The EU is preparing to curb Chinese imports of chemicals and industrial machinery, following a successful deal with Beijing that capped hybrid car exports to the bloc.
The European Commission “showed openness” to proposing safeguards, referring to an emergency brake on imports that can cover entire sectors, an EU diplomat told EUobserver on Thursday (15 October).
And there was “broad support” for the idea among member states for the commission to proceed, the diplomat said.
Last week, trade commissioner Maroš Šefčovič agreed with Beijing to cap imports of Chinese hybrid cars at 350,000 next year, which was less than half the amount expected this year.
He called the deal a “blueprint” for other sectors, a view which was publicly echoed by EU Commission president Ursula von der Leyen, also on Thursday.
Under World Trade Organization (WTO) and EU rules, anti-dumping and anti-subsidy cases require Brussels to prove that Chinese firms sell at unfairly low prices or receive subsidies.
Safeguards do not need evidence under WTO rules, which allows them to be used as an emergency measure.
And the commission only has to show that a surge in imports is seriously harming European producers.
“We like the idea, chemicals, machinery where there’s still a lot of Chinese overproduction needs to be managed,” said another EU diplomat.
The instrument had its limits: Safeguards have to apply to all countries, not just China, and can last no more than eight years.
The EU rarely uses WTO safeguards, but did so on steel, also aimed at China, which expired in June, after reaching the eight-year limit, and which have since been replaced by a separate EU steel regime.
And the Centre for European Reform, a prominent think-tank in Brussels, previously suggested exempting the EU’s 76 free-trade partners from safeguards so that the measures fell mainly on China.
It was a legal moot point in the WTO if that was OK, but the EU has done something similar before.
Norway, Iceland, Liechtenstein, and 10 other countries were left out of the steel safeguard, but using this tool to address Chinese imports was still seen as a temporary solution.
Before the end of the year, the EU commission aims to present diversification tools to reduce reliance on Chinese goods, as well as a mechanism to compensate companies hit by Chinese countermeasures.
And the package would include an instrument to shut Chinese companies out of the EU market if need be, in a measure first proposed in a Franco-German paper last week.