Bargaining chips from the Netherlands

Many in China and the Netherlands share a passion for combining innovation and employee-friendly entrepreneurship. Chinese company Huawei is an example.

As for a Dutch company, centenarian brand Philips is globally famous for light bulbs and small household appliances. One of Philips's spin-off companies is another big Dutch brand, ASML Holding, which is a world leader in manufacturing photolithography machines that make computer chips and, like Philips, also addresses the needs of all stakeholders including its employees.

On the eve of Dutch Prime Minister Mark Rutte's recent visit to the White House, US media reported that the Netherlands, Japan and the United States have agreed to stop selling more advanced chip-making machines to Chinese companies. Rutte has declined to give any details. ASML, the potential sacrificial lamb, too, has refused comments. As for the White House, it has neither explained nor contradicted the US media reports.

So what is fact and what is hot air?

The Dutch are long-standing allies of the Americans or Yankees, which is a mix of typically Dutch Christian names "Jan" and "Kees". When the Dutch lost the island of Manhattan to the English, Jan and Kees were apparently the most common names in New York. That's why the English nicknamed the local people "JanKees", or "Yankees".

And as early as 1782, the Netherlands established diplomatic relations with the US after supporting the American Revolution.

The Dutch and Americans have a long shared history. In fact, the Americans liberated the Netherlands from the Nazi regime at the end of World War II at great cost to themselves. And the Dutch don't forget such sacrifices. As a result, the Netherlands, despite its dwarf-like size, is the second-largest global investor in the US economy.

Does this mean the Dutch people or their leaders will blindly follow the Americans? No. In 2019, during a joint presentation, Rutte told then US president Donald Trump in public — on live television actually — that Trump was wrong. It was a blunt response, but did not damage the relationship. Of course, what worked with solo artist Trump may not necessarily work with incumbent US President Joe Biden and his professional staff.

Over the last decade, European countries have been re-inventing themselves. The Netherlands is a founding member of the European Union, which is — for better or for worse — becoming very efficient in terms of administration.

On the one hand, this made some English gentlemen with loud voices think they'd be better off on their own, and say too many EU rules and regulations "were what led" to Brexit. On the other hand, there are collective efforts to transfer economic prosperity from Northern Europe to Southern Europe, in order to create cohesion.

Europe as a whole has come out of the COVID-19 pandemic stronger. Complicating the circumstances are the new Eastern European members that only recently stepped out from under Moscow's umbrella, as well as the necessity to create a greener planet. Plus, there is the ongoing Russia-Ukraine conflict. These issues have triggered plenty of internal discussions. And there is a consensus on what Europeans don't need. Europeans do not appreciate belligerent noise from across the Atlantic trying to forcibly isolate China.

The story in some US reports about a ban on the sale of chip-making machines is part of a bigger issue. For example, the Inflation Reduction Act the US introduced recently will, in essence, allow the administration to give huge subsidies to companies producing goods in the US.

US products will be favored, and goods produced elsewhere will not be able to compete for the lack of a level playing field. The IRA mechanism is a tax advantage of $369 billion for US producers. Worse, the IRA can be used to force other countries to follow the US' policy.

Also, some other countries have been allowed to share the "Made in USA" label, so that solar panels made in China can also be manufactured in, and at a cheaper rate than, China. It's another matter that the Canadians can lose this favored position if the White House issues just a one-page document. The US president does not even need to consult the Congress to discipline dependent economies.

There are rumors in the media that the EU, too, has been offered a similar US-dependent satellite status. But since not all Europeans are enthusiastic about it, the EU recently announced potential countermeasures against the IRA.

The EU sees the IRA as a threat and not as a positive contribution to a greener planet by the Americans, illustrating the complex relationship developing across the ocean. In this light, the issue of chip-making machines and their export to China is layered.

Different from the Trump era, a Dutch leader publicly disagreeing with the US president, especially on the US' own turf, would be inappropriate. The refusal to comment on the export ban of chip-producing machines to China, combined with the EU's countermeasures against the IRA, is in my view the real news for those responsible for strategic planning.

The author, a foreign exchange scholar at Tsinghua University from 2012 to 2015, is a civil law notary at The Hague. The views don't necessarily reflect those of China Daily.

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