How the EU Shields Itself from China's Growing Trade Dominance in Key Sectors
By Philip Blenkinsop
EU Trade Measures and Strategies Against Chinese Economic Influence
BRUSSELS, June 18 (Reuters) - European Union leaders are debating on Thursday possible new and tougher measures to curb the bloc's growing trade deficit with China and its heavy reliance on the world's second-largest economy for rare earths and other critical supplies.
These are the current set of EU trade measures as well as possible future tools.
Anti-Dumping and Anti-Subsidy Duties
Mechanisms and Implementation
The European Commission can impose additional duties on companies operating in foreign countries if it determines they are selling into the EU at artificially low prices, such as below cost, or are benefiting from unfair subsidies. In exceptional cases, it can accept minimum price undertakings. The investigations typically last just over a year, but including preparatory work this means there is generally a two- to three-year gap between a problem being identified and a solution found. Critics say this is too long for struggling domestic EU industries.
Current Impact and Scope
At the end of 2025, the EU had 172 anti-dumping and anti-subsidy measures in place, just over three-quarters of them targeting Chinese companies. This includes additional duties of up to 35.3% on Chinese-built electric vehicles.
Safeguards
Sector-Wide Protections
The Commission can respond to surges of imports with safeguards for an entire sector, such as steel products at present. They typically take the form of duty-free quotas and tariffs on volumes beyond the quotas. Initial measures can be put in place in four to five months.
Duration and Limitations
However, they are designed to be temporary, lasting up to a maximum of eight years under global trade rules, with a steady increase in the quotas over time. The EU is set to extend beyond that eight-year limit for steel from July, but this has required difficult negotiations with steel-exporting nations.
Safeguards are a blunt instrument, targeting all importers, including those from countries with which the EU has free trade agreements. The EU has only used safeguards twice.
Anti-Coercion Instrument
The "Trade Bazooka" Explained
Dubbed the EU's "trade bazooka", the ACI was approved in 2023, has never been deployed and is meant as a deterrent. It allows the EU to retaliate against third countries that put economic pressure on EU members to force a policy shift and sets out 10 possible courses of action.
Potential Retaliatory Actions
These include curbs on imports or exports, restrictions to public tenders, measures to curb services trade and investment and restrictions on the protection of intellectual property rights.
International Procurement Instrument
Ensuring Reciprocal Market Access
Among new instruments, the IPI can exclude from EU public tenders bidders from other countries if those countries do not offer EU firms reciprocal access to their markets. Alternatively, the EU can attach a penalty score to their bids. The EU has only used this once so far, barring Chinese medical device suppliers from participating in EU public tenders after concluding that China clearly favoured Chinese devices for its hospitals.
Foreign Subsidies Regulation
Addressing Unfair Advantages in Acquisitions and Procurement
While not strictly a trade measure, the European Commission can intervene if it finds that a foreign company has unfairly benefited from subsidies from outside the EU in acquisitions or public procurement. The measure has been extensively used, most recently forcing a consortium building a new Lisbon subway line to choose a Polish company instead of a Chinese firm.
Possible New Measures
Calls for Speed and Flexibility
Many EU countries want the Commission to speed up its trade investigations and prioritise key cases.
Expanding Scope and Supply Chain Resilience
Some favour a wider product scope of such investigations and a more flexible approach to safeguards, taking into account close EU trading partners or deploying a safeguard while a longer anti-dumping or anti-subsidy investigation continues.
Proposals for Diversification and Additional Protections
The Commission itself has floated an idea to require EU companies in sensitive sectors to find three supply sources, rather than relying on one. A French-led paper last month suggested possible additional duties and quotas to guard against over-reliance on a single foreign country and to protect European producers.
(Reporting by Philip Blenkinsop; Editing by Nia Williams)
