France and Germany released a joint document urging the European Union to act strongly to protect the European economy from damaging trade policies from abroad, in what has been considered a veiled reference to China.
The two European main economies sent their concerns and their call to action ten days before a summit in Brussels to discuss China’s trade imbalances with the bloc. The letter, signed by French President Emmanuel Macron and German Chancellor Friedrich Merz, calls for addressing “systemic” issues that threaten the EU industrial and commercial base.
Among the measures asked for, the letter outlines intervening against dumping, widespread subsidies and restrictions on currency convertibility, all practices that European officials have long suspected China of engaging in. It explicitly mentions hybrid vehicles, chemicals, and PET as sectors the EU should monitor closely for imports. The call to action urges the use of trade-defensive tools more swiftly and efficiently.
Two measures have also been proposed to secure EU diversification and economic stability. One seeks to limit reliance on a single supplier of critical materials. In contrast, the other seeks to limit access to the EU single market for countries that widely engage in anti-competitive practices. Those measures should require only a qualified majority, making them easier to pass than other trade-related measures.
Germany is pushing to have everything up and running as soon as possible. A French presidential official told Reuters that the EU needs to act urgently as trade imbalances are becoming unsustainable.
The Commission welcomed the letter and the proposals as a valuable contribution and in alignment with the Commission’s stance on competitiveness. For instance, the Commission is already developing an instrument to limit suppliers of critical materials.
