Five EU countries urge Brussels to use more tariffs against China

PARIS — A France-led group of five EU countries is calling on Brussels to make a broader use of tariffs and other defensive measures to take on China and other countries' abusive trade practices.

In a joint non-paper seen by POLITCO, France, Italy, Spain, the Netherlands and Lithuania urged the EU to launch probes into unfair trade practices more frequently. The document, which was shared with the European Commission and other member countries on Friday, also proposed the creation of new, more defensive trade tools.

The non-paper was issued at a moment when the European Commission is working on a “more assertive and effective trade defense policy” to deal with Beijing. Brussels is due to hold an internal strategy debate on the competitive threat posed by China next Friday.

While the document didn't explicitly name China, it implicitly refered to Beijing by stressing that "some of the European Union's (EU) main trading partners are breaking with this multilateral framework by imposing new trade barriers or contributing to systemic and structural industrial overcapacity."

The non-paper's signatories, which include all of the EU's biggest economies except Germany, urged the Commission to "contemplate more frequently the opportunity to open safeguard investigations in case of sector-wide trade disruptions." The countries also called for the bloc to "be more proactive" in bringing breaches of trade rules before the World Trade Organization, and to allocate more human resources to its investigative units.

In what appears to be a push to make trade enforcement more geopolitical, the five countries also called for adding "economic security" among the criteria that are assessed when deciding whether to open trade defense probes which can result in tariffs and other trade sanctions.

"This approach would help preserve the Union’s remaining production capacities in strategic sectors and value chains, thereby protecting the Community’s industrial base," they wrote in the document, first reported by the Financial Times.

Other proposals include technical tweaks to existing legislation to make sure that foreign companies can't circumvent EU trade probes, and a move to allow the Commission to apply anti-subsidy duties directly on companies. At present, those duties can only be applied to countries and products.

The group also pitched the idea of a so-called "resilience tool" — a "cross-sector trade defence tool" which could be activated when no other trade defense tool is applicable — and the idea of additional duties or tariff rate quotas "in order to protect European producers."

On Friday, French President Emmanuel Macron called on the EU to take inspiration from the U.S. on trade measures aimed at protecting strategic industries. Tackling "global imbalances" — including China flooding the rest of the world with its exports — is also the top identified by the France for the summit of G7 leaders which it will host in Evian-les-Bains on June 15.