On Oct. 5, France and Germany submitted an informal paper to the European Commission calling for stronger EU trade defense measures and additional protectionist tools.
The tools mainly target restricting goods and companies from other countries from entering the European market, reducing so-called supply chain dependencies and preparing in advance for possible retaliation.
Under the current proposal, the EU could investigate other countries' overall policies and take measures when it deems they undermine so-called fair market conditions in the EU.
China's position is clear: if the EU insists on discriminatory measures, China will respond resolutely to defend the legitimate rights and interests of Chinese industries.
In response to the French-German push, China can coordinate positions with potentially affected third parties within the WTO framework and jointly study countermeasures. Available tools include anti-discrimination investigations, industrial chain and supply chain security investigations, and investigations into the impact of foreign subsidies.
Zhou Mi of the Chinese Academy of International Trade and Economic Cooperation said such investigations can assess whether foreign policies affect Chinese companies or create unfair competition, thereby safeguarding their legitimate rights and limiting the spillover effects of unfair policies.
Reports suggest that EU Trade and Economic Security Commissioner Maros Sefcovic will soon visit Beijing. Attempting to launch new restrictive tools at this point weakens the atmosphere for consultations and, if pursued, would further narrow the space for resolving problems through dialogue and undermine the negotiating results already achieved.
In June this year, China and the EU established a trade and investment consultation mechanism with four working areas: trade and investment balance, export control, intellectual property, and WTO reform.
The EU side therefore needs to answer which ongoing issue the new tools would actually solve. Trade and investment balance is one: the EU wants China to open its market further and import more European goods and services, but it is hard to balance trade while trying to restrict China on many fronts.
Market access and business investment is another. China supports Chinese companies investing in Europe and welcomes greater European investment in China, yet the EU is investigating Chinese wind power and security screening equipment companies under the Foreign Subsidies Regulation, tightening investment screening, restricting Chinese companies from public procurement of medical devices and barring funding for projects using Chinese inverters.
Market access should be two-way: whether Chinese companies can obtain stable, transparent and non-discriminatory treatment in Europe requires a clear answer from the EU.
On critical items and intellectual property, China and the EU are discussing how to balance trade, open markets to each other and keep supply chains stable -- while the new tools proposed by France and Germany address how the EU can adopt restrictions faster and more easily. Such an approach does not help resolve the issues under negotiation.
