France, Germany proposal wins unanimous backing

Bloc also pursues collective defense-style solidarity mechanism; China pushes back

European Commission President Ursula von der Leyen speaks at a press conference following an EU summit in Brussels, Belgium, on Friday. [AFP]
European Commission President Ursula von der Leyen speaks at a press conference following an EU summit in Brussels, Belgium, on Friday. [AFP]

The EU is developing tools to swiftly restrict access to its single market in the event of a trade war, AFP reported.

European Commission President Ursula von der Leyen said Friday, after an EU summit in Brussels, Belgium, that the bloc would develop "new instruments to act quickly and immediately in a decisive manner by restricting access to the single market when it is in the EU's interest to do so."

However, she was careful to draw a distinction. "Let me be clear: the new instrument does not replace the full use of existing instruments," she said, adding that existing tools "must be used to the fullest extent necessary, case by case."

France and Germany had sent von der Leyen a joint letter last week proposing that the EU establish legal tools to respond rapidly to potential trade conflicts — such as a cutoff of critical raw materials supplies by a specific country.

China is widely seen as the likely target of the measures under consideration. The EU recorded a trade deficit of 360 billion euros ($404 billion) with China last year.

Von der Leyen also warned that the EU's trade deficit with China would "worsen further" this year. EU leaders have expressed concern that the trade imbalance will deal additional blows to the bloc.

Fears of a trade war had eased last week after the EU and China agreed to cap imports of Chinese hybrid vehicles, but China remained a dominant topic at the summit.

German Chancellor Friedrich Merz said EU leaders had backed the Franco-German proposal at Thursday's meeting.

French President Emmanuel Macron said the EU was moving toward "a much more pragmatic trade policy — one that is willing to protect these industrial sectors and economic actors from unfair competition."

Von der Leyen said the bloc would also establish a "solidarity mechanism" to support member states that come under coercion or retaliation, along with tools to diversify supply sources.

Chinese authorities pushed back against the EU's moves on Friday while urging dialogue to resolve differences. A Commerce Ministry spokesperson warned against what observers have described as a "dual-track" EU strategy of combining negotiations with pressure on China, saying the EU "should not harbor the illusion that it can gain benefits through pressure."

The spokesperson added that the EU "should even less underestimate China's resolve and ability to defend its own interests," and urged the EU "to develop bilateral economic and trade relations in a healthy and stable manner."

Chinese Finance Minister Lan Fo'an met with European Central Bank President Christine Lagarde and other EU officials on the sidelines of the International Monetary Fund and World Bank annual meetings in Thailand, where he emphasized the importance of dialogue.

Wang Yi, China's foreign minister and director of the Office of the Central Foreign Affairs Commission, met with the president of Croatia, an EU member state, and said there was "no fundamental conflict of interest between China and the EU" and that the two sides "can achieve complete mutual prosperity," calling for solutions through dialogue and negotiations.


spa@heraldcorp.com