BRUSSELS: The European Union (EU) is developing a \u201csolidarity instrument\u201d to support companies that diversify critical supplies away from China and cushion the impact of any retaliation by Beijing in the event of a trade conflict.\u00a0<\/p>\n
The tool will come at a price, though, and would require funding, just as member states haggle over the bloc\u2019s next multiyear budget, according to people familiar with the matter.\u00a0<\/p>\n
It\u2019s unclear how much money would need to be committed as it would depend, among other things, on the scale of any Chinese response \u2013 but it could be significant, given the size of the industries and trade involved.<\/p>\n
The EU\u2019s deliberations come as several member states push to cut spending.\u00a0<\/p>\n
The tool, which is being developed by the bloc\u2019s executive arm, would be part of the EU\u2019s efforts to address a massive trade deficit with China that now exceeds \u20ac360bil (US$411bil) and affects every member state.<\/p>\n
Envoys were briefed on the efforts this week, said the people, who spoke on condition of anonymity to discuss private talks.<\/p>\n
Spokespeople for the European Commission, which handles trade matters for the bloc, declined to comment.<\/p>\n
The EU\u2019s strategy to re-balance trade relations with Beijing includes parallel tracks: a dialogue, developing new instruments to diversify supplies, and making better use of existing tools such as anti-subsidy probes, safeguard measures and possible deployment of the so-called anti-coercion instrument.<\/p>\n
That step would allow the bloc to adopt numerous tariff and non-tariff responses to alleged coercive practices. \u00a0<\/p>\n
The bloc\u2019s executive arm has been at pains to note that none of its tools are uniquely aimed at China, the people said.<\/p>\n
In talks so far, Beijing has been open to exploring how to increase imports from the EU, but less keen to find ways to tame its own exports, said the people.<\/p>\n
Both are key to the EU given the vast trade gap as well as China\u2019s market barriers and moderate consumption levels, the people added.<\/p>\n
The EU is also pushing for longer permits and simpler procedures to import critical supplies, as well as asking Beijing to reduce market access constraints and abate its exports.<\/p>\n
China wants the EU to reciprocate any changes Beijing agrees to by loosening the bloc\u2019s own controls, said the people.<\/p>\n
The two sides have set an October deadline to make progress.<\/p>\n
Ursula von der Leyen, president of the European Commission, said in June that the bloc will act decisively if the dialogue doesn\u2019t deliver.<\/p>\n
EU trade chief Maros Sefcovic is due to travel to China in October to take stock of the talks, ahead of an EU leaders summit in Brussels where the issue will be on the agenda. \u00a0<\/p>\n
Several officials in Brussels and a number of capitals are sceptical that EU leaders have the political will to take on Beijing if diplomacy fails.<\/p>\n
China will inevitably retaliate aggressively if the EU acts, the people said.<\/p>\n
Beijing has a stranglehold on minerals and chips critical to key European industries such as defence and autos.<\/p>\n
This complicates efforts to get tough on Beijing as China can potentially use export controls to bring European companies to their knees.<\/p>\n
Meanwhile, China has already cautioned that it\u2019ll fight any EU moves to protect its industries and expand its policy toolkit.\u00a0\u2014 Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"BRUSSELS: The European Union (EU) is developing a \u201csolidarity instrument\u201d to support companies that diversify critical supplies away…\n","protected":false},"author":2,"featured_media":546951,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,114,231836,113,2244,61,60,1628],"class_list":["post-546950","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-china","tag-diversify","tag-economy","tag-eu","tag-ie","tag-ireland","tag-trade"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/546950","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=546950"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/546950\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/546951"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=546950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=546950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=546950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}