China ‘most challenging trade partner’, says EU’s next trade chief
The European Union‘s trade chief-in-waiting has described China as the bloc’s “most challenging trade partner” at a parliamentary confirmation hearing in which he vowed to crack down on mainland-exported overcapacity “with all our force”.
Maros Sefcovic, regarded as a close ally of European Commission President Ursula von der Leyen, stuck closely to the tone established by his hawkish boss over the last three years during a three-hour grilling by members of the European Parliament on Monday.
The Slovak said the “pendulum is swinging” towards matters of economic security amid tensions between free trade and protectionism, articulating a more muscular vision of the EU than that outlined by his predecessor, Valdis Dombrovskis.
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“We will tackle with all our force overcapacities being created by China and threatening our industry in Europe,” said Sefcovic, who would also be the commissioner for economic security should he clear a vote of MEPs later this month.
By his account, he said he had told his counterparts from Beijing that the EU “cannot tolerate where subsidies are aimed to preserve Chinese jobs at the expense of jobs for Europeans”.
Describing China as “our third biggest and most challenging” trading partner, Sefcovic vowed to “rebalance” ties and be “more assertive in challenging structural imbalances and unfair practices” including “non-market policies driving overcapacity”.
The overcapacity issue has become a major bone of contention between Brussels and Beijing in recent months.
During a heated debate at the World Trade Organization last week, the EU and other Group of 7-aligned members blasted China for decades of “large-scale state interventions”, claiming that the body’s rules were not fit to handle Beijing’s policies.
The Chinese delegation, in response, accused the group of propagating a “false narrative to excuse lack of competitiveness”, according to sources present at the debate.
Pointing to sluggish consumption in the mainland’s economy, the EU believes that subsidised exports of manufactured goods – mostly hi-tech or cleantech – are being shipped to Europe and undercutting local companies.
Von der Leyen has made the matter a cornerstone of her China strategy, along with a drive to cut dependencies on the country’s critical minerals. She has pledged to “de-risk” ties with China, and Sefcovic vowed on Monday to pursue her agenda to the full.
In many cases, Europe, like many other parts of the West, relies on China for supplies of the raw and processed minerals used to manufacture goods that will power its green transition.
Sefcovic attends his confirmation hearing before the European Parliament in Brussels on Monday. Photo: EPA-EFE alt=Sefcovic attends his confirmation hearing before the European Parliament in Brussels on Monday. Photo: EPA-EFE>
While he demurred when asked by French MEPs whether he would designate a new trade instrument specifically for dealing with Chinese industrial overcapacity, Sefcovic threw his support behind traditional anti-subsidy and anti-dumping tools, which the commission has been using with greater frequency in recent years.
Pointing to anti-dumping measures taken against some Chinese steel products, Sefcovic said the EU had reduced their import by “80 or 90 per cent”.
“This is the approach I would go to if it’s not fair, if the level playing field is not respected,” he added.
He also defended the EU’s anti-subsidy tariffs on Chinese-made electric vehicles, which took effect late last month following a long investigation that has spiralled into a bitter political spat.
Earlier on Monday, Beijing launched a WTO case against the definitive measures.
“Currently a team from [the EU’s department of trade] is in China,” Sefcovic said. “We understand China is interested in this negotiation but what is very important to us … is that [a deal would] have to be equally effective and enforceable (as tariffs).”
Brussels had “already reacted forcefully to the flawed attempts by China” to target diary, brandy and pork, he added, in response to the EV duties.
Sefcovic has criticised the soaring shipments of Chinese e-commerce platforms in Europe like Temu. Photo: Reuters alt=Sefcovic has criticised the soaring shipments of Chinese e-commerce platforms in Europe like Temu. Photo: Reuters>
He said the Commission hoped to avoid any further Chinese retaliation through dialogue, but if talks were to fail, “we have contingency plans in place”.
Alluding to strategic dependencies, Sefcovic raged against the “weaponisation of our economic ties” with China.
Much as the bloc cut out Russian gas supplies following the Kremlin’s invasion of Ukraine in February 2022, the Slovak said he was confident of doing the same on critical minerals, citing Japan‘s quest to unwind dependencies on China as a model.
At various points, Sefcovic hit out at the soaring shipments of Chinese e-commerce platforms in Europe, name-checking Temu, and said Europe must step up to compete with Beijing in the developing world.
“We will not bring a ship full of workers, concrete, cement,” he said, when asked how the EU could challenge China in building projects in third markets.
Yet despite the tough rhetoric, Sefcovic claimed not to be interested in further confrontation with China.
“The EU is not interested in trade wars. We are looking for a rebalancing of our relations with China,” he said.
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