Deputy Director-General for Trade at the European Commission Denis Redonnet told MEPs on Tuesday that the EU will step up measures against Chinese imports before the October deadline it set to protect the bloc's market from Chinese overcapacity.
The warning comes as Brussels started negotiations with Beijing last month to reduce its record-high €1 billion-a-day trade deficit with China, setting an October deadline for the two sides to make significant progress.
However, tensions remain high between the two trading partners, as Beijing has repeatedly threatened retaliation if the EU adopts measures closing its market to Chinese exports.
“Dialogue alone will not suffice,” Redonnet told EU lawmakers, adding that the EU needs to decide how “to protect and preserve the European industrial base.”
“We need to look at what the Chinese do. It is more than likely that we'll have unilateral protection measures adopted atthe European Union level. So we'll be taking various measures in parallel.”
The EU is fighting low-cost Chinese imports flooding its market and threatening its manufacturing industry in key sectors such as steel, chemicals, machine tools and electronics.
“What can we do ahead of that October deadline? We'll look at a number of sectors, we'll try to start rebalancing and rein in the export levels,” Redonnet said.
Quotas and tariffs to protect EU industries
To defend its steel industry, the EU doubled tariffs on certain steel imports on 1 July and reduced quotas for the sector. Similar safeguard measures could be used in other industries in the coming weeks, the senior EU official said.
He added, however, that safeguards require the backing of a majority of member states and that not all EU countries share the same interests. Some have factories directly threatened by Chinese competition, while others have industries that rely on cheap Chinese products.
“If we had to defend European manufacturing in two to three member states, we would need the backing of a majority of all member states. And those other member states may be focused on users' interests rather than producers' interests,” he said.
In parallel, to rebalance the situation among EU member states, the Commission is working on a solidarity mechanism to compensate those most affected by a surge in Chinese imports.
The EU executive also plans to defend the EU market product by product as China heavily subsidises its exports to the EU prompting the Commission to resort to anti-dumping and anti-subsidy duties.
Last Thursday, it launched an anti-dumping probe into Chinese Peking duck producers.
Reviewing and adjusting trade defence tools is part of the mandate EU leaders gave the Commission in mid-June, asking the EU executive to engage with China while keeping all options on the table to defend the EU market.
