EU seeks to develop new tools to tackle China export flood

EU seeks to develop new tools to tackle China export flood

BRUSSELS

EU leaders have agreed during talks that the bloc must develop beefed-up trade defenses to curb a surge of Chinese exports deemed an existential threat to European industry by Brussels, while simultaneously seeking "constructive dialogue" with Beijing.

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 27-nation bloc's trade deficit in goods hit around 360 billion euros ($413 billion) last year, meaning Chinese exports sharply exceeded the EU's.

During a two-hour summit dinner in Brussels on June 18, leaders chewed over how the EU could address the imbalance, and whether the bloc needed to boost its arsenal.

After talks ended early on June 19, an EU official said the leaders tasked the commission with continuing to engage "in a constructive dialogue with our main economic partners" but did not directly say China.

They also asked the executive "to develop and eventually complement the toolbox in the area of trade defense" and to make sure the EU has "all the instruments it needs to defend its interests and derisk," the official said.

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.