Franco-German trade initiative towards China: proposal for new EU instruments

The Franco-German initiative was presented before the visit of the European Commissioner for Trade, Marosz Shefczowicz, to Beijing. The talks are expected to be the culmination of the EU's dialogue with China, launched by the European Commission in March, on Europe's growing trade deficit.

The effects of the negotiations are to be discussed by EU leaders during the summit in Brussels on October 15 and 16.

In a letter addressed to Ursula von der Leyen, Merz and Macron emphasized that the EU already has a wide range of trade instruments at its disposal - from dialogue with partners to the use of trade defense measures. However, in their opinion, the current solutions are not sufficient.

"However, this is no longer enough," the leaders said in a letter sent to journalists.

"New instruments without excessive bureaucracy"

The German Chancellor and the French President supported the creation of new legal tools that could be launched efficiently and without excessive administrative procedures.

As they stressed, the EU should be able to respond to the actions of third countries which, in their opinion, deliberately undermine equal conditions of competition and the principles of a fair market. These are political or economic measures leading to serious, systemic disturbances in the Union's internal market.

According to Merz and Macron, the European Commission should receive an instrument allowing for a "decisive and systemic response", including the possibility of using the so-called reverse qualified majority. In extreme cases, this tool would enable immediate restriction of access to the EU common market.

European Commission: This is a valuable voice in the debate

European Commission spokesman Olof Gill announced that the EC welcomes the joint initiative of France and Germany.

"It is a valuable contribution to the ongoing debate on how the EU can best respond to geoeconomic risks and global macroeconomic imbalances," he stressed.

According to Gill, the letter is in line with Ursula von der Leyen's approach towards trading partners, including China.

The initiative of Berlin and Paris is also perceived as a signal of a change in the German approach to Beijing. So far, Germany has been considered a country inhibiting the tightening of EU policy towards China, primarily due to the importance of the Chinese market for German exports.

What is reverse qualified majority?

Currently, the EU has an instrument for protection against economic extortion, known as the Anti-Coercion Instrument (ACI). The mechanism, sometimes referred to as the "trade bazooka", was created in response to US tariff threats during Donald Trump's first presidency.

In practice, ACI is considered a difficult tool to use. The procedure is multi-stage, and final decisions require the support of a qualified majority of member states - at least 15 capitals.