EU trade Chief seeks to rebalance EU-China trade as Brussels weighs tougher measures

EU Trade Commissioner Maroš Šefčovič said on Friday that the EU was walking a tightrope in negotiations with Beijing, weighing conventional trade measures against broader political considerations.

After several months of negotiations, Brussels and Beijing reached a deal on 9 October to curb imports of hybrid cars from China. However, the agreement is unlikely to significantly narrow the EU’s record trade deficit with China, which has reached €1 billion a day, a gap the European Commission is seeking to reduce.

“There are whole sectors under threat; each head of states and government is concerned that there might be potential heavy losses of the jobs,” Šefčovič said on Friday, after a meeting of the 27 trade ministers in Ireland.

He added: “We have to proceed not only with the traditional trade techniques, but also with a very political approach, how to balance the trade between between China and the European Union.”

A new round of discussions is taking place at a technical level with Beijing until the end of the year, with political negotiation scheduled for January and March 2027.

But given the urgency, EU leaders gave the European Commission a political mandate last week to work on a “kill switch” tool that would allow Europeans to cut off China's access to their market to counter economic distortions.

Under the October deal, the EU will introduce country-specific quotas allowing 350,000 Chinese hybrid cars onto the European market annually over four years, with a fixed annual adjustment rate of 6%.

Striking a deal on new sectors

The Commission aims to extend the agreement to other sectors, but EU officials warn that progress will also depend on Beijing’s response to the EU executive’s efforts to strengthen its trade defence tools.

The Commission is set to present a new instrument on 9 October aimed at encouraging EU companies to diversify their suppliers of strategic products to reduce their dependence on China.

It also hopes to present a proposal for the so-called “kill switch” that same week and ahead of the December summit of EU leaders. Pushed by France and Germany earlier this month, it would allow the Commission to adopt radical measures against Beijing in the event of economic pressure on the EU market.

Another unilateral EU trade defence measure targeting Chinese chemicals and industrial machinery could also come in December, with the risk of prompting Chinese countermeasures.

According to the latest Chinese customs data, China's exports to the EU have continued to surge, rising by 25% over the past year.