all no match for the large countries, as Merkel recently emphasised.

Only a European approach can work. There is only one route in this discussion that can lead to a solution. And that is that the Huawei and the ASML case are being settled at European level. This is necessary for two reasons.First of all, as argued, an individual European country does not stand a chance against China or the US. The Netherlands runs the risk of losing friendship with the US if ASML delivers to China. China, on the other hand, threatens to take strong measures against the Netherlands if ASML does not receive an export license. An unsolvable problem at the Dutch level. But soluble at European level. Europe can place much more weight, both to China and the US, then a country as the Netherlands. China and the US desperately need the 500 million consumers in Europe to sell their products. Putting a big mouth against the Netherlands is one thing. But arguing with Europe is something else for both China and the US. And the advantage for an individual country like the Netherlands is that, regardless of how Europe decides on ASML, the Netherlands can maintain neutral relationships with China and the US.

Strengthen cohesion within Europe. The second argument is of an internal European nature. Europe needs to become technologically and economically stronger, has to unite better for this and perhaps needs to develop a new industrial and competition policy. Both the ASML and the Huawei case are excellent for designing a piece of European industrial policy. It makes little sense for individual countries to decide for themselves whether or not to use Huawei. Or Huawei is a security risk, but then that applies to all European countries. Either Huawei does not seem to be a security risk, then all countries can use Huawei. It is odd when some countries use Huawei 5G equipment and others do not. Only at European level it can be negotiated with China under which conditions Huawei is allowed to deliver 5G equipment to all European countries and what concessions China has to do for that. It is therefore of the utmost importance for all countries that a decision about Huawei is taken on European level and that this is not decided at Member State level.

Handle the ASML case at European level. The same applies more or less to ASML. If Europe wants to become stronger in terms of technology, we must consider companies such as ASML as European and not as Dutch assets. Europe can then conclude a deal between ASML and China under certain conditions, for example by setting requirements for China for technological cooperation with Europe, how to deal with European intellectual property in China or the right to do business in China in a certain way . A country like the Netherlands can never get a deal with China on a level as Europe can have.

Conclusion: European approach desirable for both Huawei and ASML. So there is only one sensible way for the current situations with Huawei and ASML, and undoubtedly for more such technology matters in the future: opt for a European approach. This benefits both individual member states and Europe.

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