belgian capital — The European Commission is exploring ways to carry Beijing to rein in its exports to the bloc as Brussels seeks to reduce an eye-popping trade deficit with China, its trade chief said Monday.
“Mechanically, if you look at our deficit issue, what’s needed is the increase of European products to China … We also need to look at how to manage better the Chinese exports to the European Union,” Maroš Šefčovič said in an interview.
“It’s very clear that the most efficient and the best way for the future relationship would be if this problem is being tackled from both sides,” he added.
The Commission is under pressure from national leaders to show concrete results from its engagement with Beijing by mid-October. Two months ago, member countries urged Brussels to come up with new tools to reduce the EU’s €1 billion-a-day trade deficit with China. The matter is only growing more urgent, with EU chemical and car manufacturers closing plants and cutting jobs as they struggle to compete with cheaper Chinese imports.
The trade commissioner said he will speak with his Chinese counterpart, Wang Wentao, by videoconference “in the middle of September” before visiting Beijing “at the beginning of October.” A team of EU negotiators is also in China this week, Šefčovič said, where talks are “very open, very tough,” with “all topics … on the table.”
“We need to have tangible results by October,” he said, adding that EU leaders are looking for “clear deliverables,” including “some pilot schemes” to address China’s supply glut.
More broadly, the comments reflect a sea change in the EU’s approach to trade policy with China. Additionally, take a page from Washington’s own playbook with Beijing.
Rather than relying primarily on traditional trade defenses after Chinese goods reach Europe, the approach increasingly focuses on managing trade with the Asian behemoth — combining efforts to sell more European goods with measures to control the flow of Chinese shipments into Europe. The strategy evokes policies from the 1980s, when Japan and South Korea agreed to cap shipments of cars, steel and electronics to Europe and the United States.
In particular, the EU would be eager to sell non-sensitive products to Beijing, such as agricultural goods, medical devices and cars.
This shift in strategy is “a reaction to the reality, because we know that many of these export surges are not generated on the pure economic performance or pure market logic,” the commissioner acknowledged, as state subsidies from Beijing continue to distort competition.
But limiting Chinese imports, and indirectly raising prices for domestic producers, could have unintended consequences.
Inflation in the eurozone reached 2.9 percent in July, well above the European Central Bank’s 2 percent target, due to the Iran war. Measures that make Chinese imports more expensive could fuel further price increases, creating more headaches for European governments.
Tradeoffs
Should its engagement with Beijing fail to bear fruit, the EU would look to make full use of its trade defenses and shut off its markets, Šefčovič said.
“We are working with very concrete proposals. Let’s see how our Chinese counterparts would react to them … But if simply there will be no action, then of course it will be much more difficult for us just to talk about these issues,” he added.
The Commission wants to fine-tune the way it uses safeguards — trade measures that can temporarily restrict imports when a sudden surge threatens European producers. The EU used an updated version of such measures when it imposed tariffs on foreign steel in early July, irritating many of its trading partners, chiefly Brazil and China.
“From one side I have to say that it’s a very efficient tool. From the other side, it’s very heavy-handed,” Šefčovič said, stressing that his department is still drawing lessons from the steel case to make those investigations faster and more calibrated.
The trade commissioner added that Brussels is still developing a “diversification instrument” to encourage businesses to source goods from different suppliers when alternatives are available; the aim is to reduce Europe’s dependence on Chinese products in strategic industries.
“Of course, diversification brings costs,” Šefčovič said, pointing to increased prices for sensitive goods such as critical minerals or green tech.
But some companies, he said, are realizing that “the cost of diversification is smaller than the cost of disruption.”
Carlo Martuscelli contributed reporting.