France and Germany seek faster EU trade defences

In proposals reported on October 5, French President Emmanuel Macron and German Chancellor Friedrich Merz urged the European Union to create a fast trade-response mechanism and reinforce its economic-security capabilities in a submission to Commission President Ursula von der Leyen. China is seen as the likely focus, although the proposed measure would not name a particular country.¹

Proposed EU tools

The Franco-German document calls on the European Commission to put forward two instruments as soon as possible. One would reduce companies’ dependence on a sole supplier for certain critical goods. According to the proposal, the second tool could restrict entry into the bloc’s single market for countries found to be damaging fair market conditions through political or economic measures.¹

The proposal says EU countermeasures should take effect unless a qualified majority of member states blocks them. German officials said the measures could be activated in a matter of days, though any legislation creating a new tool would need backing from member-state governments and the European Parliament.¹

Trade concerns

Macron and Merz said that market-distorting practices threaten the EU economy and its industrial base, according to the French and German proposal. In a separate joint statement reported by the South China Morning Post, they said: "The open and rules-based trade system is massively affected by weaponisation of trade, systemic market-distorting practices, and global macroeconomic imbalances."¹²

According to the document, the EU should use its existing trade-defence instruments faster and more effectively, increase investigations and address entire sectors. It identifies imports of chemicals, PET and hybrid vehicles as areas where urgent action is needed. The measure itself would not be directed at one country, although China was identified as its most likely focus.¹

A French presidential adviser said trade imbalances with some partners had become unsustainable and said Paris and Berlin wanted existing EU anti-dumping measures deployed quickly. The adviser said: "France and Germany are very keen to put an end to the naivete on trade".¹

Commission and talks

The European Commission welcomed the letter and accompanying document as a contribution to its debate on geoeconomic risks and global imbalances, according to the report. France and Germany, the EU’s two largest economies, have jointly called for tougher trade defences.¹²

The initiative arrives as European and Chinese negotiators prepare for talks described as crunch discussions. The South China Morning Post reported that EU leaders will examine trade imbalances involving China at a Brussels summit, while the upcoming negotiations are being held against the threat of a trade war.¹²