EU leaders debated on Thursday whether the bloc needs new beefed-up trade defences to curb a surge of Chinese exports deemed an existential threat to European industry and jobs by Brussels.
There is a growing consensus in the European Union that it is too dependent on China, and Brussels fears this makes it vulnerable to potential coercion and supply shocks.
The bloc’s trade deficit in goods hit around $413 billion last year, meaning Chinese exports sharply exceeded the EU’s.
“Our trading relationship with China has reached a point that requires a reset. Not confrontation, but rebalancing,” EU trade chief Maros Sefcovic said.
On the menu of a summit dinner in Brussels: chewing over what current tools the EU can use to address the imbalance and whether there should be new instruments and actions, which the European Commission has pushed for.
The talks were set to test just how far the EU will go to protect its industries, before leaders guide the commission on its next steps.
While EU capitals agree on a common diagnosis, the positions differ on the cure and several leaders on Thursday said Brussels should seek to tackle the issue by talking to China first.
Irish Prime Minister Micheal Martin urged “substantive dialogue” with China, especially over “excess manufacturing, and the sense that a lot of products have been dumped onto the European Union market with consequences for European industry.”
His Spanish counterpart Pedro Sanchez struck a more conciliatory tone.
“We need friends, we need balanced relationships, we need to be pragmatic, and we need to build bridges both with major economies and potential allies, such as China,” Sanchez told reporters.
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Following Trump’s playbook?
One way to beef up the EU’s arsenal could be creating a new tool to impose sector-specific tariffs such as chemicals or green tech — taking a page out of President Donald Trump’s playbook.
French President Emmanuel Macron last month called for a “European equivalent of Section 301” — the trade tool Trump has employed to set sweeping tariffs — arguing Europe’s “sovereignty is at stake”.
Germany has until now adopted a cautious posture because its economy is more exposed to potential retaliation, while Spain has sought to avoid tensions as it chases Chinese investment.
But Berlin appeared to be coming around to France’s way of thinking.
A German official said Berlin was “open” to new tools if they are necessary so long as they were “not targeted at specific recipients”.
