In a speech at the Carnegie Endowment on 8 November, EU Commissioner of Trade Peter Mandelson advocated further interdependence between the European Union and the United States, especially as the world’s economy adjusts to the rise of new economic powers – namely China, as the rising power overtook Germany this week to become the biggest national exporter in the global economy. The increasing need for relationship building between the EU and China has been noted by Friends of Europe, as we prepare for the Beijing-Brussels dialogue on November 27th.

In defending and preserving this openness to the world and this growth of the global economy and its integration, the EU and the U.S. are faced with some simple realities. The first is that we now live in a world that is increasingly economically multi-polar. One billion new workers have entered the global labor force in the space of just two decades in the world. In those 20-odd years, China has risen from a country with which the EU traded almost literally nothing to becoming our biggest trading partner for manufacturers. In some ways, an older balance of economic power is reasserting itself in the world.

In 1830, India and China were the two biggest economies in the world – in 1830. By 2050, they will again be amongst the very largest economies in the world. Of course, this is not the only way of weighing power in the modern world, far from it. But it is fundamental. And that’s in the nature of the fundamental revolution in economic terms, and also political terms, therefore, that the world is undergoing.

Now, the machinery of what you might call the Atlantic consensus – the World Bank, the IMF, GATT, G7 or G8 – was conceived and rooted in the assumption that the global economic and political order could and would indeed be governed largely by the Atlantic world. That assumption now no longer holds. There has been a reorientation from the Atlantic to the Pacific and beyond. Now, the multilateral institutions that survive, therefore, will be those ones that are able to adapt to this new 21st century landscape.

The second simple reality that I would identify for you is that economic globalization means interdependence. This is not simply a question of global supply chains and production lines. Our open markets are a ladder out of poverty for the developing world. Their growing markets are a source of growth for us. That is the fundamental interdependence that links and joins us and our interests together in the global economy. A world of growing prosperity and economic integration is a more stable world, even if it doesn’t always feel that way

Now, for that reason, multilateral institutions in the multilateral trading system will matter more than ever in the new global age of the 21st century. There is no going it alone in this century, in this global age. Interdependence doesn’t allow going it alone in the way that we have tried to practice or imagine it was possible in the past. Our ability to get things done multilaterally will define the extent to which we can shape globalization in a way that makes it equitable and sustainable and binds in the big new players who are emerging in that global economy. It will certainly define the extent to which we can confront huge pressing problems such as global warming, migration, nuclear proliferation, and energy security.

You look at any of those issues, issues and challenges, which touch us personally and intimately in our societies and our communities where we live, they all have their roots and their origins in global challenges and global issues. Never was it less the case that politics is local. Politics is global and we have to recognize that and understand that the only way in which we’re going to come to terms with and allow our politics to gestate in a more hopeful and positive direction is by using more and better multilateral processes and institutions, in order to use our collective weight and influence and strength in order to bring about the changes, the improvements and changes that we want to see in the world that will benefit all.

So an Atlantic economic charter, today, I think would read like this. Promote open global markets as a source of development and opportunity for our businesses and our jobs and everyone else’s. Resist protectionism at home. Work for a positive reciprocity that creates openness in all markets abroad. Welcome the big, new players. Welcome, embrace the big, new players, and ensure that they have a stake in a rules-based, multilateral trading system. Defend the rules of that system and use effective trade defense measures when people break those rules.

Which brings me to China – I think that the most significant, symbolic, emblematic test of such an approach as I’ve described in a putative Atlantic economic charter, the test for Europe and the United States, more than any other, will be China – which we will be discussing, incidentally, during the Transatlantic Economic Council tomorrow. The number that preoccupies me these days is $20 million, $20 million, because that is how fast the EU-China trade deficit is growing every single hour; not week, not day, hour. $20 million is what sort of preoccupies my little trade commissioner’s would be computer-like brain.

Now, that is fast enough to catch up with the U.S.-China trade deficit in the next year or so. I mean, you may think that you’re winning this race – (laughter) – but we’re right up there behind you. Two weeks ago, China overtook Germany to become the biggest national exporter in the global economy; China, which not so long ago, barely featured on our radars and was a subject we hardly addressed. It’s now a bigger exporter than Germany, which hitherto has been the biggest in the world.

China has become such a difficult issue in our politics that it is important, though, and I want to stress this to you at the outset, it’s important to stop and recall the basic fact that openness to China’s growing economy is, in general, a good thing for us, both in the U.S. and the EU, to break on inflation, a competitive check, and a huge market for our goods and services. That’s why I say unequivocally, China’s growth is, in principle, a good thing for us.

A change on the scale of China’s impact on the world economy, obviously though, can never be easy to accommodate. But it is in our interest, as much as China’s, to have China at the table in the WTO system, playing by the rules as a major global economic power. We have a joint interest in a China policy that recognizes the long-term economic and systemic interests that we jointly share. So our first message to China must, in my view, be one of recognition and acceptance. Even some of the main points of contention with China are actually rooted in shared interests.

We want an end to a managed currency in China that’s hurting us. But a stronger yuan would also stabilize the Chinese economy by boosting domestic demand and removing some of their massive dependence on export-led growth. Even if revaluation would not, in itself, solve our trade deficits – and by the way, it wouldn’t – it would help cool an overheating, heavy industry sector, which is swollen with overcapacity in China and artificially cheap capital, boost domestic demand, and create a better social safety net in China. And you reduce the huge levels of precautionary saving that are padding the Chinese banking sector and removing the need for change and reform within the Chinese economic system.

But the corollary of the acceptance of China’s new global status – and I stress this with equal force and emphasis – must be acceptance by China that we are going to deal with her as we would any other major trading power. We will deal with China as we would with each other. We have our legitimate complaints about Chinese practices and we should press them. We want China to fulfill its remaining WTO obligations and to trade fairly with the rest of the world. We need China to reciprocate the market access on which its own growth is built. We have a joint interest in seeing the protection of intellectual property rights dramatically improved in China.

Now, China has been perhaps the single greatest beneficiary of a rules-based open trade system in the last decade. Now, China must live by those same rules. She cannot expect special considerations and special allowances. I think this is the only way that we will be able to sustain the political support at home that we need in our own societies to meet the challenges and changes that an open economic relationship with China imposes on us. If we don’t get that reciprocity from China, I don’t believe it will be possible, certainly not in the way that we have to date. And my word, it’s been hard to sustain public support for our openness to China.

And that’s why I say it’s in China’s own interests, if it doesn’t want to provoke a backlash here or in Europe against its exports, its mighty export-led growth, China has got to play fair with the rest of the world. Everyone has got to understand that these rules are not being operated simply in China’s interests, but they are being operated fairly, on an even playing field in all of our interests in the global economy.