Key facts
- The EU and China have initiated a formal trade consultation mechanism to address a €360bn annual trade imbalance.
- Both sides have agreed to a three-month period of talks, with tangible results expected by October.
- The dialogue aims to stabilize and balance the bilateral trade relationship.
- Key areas for consultation include trade and investment rebalancing, export controls, intellectual property rights, and WTO reforms.
- A joint monitoring mechanism will track export/import surges.
The European Union and China have agreed to enter a three-month period of formal trade talks to address the significant imbalance in their bilateral trade relationship, which currently stands at €360bn annually in favor of China. This initiative aims to avert a potential trade war and stabilize commercial tensions that have been escalating.
The agreement follows weeks of heightened rhetoric and recriminations, with the EU expressing concerns about the "unsustainable growth" of the trade deficit and its impact on European industries and jobs. EU trade commissioner Maroš Šefčovič stated that tangible results are expected by the next meeting in Beijing in October.
Discussions will cover several key areas, including the rebalancing of trade and investment, export controls on sensitive items like rare earths, intellectual property rights, and World Trade Organization reforms. A joint monitoring mechanism will also be established to track sudden surges in exports or imports, with "political" discussions triggered if danger zones are breached.
Industry groups have warned that the high volume of Chinese exports threatens to "cannibalize" European factories. The EU has indicated a cautious approach, following previous measures such as tariffs on electric vehicles, with potential quotas on hybrids and chemicals being considered for the autumn.