The European Commission is set to introduce new trade defense instruments, including a diversification tool, to address the EU's escalating trade deficit with China, which currently stands at €1 billion per day. European Commission President Ursula von der Leyen announced this initiative during a press conference following the recent European Council summit, where leaders expressed unified support for a strategic response to the trade imbalance.
Von der Leyen emphasized the need for Europe to proactively defend its interests, stating that existing trade mechanisms must be utilized more effectively. The proposed diversification instrument aims to assist European companies in reducing reliance on a limited number of countries for critical components, thereby mitigating risks associated with supply chain vulnerabilities. European Council President António Costa reiterated the urgency of the situation, highlighting that the status quo is unsustainable and that dialogue with China remains essential.
The Commission has not yet specified the timeline for the introduction of these new tools, but several officials suggest that the announcement could coincide with von der Leyen's State of the Union address in September. The focus on 'de-risking' rather than 'decoupling' reflects a nuanced approach to EU-China relations, balancing economic security with continued engagement.
As the EU prepares to implement these measures, the emphasis on strategic diversification signals a significant shift in trade policy aimed at enhancing the resilience of European industries against external shocks and geopolitical tensions.