Germany and France are calling for tougher EU trade instruments against unfair practices

Germany and France want to enable the EU to react more harshly to unfair trading partners within a few days if necessary. Systematic market-distorting practices endanger competition for European companies and lead to increasing dependency, according to a letter from the two heads of government Friedrich Merz and Emmanuel Macron to Commission President Ursula von der Leyen. The previous instruments were no longer sufficient.

The heads of government are therefore proposing two instruments: One for diversification, which is intended to ensure that companies do not become too tied to suppliers from individual countries. And a procedure that could be used to quickly exclude another country from the European internal market.

The latter concerns cases "when third countries deliberately attempt to undermine the restoration of a level playing field and fair market conditions through political or economic means, which leads to serious and systematic distortions of our internal market," says the letter.

Protection from Chinese competition

Both governments do not name specific countries to which the new trading instrument will be applied. The main reason for this is likely to be Chinese trade policy. The EU has an enormous trade deficit with China and wants to protect its industry from competition. China is accused of distorting the market through state subsidies, creating excess capacity and thus enabling dumping prices that European companies cannot compete with.

The EU has been discussing a new trade policy toolbox for months that can be used to ward off unfair competition. This is considered crucial to ensuring that other states do not even come up with the idea of ​​discriminating against EU companies or banning the export of certain raw materials. Countries like the USA and China have long had a sanctions system in place.

To ensure that the instrument proposed by Merz and Macron can be used in the short term, the EU Commission should be given a lot of room for maneuver. It could be activated as long as member states do not actively vote against it with a qualified majority. Merz and Macron want to present their proposals at the summit of European heads of state and government next week.