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The EU will broaden the use of its trade defences to shield entire industrial sectors from what Brussels sees as an “existential” threat from Chinese imports, the bloc’s industry commissioner has said.
Stéphane Séjourné told the FT and other European outlets the EU would deploy import quotas and tariffs more systematically because European industries such as chemicals, metals and clean technology were at risk of being destroyed by unfair Chinese competition.
“We will use safeguard clauses in a more general manner on sectors and not just on businesses or particular raw materials,” he said. It will be “a less fragmented approach [that] allows us to get over difficulties for entire sectors because we’re in situations where, in reality, eight- or nine-month inquiries don’t allow us to save the sector.”
EU safeguard measures put quotas on imports and apply tariffs to any that exceed this quota. The move is part of a set of measures to protect the European market and its industries from cheap Chinese products and exports.
“Our objective is not to break with China but to have a real rebalancing and real measures that allow us to do it,” Séjourné said.
The EU’s daily trade deficit with China has reached €1bn and 29mn jobs are at risk from Chinese overproduction, he noted.
Séjourné said that while China was not similarly dependent on Europe in any sector, the EU could exploit the appeal of its single market. “That’s the angle through which there is probably a Chinese weakness,” he said.
Greater use of safeguards would be accompanied by proposals to “force companies to diversify” their supply chains, as reported by the FT last week, Séjourné said.
But safeguard procedures are a blunt tool as they hit all trading partners. They are activated by a sudden surge in imports and last five years to give industry relief to become more competitive. A steel safeguard halving quotas and levying 50 per cent duties has generated backlash from exporting countries.
The Commission is also weighing a proposal from five member states including France to develop a “resilience” tool that could impose quotas or additional duties on company suppliers when their imports are concentrated beyond a certain level.
It was part of a call for action on “the rise of unfair trade practices” this weekend. Member states become increasingly concerned about the levels of trade deficit.
The measures will be discussed by commissioners at a special meeting on China on Friday.
Séjourné said that if Brussels did not take a more “muscular” approach towards the impact of dumping and state-subsidised competition, it risked a backlash from member states, which could wrest back control of trade policy from the EU.
“In three or four years countries will say ‘you’ve not been able to protect us so we are going to retake control over trade and put in place safeguard, protection and border control measures ourselves,” he said. This would be “the best way to fragment the single market and weaken ourselves even more internationally”, he added.
But he said that while European countries shared the assessment that they were too dependent on China, “we are trying to find ways forward in the maze of discussions with member states, like Spain and Germany, who are rather reticent to give negative signals to China.”
As Chinese goods in the chemicals, automobile and machine tools industries overwhelm European competitors, Séjourné added that the World Trade Organization is no longer capable of defending its interests in the short term.
“The WTO is no longer seen as a short-term solution but a long-term project that we must build up bit by bit . . . we need a European response because the member states have understood the limit of bilateral discussions,” he said.
Additional reporting by Andy Bounds in Brussels
