Brussels prepares to trade dialogue for tariffs

Brussels has reached a familiar and rather inconvenient conclusion: polite conversation does not stop a flood of cheap goods. Denis Redonnet, the European Commission’s Deputy Director-General for Trade, told MEPs that the EU will step up measures against Chinese imports before the October deadline it has set for progress with Beijing. The message was plain enough. The industrial base, once hollowed out, is not something the Commission can preserve with good intentions and a few roundtables.

The timing is awkward, which in Brussels usually means it is perfectly normal. Negotiations with China began only last month, with the stated aim of reducing the EU’s record trade deficit, now running at around €1 billion a day. Yet tensions have hardly softened. Beijing has repeatedly threatened retaliation if the EU closes its market further to Chinese exports, and the Commission is now preparing for exactly that possibility. Redonnet told lawmakers that dialogue alone would not suffice and that the Union must decide how to protect and preserve European industry.

The sectors under pressure are not obscure. Steel, chemicals, machine tools and electronics are all in the firing line as low-cost Chinese imports continue to pour into the European market. The Commission says it wants to rebalance trade and rein in export levels, which is bureaucratic language for saying that the present arrangement is not working for European producers. On 1 July, the EU already doubled tariffs on certain steel imports and cut quotas. Similar safeguards may follow in other industries in the coming weeks.

There is, however, a catch that Brussels knows all too well. Trade defence measures need backing from a majority of member states, and not every capital sees the world through the same lens. Some countries have factories directly exposed to Chinese competition; others depend on cheap Chinese products to keep their own industries competitive. If the Commission wants to defend manufacturing in only a handful of member states, it still needs a majority of all member states behind it. That is the sort of collective logic the EU likes to present as solidarity, even when it mostly resembles managed disagreement.

To soften the blow, the Commission is also working on a solidarity mechanism to compensate countries hit hardest by a surge in Chinese imports. At the same time, it plans to continue defending the market product by product, using anti-dumping and anti-subsidy duties where Chinese state support distorts competition. Last Thursday, it even opened an anti-dumping probe into Chinese Peking duck producers, a reminder that no item is too niche once Brussels has decided to regulate its way out of a trade problem.

The broader mandate came from EU leaders in mid-June, who asked the Commission to engage with China while keeping all options open. That sounds balanced, if one ignores the usual Brussels habit of calling centralisation prudence. In practice, the Commission is moving toward a more openly protectionist posture, because the alternative would be to admit that the Union’s trade policy has left it exposed, divided and late to its own crisis.

Written by Thorben Thiede thorben.thiede@alpineweekly.com