August 2015
Student number 2323869 Supervisor: Dr. N. Voelkner
Dynamics of the EU-China Partnership on Urbanisation:
A Liberal Intergovernmentalist approach
DECLARATION BY CANDIDATE
I, hereby declare that this thesis, entitled “Dynamics of the EU-China Partnership on Urbanisation: A Liberal Intergovernmentalist approach”, is my own work and my own effort and that it has not been accepted anywhere else for the award of any other degree or diploma. Where sources of information have been used, they have been acknowledged.
Yan Hai
15 August 2015
Groningen, The Netherlands
Table of Content
Chapter 1. Introduction ... 4
Chapter 2. Literature Review ... 9
Chapter 3. Liberal Intergovernmentalism ... 11
Chapter 4. EU-‐China Urbanisation Partnership ... 25
Chapter 5. The Method ... 31
Chapter 6. Stage One: From Strategic Policy level to issue-‐specific National Preferences Formation ... 38
Chapter 7. Stage 2: Bargaining Powers and Negotiation Outcomes ... 54
Chapter 8. Stage 3: The Institutional Choice ... 62
Chapter 1. Introduction
1.1 Motivation
The Eurozone economic crisis of the last few years has slowed down the economic growth of the Eurozone and has shocked the global economy.1 It is, therefore, the priority for the European
leaders to find solution to the problem. The European Union released the “Europe 2020 Strategy”2 to guide the European economy back to a healthy levels. Coinciding with the Strategy, numerous actions have been taken at both EU level and within member states. Besides domestic efforts, another way of solving such difficulties is by cooperating with other nations that have the capacity, such as China. China is vastly important to the European Union especially in economic areas: China is now the second largest trading partner of the EU, while conversely the EU is China’s biggest trading partner. According to statistics released by the European Union, the largest amount of European imports comes from China, which is now the fastest growing exports market for the EU, with one billion euros daily trade between the two.3 While Europe is busy putting the crisis solving agenda together, China has been willing to help by means of investments. In the first half of 2012, Chinese investment in Europe grew by 6.3% compared to 2011, amounted to 5.4 billion euros.4 Moreover, China has been accelerating its purchase of European bonds in an attempt to help tackling the crisis.5
However, China also has its own issues to overcome with regards to its own development. The
1 European Commission. “Europe 2020: A European strategy for smart, sustainable and inclusive growth”, 5,
Accessed 1 May 2015. http://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-%20Europe%202020%20-%20EN%20version.pdf
2 ibid.
3 European Commission. “Trade Policy China.” last modified 22 April 2015, Accessed 1 May 2015.
http://ec.europa.eu/trade/policy/countries-and-regions/countries/china/
4 Zhang Haibing. ”The Euro Zone Debt Crisis: An opportunity for closer EU-China Cooperation.” Clingendael Asia
Forum, October 8 2012. Accessed 1 May 2015.
http://www.clingendael.nl/sites/default/files/The%20Euro%20Zone%20Debt%20Crisis.%20An%20Opportunity%2 0for%20Closer%20,EU-China%20Cooperation.pdf
5 Fu Jing,Zhaoyinan and Ji Tao,” Li says Beijing will keep buying European,” June 30, 2015. Accessed July 3, 2015.
Chinese national development strategy involves fast urbanisation and the construction of heavy industries. This resulted in speedy economic growth and raised China’s stature as an international player. However, this over-heated economic growth comes at a cost, pressuring China to take measures. The unbalanced urbanisation process and the speedy development of heavy industries in China left pollution and high energy-consumption issues unaddressed. The central government of the People’s Republic of China (“PRC”) released its 12th Five-Year Plan in 2011, which sets up ‘sustainable urbanization’ as national development strategy. Besides domestic efforts, the European Commission and the central government of the PRC launched EU-China Partnership on Urbanisation (hereafter referred to as ‘The Partnership’) in 2012 to tackle the urbanisation challenges in China. This deeper EU-China relation is an important indicator that China becomes more active in setting the cooperation agenda and shows a more open attitude towards the EU.
According to the report of the first high-level conference for the Partnership (2012), this Partnership aims at tackling the urbanisation problems that China confronted, with the help of European experiences.6 Thus a question is raised, what are the domestic reasons that drive China and EU to launch the Partnership? The thesis aims at seeking domestic reasons for the Partnership. In a broader international relations context, the thesis tries to find domestic reasons for international cooperation.
1.2 Liberal Intergovernmentalism and the Research Questions
While searching for theories to explain the Partnership, Functionalism and Liberal Intergovernmentalism (LI), which were proposed to explain the European integration, came into consideration. This is because European integration is regarded as serious of international cooperation. While functionalism assumes that international institutions are the main driver power for European integration, LI reaffirms the central role of national states. Due to the fact that the Partnership is new and there were no existing institutions for the daily tasks of the Partnership, LI seems more applicable for the Partnership. LI was proposed by Andrew
6 Friends of Europe. ”EU-China Urbanisation Partnership.” May 2012. Accessed March 4, 2015.
Moravcsik7 to explain European integration by combing theories at three stages: Stage 1: national preferences formation; Stage 2: inter-governmental bargain; and Stage 3: institutional choice. Moravcsik chose five treaty-amending negotiations as his case studies to examine LI. From this perspective, LI actually provides a complete explanation as to the whole process of international cooperation, combing the national preferences, international negotiation and corresponding institutional choice within a single framework.
The thesis frames LI in a broad international cooperation, with special focus on the formation and reflection of national preferences at each stage and the sequence. By comparing the issue-specific national preferences from European and Chinese sides at three stages, the thesis attempts to provide a complete and “fair” explanation of their cooperation. Thus the major research question that it tries to answer is “From a liberal intergovernmentalist perspective, how do European and Chinese issue-specific national preferences contribute to the dynamics of the Partnership?” Three sub questions are formed at the three stages as follows:
1) What are the interest groups that define the issue-specific preferences on both sides of the Partnership, separately?
2) In what way does the preferences shape the bargaining results?
3) In what way does the preferences affect the formation of the institutions?
By elaborating on these questions, the thesis also aims at showing whether LI provides an adequate and useful framework in explaining different attitudes of EU and China towards the Partnership and the reasoning behind which.
1.3 Methodology
The discussion is shaped by the theory of LI, as discussed in chapter 4. Due to the comparative nature of the LI theory, comparative case studies will be applied.
1) At the national preferences formation stage, the strategic explanations and the issue-specific explanations within one side will be compared; as well as the strategic backgrounds and
7 Andrew Moravcsik’s masterwork is “The Choice for Europe. Social Purpose and State Power from Messina to
issue-specific preferences of both sides.
2) At the second stage, relative bargaining power and benefits will be compared.
3) At the third stage, the different responsibilities of the European institutions and Chinese government in forming the institutions will be compared.
To carry out the study, official documents of EU institutions and the Chinese government for key policies, speeches and meetings related to the Partnership will be examined. The 12th Five Year Plan and the Europe 2020 Strategy will be reviewed. The European side has a relatively
democratic economic environment and reports from European think tank BUSINESSEUROPE8
and friends-of-Europe9 will be reviewed as the elite opinions from the European side. In addition to English resources, Chinese newspapers are also used, mainly China Daily. For the benefit of broad references, other references from reports, journal articles and websites are also used in the thesis.
1.4 Thesis Structure
The rest of the thesis is organized as follows. Chapter 2 is the literature review about the current studies of Sino-EU relation. These current explanations neither combine the domestic background and EU-China cooperation within theoretical framework nor elaborate on the specific reasons. But instead the reason of cooperation is always due to their strategic considerations. The third chapter elaborates on the theory of LI, with specific attentions given to the formation and reflection of national preferences at each of its three stages. Critiques of LI are discussed and can be regards as LI’s criteria to be applied to bilateral negotiation. This arrangement helps to focus on the research questions, which seeks to explain the issue-specific
8 According to the official website of BUSINESSEUROPE, “BUSINESSEUROPE is the leading advocate for
growth and competitiveness at European level, standing up for companies across the continent and campaigning on the issues that most influence their performance.” More details please refer to the website:
http://www.businesseurope.eu/content/default.asp?PageID=582
9 The official website of friends of Europe describe its self as follows: “Friends of Europe – Les Amis de l’Europe is
national preferences from both sides in the case of the Partnership. Chapter 4 tracks the launch of the Partnership to give the necessary background of the case study. Chapter 5 elaborates on the method of the analysis, which deals with why and how LI can be applied in analyzing the case. Chapter 6 is dedicated to answer the first sub question. It compares the national preferences formation of both sides, and offers the strategic explanation of their national preferences. Chapter 7 answers the second sub question at the inter-governmental bargaining stage. To do so, the thesis compares the bargaining powers and their relative gains of the bargaining results. Chapter 8 answers the last sub question. The different responsibilities that Chinese and European governments take in forming the institutions of the Partnership are compared. Finally Chapter 9 concludes the thesis.
Chapter 2. Literature Review
Literatures on EU-China relations after the global financial crisis portray EU’s and China’s intentions in negotiation using different approaches. On one hand, EU is described as a normative power and has a so-called “engagement policy” towards China: “engaging China further, through an upgraded political dialogue” and “supporting China’s transition to an open society based on the rule of law and the respect for human rights.”10 For example,Yan Shaohua applies the analytical framework “Normative Power Europe”11 to studyhow the EU diffuses its norms on climate change in its engagement with China12. On the other hand, China as a pragmatic power aims to maximize its political power in international society. From this perspective, the incentives for EU-China cooperation are fixed and termed as their ‘strategy’. Thus the literature focuses mainly on the discussions whether China is an emerging challenge or threat to the western world by giving more attentions to Africa, and other security issues, which reduces the EU’s influence. For instance, “The EU’s and China’s engagement in Africa: the dilemma of socialization”13 discusses the conflicts of their interests and engagement process in Africa. The article compares China’s non-interference policy and the European concept of human security regarding their security policies in Africa and thus suggested it is necessary to promote common normative values and principles with China. The article “Towards a ‘Unitary Actor’ Perceptions of China’s Role in Africa Across EU institutions”14 also discusses said EU institutions’ perceptions of China’s actions in Africa. It describes that EU perceives China’s these actions as threat to European norms. Scholars like David Kerr (2012), Rien T. Segers (2012) and
10 Communication of the EU Commission.“Building a Comprehensive Partnership with China.” March 25, 1998.
Accessed March 1, 2015. http://ec.europa.eu/comm/external_relations/china/com_98/index.htm
11 “Normative power” was put forward by Ian Manners as “the ability to define what pass for ‘normal’ in world
politics,” see article, I. Manners, “Normative Power Europe: a Contradiction in Terms?”, Journal of Common Market Studies, Vol.40, No. 2, 2002,
12 Yan Shaohua. ”Europe as a Normative Power on Climate Change? The EU’s Engagement with China.” Accessed
March 1, 2015. http://www.e-ir.info/2015/05/27/europe-as-a-normative-power-on-climate-change-the-eus-engagement-with-china/
13 Liu Lirong. “The EU and China’s engagement in Africa: the dilemma of socialisation” Occasional Paper 93, Paris:
EU Institute for Security Studies. August 2011. Accessed May 1, 2015.
http://www.iss.europa.eu/uploads/media/The_EU_and_Chinas_engagement_in_Africa.pdf
14 Frauke S. Austermann. (2012), Towards a ‘Unitary Actor?’ Perceptions of China’s Role in Africa Across EU
Wolfgang Deckers also focus more on the geopolitical issues from strategic point of view.15 However, there is not yet a complete explanation that combines the domestic background and EU-China cooperation using the same lens as well as elaborates on the specific reasons, instead of a strategic explanation of cooperation.
Due to the fact that the Partnership has only been launched for 3 years, only limited academic attention has been given to it and related analyses are basically more descriptive, regarding the Partnership as part of ‘EU-China Strategic Partnership’. For example, Alexandra Sombsthay gives an overview of the Partnership in his article, ’The EU-China Partnership on Urbanisation: A New Path for Cooperation at the local level’16. While the current debate on the Partnership focus on its importance, no specific attentions were given to the specific dynamics of launching the Partnership from both European and Chinese perspectives. There are also some other forms of limited documentation about the Partnership, for instance a Factsheet17 (2013) released by the European Union. The factsheet places the Partnership under the ‘Energy and the Environment’ section of EU-China Strategic Partnership. Some more documents over the partnership will be disused in a later section.
To fill the academic gaps discussed above, this thesis explains the Partnership combining the motives and distribution of benefits, taking into account their respective domestic issues (EU-crises versus China’s urbanisation problem) and their growing interdependence.
15 See Kerr, David. (2012). "Problems of Grand Strategy in EU-China Relations"; Rien T. Segers, China, Japan and
the New East Asia - Towards a Change in World Hegemony; Wolfgang Deckers(2012), EU, China and US: Who Will. Benefit from the Triangular Relationship?
16 Alexandra Sombsthay. “The EU-China Partnership on Urbanisation: A New Path for Cooperation at the local
level.” EU-China Observer, pp6-9.
17‘European Union. “The EU-China Comprehensive Strategic Partnership: Working for You.” November 6,2013.
Chapter 3. Liberal Intergovernmentalism
Liberal Intergovernmentalism (LI) was developed on the basis of intergovernmentalism in the
context of European Integration, byAndrew Moravcsik in the 1990s. Intergovernmetalism is a
theory that reclaims the premise roles played by national governments. Both Intergovernmentalism and LI were proposed to as alternative theories to neo- functionalism, which was the mainstream theory for European integration before 1990s. Neo-functionalism as a theory of European integration denies the premise role of governments during the integration process. Thus, in order to have a clear understanding of Liberal Intergovernmentalism, this chapter will shortly introduce neo-functionalism and intergovernmentalism.
Neo-functionalism was the mainstream theory to explain European integration from the beginning of European integration in the 1950s and 1960s. Neo-functionalist scholars like Ernst Haas, Leon Lindberg, Joseph Nye and Philippe Schmitter emphasis the dynamic for European Integration is the institutions themselves, as described by “spill over” theory.18 Spill over theory describes European Integration as the rolling of snowballs: the integration in economic areas will result in the integration in political areas. This is due to the fact that established institutions like the European Commissions and the European Council can have autonomy in making decisions for the member states. Thus neo-functionalism says European institutions take over the roles of national governments, which is contrary to, for instance the realism. Spill over theory could explain the fast progress of integration during the 1950s and 1960s, however it failed to explain the slowing down of integration process during the 1960s and 1980s. Because the national level vetoes played important role. For instance, the “Empty Chair Crisis ” event showed national government can still influence the decision making process in the European integration.
18 For the writings: Ernst.B. Haas, The Uniting of Europe: Political, Social, and Economic Forces 1950-1957,
Because of the failure of neo-functionalism, Stanley Hoffmann (1966) proposed a more realistic approach to explain European integration. In his work “Obstinate or Obsolete? The Fate of the Nation-State and the Case of Western Europe”, he reclaims national state as the premise actor to bargain for its national interest.19 Intergovernmentalism, focuses on the intergovernmental
interaction during the European integration process, as summarized by Moravcsik:
“Intergovernmentalist theory seeks to analyze the EC as a result of strategies pursed by national governments acting in the basis of their preferences and power. The major agenda-setting decisions in the history of the EU, in which common policies are created or refined, are negotiated intergovernmentally. ”20
However, though it reclaims the premise role of nation states, intergovernmentalism treats national preferences as given and does not illustrate on issue-specific preferences formation. Moravcsik does this in LI. Built upon intergovernmentalism, Moravcsik identifies the whole process of international policy coordination as triple causal sequences: National Preferences formation stage; Intergovernmental bargaining stage; and Institutional choices stage. The central role that domestic political economy environment plays in the formation of national preferences, and consequently, governments in the interstate bargaining process is at the crux of LI.21 From
this perspective, Moravcsik explains state behavior as the rational governments’ reaction to ‘’domestic societal pressure’’ and an international “strategic environment”.22 That is to say whereas a process of domestic preference formation dictates the governments’ understanding of benefits of potential policy coordination, the interstate bargaining process shapes the possible negotiation outcomes.
In the rest of this Chapter, each of the three stages of the theory will be elaborated on with more
19 Stanley Hoffmann. “Obstinate or Obsolete? The Fate of the Nation-State and the Cases of Western Europe.”
Daedalus Vol. 95, No. 3, Tradition and Change (Summer, 1966), pp. 862-915
20 Moravcsik, Andrew (1993). “Preferences and Power in the European Community: A Liberal
Intergovernmentalist Approach.” Journal of Common Market Studies 31 (4): 496
21 Andrew Moravcsik (1999). “The Choice for Europe. Social Purpose and State Power from Messina to Maastricht.”
(London: UCL Press). Pp18-19
22 Andrew Moravcsik (1993). “Preferences and Power in the European Community: A Liberal
details. Besides, critiques of LI as a European integration theory will be reviewed, which explains why it is applicable to bilateral negotiations in non-military threat environment. For the benefit of answering my research question, I will focus on the national preferences at first stage and the reflections of national preferences at the second and third stages.
3.1 Stage One: Issue-‐Specific National Preferences Formation
At the very first stage, national preferences about certain issue are formed. By comparing the geopolitical explanations and economical explanations, Moravcsik identified that issue-specific economic interests best define national preferences in non-military security issues. Thus they are the dynamics behind European integration. It is vital then to understand what these national preferences are. Next, I will try to illustrate how LI explains national preferences as well as how to find the issue-specific national preferences following LI.
Moravcsik defined national preferences as follows: “an ordered and weighted set of values
placed on future substantive outcomes, often termed as ‘states of the world’, that might result from international political interaction, they reflect the objectives of those domestic groups which influence the state apparatus and they are assumed to be stable within each position advanced on each issue by each country in each negotiation, but not necessarily across negotiations, issues, or countries”23. Preferences are thus different from national strategies and
policies, which are relatively stable within one country on different issues.
To put preferences in a broader International Relations context, preferences are “exogenous to a specific international political environment”24, which are assumed to stay unchanged within “each position” advanced by “each issue by each country in each negotiation”.25 It means that once specific national preferences for a particular ‘episode of negotiation’ are formed, it will stay
23 Andrew Moravcsik (1999). “The Choice for Europe. Social Purpose and State Power from Messina to Maastricht.”
(London: UCL Press). Pp24
unchanged during the whole bargaining process for each country. To separate preferences from strategies, in Moravcsik’s words “will help us to distinguish the situations of preferences from strategies: in the situations of preferences, “a state chooses outcome X over outcome Y because it prefers X”; while strategic circumstances compel or induce the state’s choice to that chosen outcome “contributes to the realization of X, even though it prefers Y.”26 But what are the elements of preferences and how are the preferences formed?
As explained by Moravcsik, there are two motivations that might account for underlying national preferences for and against international cooperation: geopolitical interests and economical interests.27 He then compares these. A geopolitical explanation of international economic cooperation assumes that security issues are the “high politics” and economic issues belong to the realm of “low politics”. Economic issues have indirect effects on the realization of the security issues and thus have indirect security implications (“security externalities”).28 Hence, the “linkage between economic policies and underlying politico-military goals”29 are the at the core of explaining national preferences concerning economic cooperation. The core of the argument remains the same: “Whatever the “security externalities”, governments are more likely
to cooperate economically with those states with which they are “allied” in pursuit of a particular geopolitical goal.”30 The geopolitical explanations of national preferences concerning international economic cooperation are, thus, against the idea that “commercial interests drive national preferences”.31 Moravcsik’s analysis however focuses more on the economic political explanations as he concludes: ”Only in matters with little or no calculable impact on economic
interests, such as parliamentary powers or foreign and defense policy, does political economy theory generate predictions similar to those of the geopolitical theory”32
The economic political explanations of national preferences assumes international economic
cooperation as more “issue-specific” 33and focuses on the “direct consequences“34of economic integration. Especially the commercial interests are the most powerful economical motivation for national preferences. Political economy explanations are “issue-specific” in the sense that it separates politico-military policies from other policies; and assumes that domestic economic groups dominate the other non political-military policies while geopolitical interests dominate purely politico-military policies.35 In a broader international cooperation, national preferences tend to vary predictably across issues and countries in accordance with issue-specific, largely economic concerns.36 Since international cooperation has “direct consequence” on the cooperated countries’ domestic policies, cooperation is a way of “restructuring the pattern of economic externalities”. Here, economic externalities mean the “consequences of national economic activities on foreign countries”. Governments have incentives to coordinate as long as the policy adjustments can cover negative policy externalities and even create positive policy externalities.37 Thus we can say country A prefers X, mainly because X will bring the economic externalities that A expects. In a broader non-military international cooperation context, we need to find the domestic interests groups of national preferences as well as the corresponding economic externalities to understand the national preferences.
According to Moravcsik, an obvious characteristic of strong domestic group is the policy support it receives from the government. LI argues that the pressures of “domestic regulatory or fiscal objectives” contribute to the decision to cooperate.38 It is the failures of domestic policy in supporting the competitiveness of certain economic sectors that contribute to the reasons for integration: “competitiveness concerns and policy failure combine to catalyze cooperation”.39 Thus the governments tend to offer fiscal subsidization to those strong interests groups when the domestic markets are not enough for them to develop their competitive. For example, in the post-war European domestic politics, the agricultural sectors enjoyed large subsidies in almost every
European country. The fiscal burden of subsidization given to certain economic groups reflects the fact that governments are limited primarily by overall economic efficiency. Thus governments try to consider trade liberalization due to the fact that the opening up of export markets is important in international cooperation. Therefore, two elements are the key to understand national preferences: issue-specific economic motivations dictated by strong domestic economic group(s) and the economic externalities the policy adjustments would bring.
3.2 Stage Two: Interstate Bargaining
In the second stage, Moravcsik analyses negotiation outcomes, concentrating on interstate bargaining. States’ purpose of engaging themselves in mutual bargaining is realizing their national preferences, which was formed during the first stage. While Moravcsik introduces both supranational and intergovernmental bargaining theories, he strongly recommends the latter. According to Moravcsik, all the bargaining theories discuss two dimensions of observable outcomes: efficiency and distribution40. Efficiency questions whether the bargaining is efficient in the sense that all potential agreements were discovered or were gains “left on the table”.41 Distribution considers the distribution of the benefits.
Intergovernmental bargaining theory regards negotiations as “bargaining games over the precise terms of mutually beneficial cooperation and focus on distribution of benefits.”42 The distribution of benefits is dictated by the relative “issue-specific distribution bargaining power”
43of national governments. The power of each government is inversely proportional to the
relative value that it places on an agreement compared to its best policy alternative, which is termed “preference intensity”. The relationship between preference intensities, in the language of international relations, is asymmetrical interdependence”, “structural power” or “influence effect”.44 LI thus adopts a neoliberal approach of shifting the attention away from the self-help
system towards the economic interdependence between the units of a system.45 Consequently, the interdependence of state’s national policies may contribute to the birth of the policy externalities, which indicates that policies of a state may cost or benefit other states.46 Intergovernmental bargaining theory is based on the following three assumptions:
1) Such negotiations happen in “a non-coercive system of unanimous voting in which governments can and will reject agreements that would leave them worse off than unilateral policies”.47 It guarantees that governments can choose to cooperate or quit negotiations
without outside pressures. Consequently, governments would try to avoid the collapse of a negotiation that would leave each state worse off.
2) The efficiency of negotiations is guaranteed by the governments’ need and participation to
cooperate due to the fact that interested governments will directly lead the bargaining process, instead of supranational entrepreneurs. The direct engagement of governments guarantees an information-rich environment. It is also due to the absence of outside threats and the existence of common interests, governments can negotiate according to their preferences in the form of ”bargaining demands and compromise proposals.”48
3) The third assumption is related to the distribution of bargaining powers and outcomes. The stronger bargaining power is, the lower value the government attaches to an agreement: “relative value the state places on an agreement compared to the outcome of its best alterative policy.”49 Thus states with lower bargaining powers attach higher importance to make negotiation happen, and thus are willing to make concessions.50 The more a
government wants to come to the agreements, the more willing the government is to compromise. It means that the governments who attach less value to the bargain results can threat the other players by quitting.
45 See on this Robert O. Keohane and Joseph S. Nye (1989) 1st Edition 1977, Power and Interdependence: World
politics in transition, (New York: Harper Collins Publishers), pp. 25-29; Kenneth A. Oye (1995), “Explaining Cooperation under Anarchy: Hypotheses and Strategies”, World Politics, Vol. 38, No. 1, pp. 1-24
46Andrew Moravcsik (1999). “The Choice for Europe. Social Purpose and State Power from Messina to Maastricht.” (London: UCL Press).pp35
Distribution of bargained outcomes are decided by relative bargaining powers of states and their asymmetrical independent preferences: the bargaining power of each government is inversely proportional to its preference intensity; the pattern of preference intensity (or “asymmetrical interdependence”) functions in the way that it decides the relative value a government attaches to an agreement; and the relative value dictates the willingness to compromise.51 From this prospective, Moravcsik actually adopts ‘Nash bargaining solution’
to predict bargain outcomes: “in the absence of coercive threats, governments would split the
utility gains relative to their respective alternatives to agreement, which is done under pressure to avoid possibility that exogenous events might lead negotiations to collapse.”52 In the case of multilateral negotiations like European integration negotiations, there is also the possibility of being excluded, which would lead to the situation that is worse. The no-threat negotiation environment guarantees that the states most satisfied with the possible negotiation outcomes are willing to make concessions: “the willingness of states to make concessions is itself primarily a function of preferences, not capabilities.”53 Consequently, to get all interested governments on the negotiation table, side payments are offered to the governments who would gain less. According to Moravcsik, the following elements decide the bargained outcomes54:
a) the relative values attached by states on the bargaining outcomes, which indicates the possibility of quitting;
b) the possibility of exclusion, which results from alternative coalition;
c) the possibility of issue-linkage and side payments within or outside the issues.
The first factor indicates the criteria if the bargain outcomes make an interested government better off than its current situation. If not, a state might veto the negotiation, which makes it a
relatively stronger bargaining power and less willing to make concessions. It thus happens that the agreement is made only on the level of lowest common denominator in order to get all interested groups in. An alternative to cooperation creates a coalition that some states will be excluded, which creates disadvantages in a long run. The growing consequences of globalization make it disadvantageous to be excluded especially in a certain market due to the policy externalities of other states: “policies of one government creating costs (negative externalities) and benefits (positive externalities) for politically significant social groups outside its national jurisdiction.”55 However, the threat of coalition and exclusion is only effective when it is credible and costly to the targeted country.56 The negative policy externalities can be reduced or even eliminated through policy coordination, which contributes to the opportunities to cooperate. Issue-linkage and side payments provide possible cooperation among states which have various levels of preference intensities on diverse issues in long-term relations. In the less important issue areas, a certain state gives up more benefits requirements and benefit more in more preferences intensified issue areas. In this way, states exchange their concessions to balance their benefits in different issue areas.
By comparing the benefits among players, the bargaining outcomes can be measured relatively: who gains more and who relatively “loses” the negotiation?57To compare the distribution of
benefits, the following questions are asked by Moravcsik: which actor benefit most from the “core” bargain (almost what they can achieve unilaterally); and which actors gained “marginal concessions” and “side payments” outside the core bargain.58 Invoking Moravcsik’s discussion about the first stage, the distribution of bargained results should reflect the economic interests, which defines issue-specific (except for military security issue) national preferences. That is to say the patterns of agreements should reflect issue-specific national preferences, as well as the economic interests that dictate national preferences.
In the first two stages, Moravcsik elaborates on the demand and supply sides of negotiation process. He regards the national preferences formation stage as the demand side, incorporating what involved states expect to achieve through international policy coordination. The second stage, which is through intergovernmental negotiation about the possible outcomes, is viewed by Moravcsik as the process of forming the supply side of international negotiation.
3.3 Stage Three: Institutional Choice
The third analytical stage in the LI rational framework of international cooperation is international institutional choice process: governments delegate or pool “decision-making power” to international institutions. “Pooling or delegation of authoritative decision-making” to an international institution are the two ways to put constraints on sovereignty.59 In the language
of LI, sovereignty is pooled if the purpose of institutions is to facilitate future legislation; and sovereignty is delegated if the institutional objectives are to assure implementations of and compliance with the law.60
LI suggests that governments choose institutions to ensure the “credible commitments” of the negotiation results. This is because while the future is uncertain, governments find it too “costly or technically impossible” to specify all possible methods to promote the realization of their shared “broad goals”. By only agreeing to the shared “broad goals”, the involved governments are actually leaving the negotiations as “incomplete contracting”61. There are potential risks that some governments do not act according to the negotiated results, and all efforts within the negotiation process might have been in vain. “Pooling and delegating”62are thus chosen as the solutions to the aforementioned “incomplete contracting” by participating governments. From this perspective, governments choose institutions as a commitment to each other with regards to compliance of the negotiated results. Moreover, international institutions always enjoy a broader reputation. Therefore they can be used as an excuse for governments to calm down domestic
opposition of unpopular policies.
As proposed by Moravcsik, the three-stages theory is a causal sequence. The question therefore can be asked how the third stage is causally related to the last two stages. Invoking discussions at the first two stages, issue-specific national preferences are the premise factor that links the two stages: achieving the realization of national preferences drives governments to come to mutual international bargain process. Thus the third stage should somehow reflect the national preferences. What is then the role of national preferences at this stage and how are they reflected? The support that different groups give to the institutions and the substantive activities reflect different benefits those groups gain. In the language of LI, domestic cleavages and discourse mirrors their “substantive interests”: the more a certain groups can gain from future compliance of common rules, the more intensive supports these groups give to the institutions and their substantial activities. From this perspective, we can assume that the most supportive groups are those economic interest groups, which define the prescribed issue-specific national preferences. The relative responsibilities one government takes in the institutions reflect the relative benefits they can get from the negotiation. The more they wish to ensure the bargained results, the more responsibilities certain governments are willing to take.
Above discussed liberal intergovernmentalist concepts and assumptions will be the basic theoretical frameworks that this thesis will use for the analysis. The following parts will discuss the critiques that LI received as a European integration theory.
3.4 Critiques of LI in Explaining Multilateral Negotiation of European
Integration
European scholars after the popularity of neo-functionalism.63 Helen Wallace greets LI as it gives “fine-grained” 64 analysis about European integration, theoretically and historically. Meanwhile, liberal intergovernmentalism receives critiques from other integration theories for a few reasons. The identification of weakness and limitations of liberal intergovernmentalism as a European integration theory, as we well see, actually helps to argue why it is more applicable to bilateral negotiations. The following are summaries from critiques by Helen Wallace, James.A. Caporaso, Fritz W. Scharpf and George Tsebelis. As Helen Wallace gives a systematic critique, which incorporates all other writers’ critiques about LI, the following part will use her critiques as main critique, and adds other critiques alongside.
Firstly, Wallace disagrees with Moravcsik’s opinion that economic factors have primacy over geopolitical factors in the process of European integration and bargaining.65Wallace argues that geopolitical factors have great effects on European integration and the negotiation process. As has been discussed before, Moravcsik mentioned that economic factors are decisive in non-military issues, which has direct impact on economic interests. The case chosen by the thesis, i.e., the EU-China Urbanisation Partnership has direct and important impacts on economic interests and thus is durable in the application of the theory.
Secondly, Wallace criticizes Moravcsik’s choice of case studies for mainly focusing on the preferences and motivations of the three largest member states: Germany, France and the United Kingdom. Thus Moravcsik neglect small member states’ role even in instances in which they are able to create strong coalition.66 Similarly, Bache criticizes the fact that Moravcsik chose only intergovernmental negotiations, say in most important five treaty-amending sets of agreements in European integration history where only limited number of states where involved, and ignores
63 Helen Wallace, William Wallace and Mark A. Pollack (2005).”Policymaking in the European Union.”(5th ed.).
Oxford: Oxford University Press. Pp19.
64 ibid. Pp10
65 Helen Wallace (1999) 'Piecing the integration jigsaw together.' Journal of European Public
Policy, Vol. 6, No.1 (March 1999). Pp156
the smaller decisions where more states where involved. 67 Caporaso agrees with Bache by stating that “[the] selection of cases makes it easier to confirm the intergovernmentalist story.”68 They both actually suggest that the outcome of a study is predetermined by the choice of a case. Based on this claim, we can argue that liberal intergovernmentalism is actually more applicable for negotiations with small number of involved governments, say two or three.
Thirdly, Wallace criticizes Moravcsik’s definition with regards to the national preferences formation for the fact that he does not give enough examination of the ‘nature of politics’ within the involved states.69 Though Moravcsik’s liberal intergovernmentalism is applicable to democratic countries, he emphasizes the fact that democratic states do not raise a military threat domestically and internationally. Actually he means that the domestic environment ensures that domestic groups and all states can react to certain issues voluntarily according to their interests without use of military threats. The thesis will give a more detailed examination of domestic politics by offering a strategic explanation, taking into considerations the domestic political economic backgrounds since those backgrounds decisively determine the formation of national preferences and thus affect the subsequent interstate bargaining process.
Fourthly, Wallace opposes Moravcsik’s assumption that states are rational in nature. Wallace complains that there is no space left for irrationality or confusions.70 However, it is very difficult and almost impossible to account for all irrational factors. Moravcsik tried to avoid this by claiming that state actors are rational. By combining a strategic explanation of domestic background, this thesis tries also to explain that both sides of the Partnership are rational.
Finally, Wallace complains that Moravsik denies the role of supranational entrepreneurs and
67 Bache, I., George, S. (2006) Politics in the European Union, 2nd ed., United States: Oxford University Press, pp15 68 Caporaso, J.A. (1999) 'Toward a normal science of regional integration.‘ Journal of European
Public Policy, Vol. 6, No.1 (March) pp162
69 Helen Wallace. (1999) 'Piecing the integration jigsaw together.' Journal of European Public
Policy, Vol. 6, No.1 (March 1999). Pp157
international institutions.71 Fritz W. Scharpf also emphasizes the importance of international institutions by arguing that the European common agricultural policy could not function efficiently due to their institutional settings.72 He also points out that such institutions may bring about “joint decision traps”, which means member states can veto the policies they disagree with. George Tsebelis agrees with Scharpf on the importance of the institutions by saying that even if only few member states benefit from existing policies, they will try their best to keep it stable.73 However, in the case of the Partnership, no existing institutions could be chosen and new institutions needed to be created by the Partnership, and thus there was no need to study the institutions during the bargaining process. The thesis will elaborate further, for instance in the third stage, on the different responsibilities of involved governments and the supports for activities of formed institutions, instead of the role of chosen institutions. The basis for this decision is determined by the specific character of the decisions of the Partnership, as mentioned above, where supranational institutions need to be created and supplemented.
71 Ibid.pp159
72 Fritz W. Scharpf, “The joint decision trap: Lessons from German federalism and European integration”, Public
Administration, Vol. 66, 1988, p. 239 – 278.
73 George Tsebelis, Veto Players: How Political Institutions Work, Princeton and New York: Princeton University
Chapter 4. EU-‐China Urbanisation Partnership
In this chapter, I will give a shot introduction to the EU-China Partnership. The characters of the Partnership will be summarized based on the discussion about its main purpose, subjects, framework, as well as its organization structure. Documents and websites related to the Partnership will be reviewed.74
The political commitment of launching an EU-China Urbanisation Partnership was announced during the EU-China Fourteenth Summit, which was held on 14 February 2012. The Partnership aims at, as written in the joint press release of the EU-China Fourteenth Summit, tackling the challenges of “urban planning and energy issues in cities.”75 As summarized by the European Commission, the Partnership also intended to “strengthen practical co-operation on the development and commercial transfer of low carbon and environment-friendly technologies and to enhance the energy efficiency of cities”.76 On 3 May 2012, a high-level conference on the EU-China Urbanisation Partnership was held in Brussels, during which the Partnership was launched officially.77 During the conference, “The Joint Declaration of EU-China Urbanisation Partnership” 78(Hereafter referred to as the Joint Declaration) was signed by the then President of European Commission, José Manuel Barroso, and Li Keqiang, then Vice-Premier of the People’s Republic of China.
According to the joint Declaration, the Partnership will highlight 14 subjects, among which “Urban green buildings” and “Urban ecological protection, environmental protection and
74 The Joint Press of 14th EU-China Summit, The Joint Declaration of EU-China Urbanisation Partnership, 75 European Commission. “Joint Press Communiqué of the 14th EU-China Summit.” February 14, 2012 Accessed
May 3, 2015. http://europa.eu/rapid/press-release_MEMO-12-103_en.htm. Pp3
76 European Commission, “EU RELATIONS WITH CHINA: EU-China Summit factsheet.” February 14, 2012.
Accessed March 4,2015. http://europa.eu/rapid/press-release_MEMO-12-85_en.htm
77 EU-China Urbanization Cooperation (the website).“The General Situation of Our Practical Cooperation.”
Accessed 3 May 2015. http://www.ceuc.org.cn/en/page.php?cid=4&id=News_89
78 The European Commission. “Joint Declaration on The EU-China Partnership on Urbanisation.” europa.eu
(website), Accessed March4, 2015.
treatment”.79 Among all the issues, energies and resources are the main strains for the development of China and thus the “central factor of urban policies”.80 Thus, China expects to
learn European advanced technologies to manage the resources and improve energy efficiency.81
Not surprisingly, DG Energy (Directorate-General for Energy Commission) is the coordinator from the EU side, with its main function of creating an internal energy market and reducing energy consumption.82 The Chinese side appointed the National Development and Reform Commission (NDRC), who is in charge of the development issues in China, as its main coordinator for the Partnership.83
According to the joint declaration, the main platform of the Partnership is an annual EU-China Urbanisation Forum (hereafter referred to as the Forum), which acts in support of the EU-China Summit and plays a steering role in the Partnership.84 The high-level conference on EU-China Urbanisation Partnership held in May 2012 is regarded as the first Forum for the Partnership. The second EU-China Urbanisation Partnership Forum was organized by NDRC with the assistance of the DG-Energy in November 2013, with attendance of Premier Li Keqiang and President José Manuel Barroso. The European and Chinese delegations are among others Commissioners, a number of EU mayors and top experts and business representatives. It provided a platform to build networking approaches between Chinese and EU cities and regions,
79 According to the Joint Declaration, the partnership will highlight the following subjects: “Strategies and policies
relevant to the development of urbanisation”; “Spatial distribution of urbanisation”; “Sustainable development of urban industrial economy”; “Urban public services system”; “Urban infrastructure investment and financing mechanisms”; “Urban housing supply system and patterns”; “Urban energy supply and demand management”; “Urban mobility, public transport and smart transport”; “Urban green buildings”; “Urban ecological protection, environmental protection and treatment”; “Protection of Urban historical and cultural features and formation of urban landscape”; “Urban government”; “Urban-Rural integrated development”; “Exchange, discussions and personal training on urbanisation development”.
80 Friends of Europe. ”EU-China Urbanisation Partnership.” May 2012. Accessed March 4, 2015. Pp 12.
http://www.friendsofeurope.org/media/uploads/2014/11/2012-‐EU-‐China-‐Urbanisation-‐Partnership-‐WEB.pdf
81 European Commission. “Joint Declaration on The EU-China Partnership on Urbanisation.” May 3, 2012.
Accessed March4, 2014.
https://ec.europa.eu/energy/sites/ener/files/documents/20120503_eu_china_joint_declaration_urbanisation_en.pdf
82 “Mission statement of DG energy.” European Commission (website), accessed March 4,2015.
http://ec.europa.eu/dgs/energy/mission_en.htm.
83 “Main Functions of the DNRC.” National Development and Reform Commission (NDRC) (Website), Accessed
March 7,2015,http://en.ndrc.gov.cn/mfndrc/.
84 European Commission. “Joint Declaration on The EU-China Partnership on Urbanisation.” May 3, 2012.
Accessed March4, 2014.
in addressing the urbanisation challenges faced by China. Cities together with local governments play important roles in carrying out the cooperation. As advocated by both sides, the Partnership is expected to adopt “bottom-up initiatives” by involving policymakers and private sectors. It is then not difficult to understand that the main projects are carried out though city-twinning, to
build ties between cities. 85 Besides the Forum, DG Energy and NDRC also held the EU-China
Exhibition on Urban Development in November 2013.
On 29 June 2015 the third Forum was held by the DG-Energy with the assistance of the NDRC, together with the 17th EU-China summit. As highlighted by Li Keqiang this year on the Forum, the Partnership focuses on building closer ties through “city twinning” through platforms such as the EU-China Mayor’s Forum and the Partnership Forum.86 Li reclaimed that there are 12 pairing cities with more than 130 cooperated projects. Besides the Forum, the Partnership encourages other existing and upcoming projects, for instance, the “EU-China Mayor’s Forum, the EC-Link Project and the EU-China Emission Trading Scheme.87 For all the events happened within the framework of the Partnership, please refer to the official website of the China Center for Urban Development (hereinafter to as “the CCUD”).88
85 Friends of Europe. ”EU-China Urbanisation Partnership.” May 2012. Accessed March 4, 2015.pp 13.
http://www.friendsofeurope.org/media/uploads/2014/11/2012-‐EU-‐China-‐Urbanisation-‐Partnership-‐WEB.pdf
86 Ministry of Foreign Affairs of the People’s Republic of China.“Li Keqiang Attends and Addresses China-EU
Urbanization Partnership Forum 2015.” Accessed July 3, 2015. http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1278057.shtml
87 According to the Joint Declaration, the Partnership encourages the existing and upcoming cooperation on the
following projects: “EU-China Mayor’s Forum, EC-Link Project, EU-China Emission Trading Scheme, EU-China Social Protection Reform Project, EU-China Disaster Risk Management Project, Satellite Cities and Metropolitan Governance Project.”
88 Xin Yingzhong. Ccud.org.cn. “中欧城镇化伙伴关系大事记.” June 29,2015. Accessed July 3,2015.
Table 4.1 The Main process of EU-China Urbanisation Partnership
Time Title Organizer Attended Leaders Main Achievement
14 February 2012 14th EU-China Summit
(Brussels)
The European
Commission
Wen Jiabao, Premier of China; Herman Van Rompuy,
President of the
European Council, and José Manuel Barroso, President of the European Commission.
Announced the
commitment to launch the Partnership
3 May 2012 First EU-China
Urbanisation Forum
(Brussles)
European Commission and the DNRC
Li Keqiang, then vice premier of China; José Manuel Barroso
The Joint Declaration on China and Europe's
Partnership on
Urbanisation89
21 November 2013 Second EU-China
Urbanisation Forum
(Beijing)
The DNRC and the DG-Energy
Li Keqiang, premier of China; Herman Van Rompuy,
President of the
European Council, and José Manuel Barroso, President of the European Commission.
12 cities from Europe
and China signed
cooperation agreements.90 20 November-23 November 2013 EU-China Exhibition on Urban Development
The DNRC and the DG-Energy
Zhang Gaoli, Vice
premier of China; Siim Kallas, then European
Commissioner for
Transport
Representatives for
cities and enterprises were gathered to seek
for collaboration
opportunities.
30 June 2015 Third EU-China
Urbanisation Forum
(Brussels)
The DNRC and the DG-Energy Jean-Claude Juncker, president of the European Commission New EU-China cooperation projects were signed91
(Source: summarized from official websites of the Partnership, news, and official documents.)
89 “The General Situation of Our Practical Cooperation.” EU-China Urbanization Cooperation (the website).
Accessed May 4, 2015. http://www.ceuc.org.cn/en/page.php?cid=4&id=News_89
90 EU-China. “The EU-China Urbanisation Partnership. Accessed March
4,2015. ”http://ec.europa.eu/energy/sites/ener/files/documents/12_cities.pdf
91 Confrontations Europe (the website).“EU-CHINA URBANISATION FORUM: TRANSITION TOWARDS
SUSTAINABLE CITIES - EUROPEAN COMMISSION + FORUM CHINAEUROPA.” June 29, 2015. Accessed July 1, 2015.
