The EU is having a radical rethink of how to cope with the trade threat from Beijing — and its response has a very Chinese flavor to it.
Over the past years, EU trade policy has traditionally focused on building protective fortress walls, and last week’s decision to impose punitive tariffs on Chinese electric cars initially looked like another example of the classic defensive playbook in Brussels.
In a remarkable turn of events, however, the EU is now considering a next step that invites China’s electric vehicle (EV) makers inside the walls.
The big idea is to use the tariff threat to force Chinese carmakers to come to Europe to form joint ventures and share technology with their EU counterparts, according to conversations with four diplomats and two senior officials.
There are signs the formula is already attractive with EU carmakers. Franco-American-Italian carmaker Stellantis has formed a joint venture with China’s Leapmotor to start Europe operations in September. Spain’s EBRO-EV has teamed up with Chery — China’s fifth-largest automotive company — to develop EVs in Barcelona.
This is the best summary I could come up with:
Over the past years, EU trade policy has traditionally focused on building protective fortress walls, and last week’s decision to impose punitive tariffs on Chinese electric cars initially looked like another example of the classic defensive playbook in Brussels.
The big idea is to use the tariff threat to force Chinese carmakers to come to Europe to form joint ventures and share technology with their EU counterparts, according to conversations with four diplomats and two senior officials.
So, faced with the need to catch up, Europe’s tariff and joint venture plan is “an attempt to give China a taste of its own medicine,” said Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE), a think tank.
In Germany, some of whose companies still make good profits in China and have the ear of the country’s politicians, the fear of a trade war prompted Chancellor Olaf Scholz to break ranks and openly question the EU’s electric vehicle subsidy probe.
And the mood among the EU diplomats and officials that POLITICO spoke to was not one of Trumpian protectionist gloating about the decision to impose tariffs, but rather one of regret and alarm that this may well be a last resort — with European governments’ balance sheets so stretched they simply can’t match China’s subsidies.
Faced with massive pressure from Berlin to avoid a trade war, the joint venture plan to de-escalate the fight while securing some wins for Europe is quickly gaining traction in Brussels.
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