France, Germany call for new weapon allowing ‘immediate cut off’ of China from EU market
In the strongest sign yet of a shifting European Union policy on China, the leaders of France and Germany have demanded a new trade weapon that would cut off access to the EU market when third countries cause severe distortions. The tool would effectively act as a kill switch, allowing Brussels to respond rapidly to systemic distortions, potentially immediately. It would grant dramatic new powers…
French President Emmanuel Macron and German Chancellor Friedrich Merz have called for a groundbreaking new trade instrument that would enable the European Union to swiftly sever China's access to the EU market. This unprecedented move would empower Brussels to swiftly intervene and counteract systemic distortions, potentially triggering a rapid "immediate cut-off" from the internal market.
The proposal, outlined in a joint paper and a letter to European Commission President Ursula von der Leyen, aims to provide the European Commission with unprecedented powers to respond decisively to what the documents describe as "unsustainable trade deficits with key partners," "structural excess capacity," and "currency manipulation and undervaluation."
Unlike existing trade-defence tools that primarily focus on dumping or subsidies, this new instrument would be versatile enough to address a wide range of distortions, including political or economic pressure and currency manipulation. Crucially, the instrument would be deployed only if a qualified majority of EU members support it, preventing any single capital from blocking its use.
The French and German governments, which have previously had differing views on China policy, are now united in their push for this bold measure, driven by concerns over a significant influx of Chinese imports in key sectors, which they refer to as a "China Shock 2.0." The document also advocates for a new diversification instrument to reduce dependencies and force companies to spread their sourcing risks, as well as more frequent and rapid trade investigations.
The EU's trade chief and Chinese Commerce Minister are set to discuss these proposals during upcoming negotiations, with the stage set for a summit of EU leaders to address what is considered an existential threat to European industry.
Written by urgent.news from Reuters Business via SCMP's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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