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German MEP Bernd Lange (S&D), chair of the European Parliament’s trade committee, said on Friday that the October deadline set by the European Commission to secure a binding trade agreement with China is “not realistic at all”.
The European Union, which is under pressure from a €1 billion-a-day trade deficit with China that threatens hundreds of thousands of jobs across the bloc, is seeking a negotiated solution to rebalance the two sides’ trade relationship.
However, tensions are running high. In recent weeks, China has repeatedly threatened to retaliate against Brussels if it adopts protectionist measures to shut its market to Chinese products.
Negotiations between the European Commission and China began last Monday in an effort to ease tensions, with EU Trade Commissioner Maroš Šefčovič setting October as a deadline to achieve “tangible” results.
Lange met that announcement with pessimism.
“Discussions are good, agreements are better,” he told Euronews. “The deadline should be met with some kind of framework where we agree on the main points. Then a dedicated agreement has to be negotiated with a legal text, which is not realistic at all by October.”
Unfair subsidies as top priority
With the EU market being flooded by cheap Chinese imports, the bloc’s leaders have given a mandate to Commission President Ursula von der Leyen to address the issue through dialogue with Beijing while reviewing the EU’s trade defence tools.
The goal is to put pressure on China by putting all available instruments on the table. According to Lange, priority should be given to restoring a level playing field with Beijing, as it heavily subsidises products exported to Europe.
“About 4.5 percent of China’s GDP which is used mostly in illegal subsidies. This gives an unfair competition advantage,” Lange said.
“Investigations are on their way, but we have to find a broader solution on that.”
More and more cases of dumping or unfair subsidies, prohibited under EU rules, are being brought to the Commission’s attention by European industries. For the steel sector alone, 80 measures have been adopted so far by the EU executive against low-cost Chinese imports.
However, the EU has little leverage in the discussions, constrained as it is by its dependence on rare earths, which are essential for green technology, automotive manufacturing and defence. Last year, Europe experienced shortages that put its economy at risk after China, which holds a monopoly over the strategic metals, restricted their exports during its trade war with the United States.
Lange downplayed the threat.
“The blockade was a reaction to the US. Now the licencing system for European companies is not optimal, but much better than some months ago.”
He added that the EU’s dependence on China for rare earths was the result of European companies shutting down processing operations in Europe to benefit from lower costs in China.
“You can find a lot of these materials all over the world. But the real issue is in their processing and refining. That’s where we need to find at least a second supplier quite quickly.”
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