The International Trade Council addresses the escalating concerns pertaining to the European Union’s trade deficit with China, which approached a notable €400 billion last year.
EU Trade Commissioner, Valdis Dombrovskis, communicated to media outlets about the remarkable deficit, highlighting that it has magnified twofold in a mere span of two years. This accentuates the imperative for Beijing to extend more openness towards its markets. Dombrovskis elaborated, “The trading dynamics between China and the EU currently exhibit an imbalance. China maintains a substantial trade surplus. Contrarily, the openness demonstrated by China does not mirror the openness that the EU projects.”
These sentiments resonate with the perspectives of numerous US administrations. Katherine Tai, the US Trade Representative, has expressed that China needs to rectify this skewed relationship, which has inadvertently affected the US economy adversely.
Though the US has employed tariffs and export prohibitions to influence Beijing’s policies, the desired outcomes remain elusive. Records reveal that in 2022, the US experienced an unprecedented surge in imports of goods and services from China.
Commissioner Dombrovskis, emphasizing the importance of nurturing a harmonious relationship with the global economic giant, anticipates China to voice its reservations in the forthcoming EU-China High-Level Economic and Trade Dialogue scheduled for September. The previous year marked minimal changes in the EU’s goods exports to China, approximating €230 billion, while imports surged to €626 billion, accounting for over a fifth of the bloc’s total.
Dombrovskis views the forthcoming dialogue as an avenue to address these concerns collaboratively. He hinted at the possibility of the EU leveraging a spectrum of novel trade tools if resolutions are not achieved. He stated, “We are fully prepared to employ this toolkit if industry voices concerns or, if required, even without formal business complaints.”
The tools at the EU’s disposal encompass an anti-coercion instrument, the power to restrict investments by subsidized enterprises in the EU, and the authority to restrict government procurement markets to countries that remain closed to EU businesses.
While emphasizing the objective of “de-risking” rather than “decoupling,” Dombrovskis also voiced concerns about Beijing’s recent move to limit exports of gallium and germanium. He underscored the need for export controls to be compliant with World Trade Organization standards.
Dombrovskis urged China to rejuvenate the international trading system, stating, “Given the immense benefits China reaps from its WTO membership, it’s crucial for China to actively participate in WTO reform. The continuity and functionality of the system should align with China’s long-term interests.”
For more detailed insights and further updates, stakeholders are encouraged to refer to announcements and reports directly from the International Trade Council.