cross-posted from: https://scribe.disroot.org/post/10309834
The EU needs to use more “clout” against Beijing to rebalance its trade relationship, according to the former official who tried a decade ago to stop cheap Chinese exports flooding the bloc.
Ex-European trade commissioner Karel De Gucht said the EU should increasingly shut Chinese goods out of its market to convince Beijing to rein in its manufacturing boom.
De Gucht was nicknamed “the hammer” for his blunt style during his time in office between 2010 and 2014, when he vociferously attacked Chinese government subsidies that gave companies in certain sectors, including solar and telecoms, what he saw as an unfair advantage in global markets.
His tough stance was at the time seen by some as bordering on a crusade against China. But the EU’s trade deficit in goods with China has grown from €104bn in 2013 to almost €360bn last year.
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Individual member states should stop trying to deal with China on their own, he argued, as this exposes them to pressure from the world’s second-biggest economy.
Spanish premier Pedro Sánchez visited Beijing for the fourth time in as many years in April as he courted investment, with the two countries setting up a strategic dialogue.
China is “a big country . . . but they cannot live without exports”, De Gucht said, adding that the EU was the biggest market for Chinese goods. Reducing access to EU markets would pressure Beijing, added De Gucht, who now works as a trade defence lawyer.
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“If you say there should be European content of at least 70 per cent [in electric car imports], it would change,” he added.
De Gucht advocated for the EU to form an alliance of open trading nations as an alternative to the World Trade Organization, which he claimed was “dead”. The WTO dispute settlement mechanism that De Gucht used several times successfully against China during his tenure has been paralysed by a US boycott.
“I think, in the hands of the EU, there’s this string of pearls, to use a Chinese expression, and those pearls are the free trade agreements,” he said.
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The EU has clinched five new trade deals in two years and now has 45 agreements with 80 partners worldwide — more than any other trading bloc in the world.
De Gucht’s efforts to stop China from dominating key industries were often thwarted by divisions between EU member states.
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He said EU telecoms companies that feared being locked out of the Chinese market lobbied their national governments. Those companies are now largely excluded from the Chinese market anyway due to Beijing’s “buy China” policy, De Gucht argued. The European Commission needs a weighted majority of member states to vote for measures, usually at least 20 of the 27 depending on their size.
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Since his time in office, the EU has sharpened its trade instruments. But a powerful anti-coercion tool that would allow it to ditch some WTO commitments and put restrictions on services has never been used.
The Commission is now working on a new law to oblige companies to diversify their supply chains away from China, plus a “solidarity” tool that would support members suffering retaliation. It is unclear if there will be any extra money to help them.
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However, De Gucht said it would be “a mistake” to pause trade defence actions while Brussels was waiting for the new tools.
Despite his criticisms, the former top EU trade official did not believe it was too late to save European industry.
The Commission must, though, find a way to speed up trade investigations, which take at least a year. “These procedures are [still] far too long,” he said.
Most of all, De Gucht argued, Brussels needed to rediscover the kind of skill and resolve demonstrated by previous European politicians such as Jacques Delors who, as Commission president from 1985 to 1995, drove the creation of the single market.
“It is about political will. You need a guy of the stature of Jacques Delors,” he added.
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