Five EU Countries Call for Stronger Trade Defense Policies, Apparently to Rein in Chinese Imports

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[The Financial News] Five European Union (EU) member states have strongly urged the European Commission to impose higher tariffs and introduce defensive trade measures to counter unfair trade practices by China and other major trading partners.
Politico reported on the 25th that France, Italy, Spain, the Netherlands and the Republic of Lithuania jointly drafted an informal position paper calling on the European Commission to sharply increase the frequency of investigations into unfair trade practices.
The document, delivered to the European Commission and member states on the 22nd, said new "aggressive defensive tools" should be created beyond existing trade defense instruments.
The proposal is drawing attention because it comes as the European Commission is preparing a "more resolute and effective trade defense policy" aimed at countering China. The Commission is scheduled to hold an internal strategy meeting on the 29th to discuss how to respond to competitive threats posed by China.
Politico said the paper does not specifically mention China, but the document as a whole suggests it is intended to target China by warning that "some of the EU's major trading partners are erecting new trade barriers and undermining the multilateral trading system by driving systemic and structural industrial overcapacity."
In the statement, which included many of the EU's major economies except Germany, the five countries argued that "when trade disruptions occur across a particular industry, the Commission should more often consider launching safeguard measure investigations on its own initiative." They also said the EU should bring cases against violations of World Trade Organization (WTO) rules more proactively and significantly expand its investigative staff to do so.
In particular, these countries are proposing that "economic security" be added as a new criterion when deciding whether to impose trade sanctions.
The move appears to reflect an intention to use tariffs and trade sanctions not merely to protect markets, but as geopolitical tools.
The document also states that "this approach will help preserve the production capacity that remains in the EU in strategic sectors and value chains, and ultimately contribute to protecting the bloc's industrial base."
In addition, the five EU countries called for technical loopholes in existing laws to be fixed so that foreign companies cannot evade EU trade investigations. They stressed that the system should be improved so that countervailing duties, which can currently be imposed only on countries or products, can also be levied directly on overseas companies.
They also proposed creating a cross-sector trade defense instrument known as a "resilience tool" to fill gaps that existing measures cannot address, and introducing additional tariffs or tariff-rate quotas to protect European manufacturers.
In this regard, French President Emmanuel Macron said on the 22nd that "the EU should also take inspiration from U.S. trade measures to protect strategic industries," calling for a more aggressive turn toward protectionism.
France is also expected to make global trade imbalances, including China's export surge, a top agenda item at the Group of Seven (G7) Leaders' Summit to be held in Evian-les-Bains on June 15.
jjyoon@fnnews.com Yoon Jae-jun Reporter