French President Emmanuel Macron and German Chancellor Friedrich Merz have urged the European Union to develop a new legal arsenal to respond faster to any potential trade war with China, according to a letter seen by AFP on Monday.
While the letter stopped short of explicitly naming the Asian giant, it was addressed to European Commission President Ursula von der Leyen and was sent just days before the EU trade commissioner heads to Beijing to tackle trade frictions.
“We need a credible instrument in the hands of the Commission” for decisive action, including the ability to cut off access to the European single market “if needed”, Macron and Merz wrote.
The proposed mechanism could be deployed in a trade conflict, for example if a country were to cut off supplies of critical raw materials.
If that happened, “the EU must be able to inflict damage comparable to that being done to us”, a German government source said.
The United States and China could retaliate faster and more robustly in any trade war, the source added, warning that the EU’s current tools were not “as effective”.
Germany and France want to give the Commission the power to respond to a trade aggression within days. Under their proposal, such action would not need approval from the EU’s 27 member states, though a weighted majority of states could block it.
Merz and Macron are expected to present their ideas at an EU leaders’ summit next week in Brussels.
The new tool could be used against any country, but the EU’s biggest trade concern is its deficit with China, which Brussels says is harming key European sectors.
The Commission is already working on new tools to protect its industries, with one option a European equivalent of “Section 301” – the trade tool Washington has used to investigate foreign practices it deems discriminatory and to retaliate with tariffs.
The EU’s deficit in goods with China reached roughly €360 billion (around $400 billion) last year, meaning the bloc imported far more from the Asian nation than it exported there.
European companies report being undercut on prices by Chinese rivals across sectors ranging from steel for wind turbines to semiconductors and batteries.
Europe also relies heavily on Chinese supplies of critical raw materials.
Macron and Merz additionally want a new mechanism to reduce European dependencies.
(FRANCE 24 with AFP)
