BRUSSELS—The European Union has called for a joint approach with the United States to tackle China’s “unfair trading practices” as part of a plea to de-escalate commercial tensions with Washington.
In a new report, the European Commission said it is “becoming increasingly important” for the two major powers to work together to counter an aggressive strategy from Beijing, which is aiming to shape future global standards “to their advantage.” Officials suggested pursuing their “joint interest” in monitoring and curtailing China’s growing influence as a means to “lead the way toward a reduction of current trans-Atlantic trade tensions.”
Brussels issued the rallying cry in its first yearly progress update on a U.S.-EU deal that saw Europe agree to import more U.S. soybeans and liquified natural gas (LNG) in return for staving off import tariffs on its cars and auto parts.
“The EU and the U.S. are both concerned about the distortions caused by unfair trading practices, in particular by China. A strong EU-U.S. partnership is critical to effectively address such practices,” the document said.
It raised concerns over China’s actions on industrial subsidies and trade defense, including the state-financed “Made in China 2025” manufacturing program, as well as forced technology transfers and restrictive foreign investment laws.
On the issue, the report describes China as a “particular challenge as the problem is systematic and widespread” and said the “EU and U.S. share similar concerns regarding the situation and are both pursuing them actively.”
“This cooperation is particularly important, given the increasing frequency with which certain third countries, such as China, seek to impose technology transfers through policy guidance as well as through different legal instruments and practices, including joint venture requirements, authorization or licensing procedures, or insufficient protection or enforcement of intellectual property rights and trade secrets.”
The report highlights a number of areas where the EU and the United States are working together to push China to change its ways and areas in which they have had success, such as getting Beijing to own up to state involvement in its biggest semiconductor subsidy funds.
“The EU and the U.S. are pushing for regulatory changes in China in the context of the review of China’s Foreign Investment Law. It is also in their joint interest to monitor the implementation of the new law through the follow-up regulations and the actual practice.”
The report represents growing European wariness of China’s actions on the world stage, and also represents a change of approach in trying to persuade U.S. President Donald Trump to curb his attacks on the EU, amid fears the current trade deal won’t hold much longer.
The agreement was struck between Trump and Commission President Jean-Claude Juncker in Washington in 2018, following a period during which tensions had threatened to spill over into a full-blown trade war.
Trump, who had already used national security concerns to apply tariffs to European steel and aluminum imports in March 2018, was threatening to do the same to car and auto parts—a major EU export to the United States.
However, following frantic last-minute talks, Trump agreed to postpone a decision, in return for a package designed to alleviate his concerns that the EU had “treated us unfairly on trade for years.”
The pair agreed to explore a limited trade agreement abolishing tariffs and quotas on non-auto industrial goods, and reducing barriers to trade in services, chemicals, pharmaceuticals, medical products, and soybeans.
Under the agreement, European imports of LNG from the United States have increased by more than 367 percent in a year, while purchases of soybeans have gone up by almost 100 percent.
“The European Union is delivering on what President Trump and I agreed on this day last year. We want a win-win situation on trade, which is beneficial for both the European Union and the United States,” Juncker said.
“Having one of the most important economic relationships in the world, we want to continue strengthening trade between us based on the positive spirit of last July.”
However, EU officials and diplomats are still concerned that Washington may apply tariffs on European car exports in mid-November, when the current postponement ends, despite feeling that the deal has been a success.
EU Trade Commissioner Cecilia Malmstrom told the European Parliament that the bloc has drawn up a 35 billion euro ($39 billion) hit list of U.S. products that will be triggered in response to an application of tariffs on EU cars.