WASHINGTON—France and Germany this week released an informal diplomatic document known as a non-paper that could redirect the continent’s approach to trade. Released just days before EU Trade Commissioner Maroš Sefčovič touched down in Beijing for talks with his Chinese counterpart today and a week before EU leaders are slated to debate potential new protective measures, the paper urges the EU to strengthen its trade-defense, economic security, and industrial-policy toolbox in response to global imbalances and market distortions.
Though unspecified, the context is clear. The EU’s trade deficit with China reached an estimated one billion euros per day in 2025, making Beijing the most obvious target. But the paper’s country-neutral language leaves open how broadly the tools could be used, and against which trading partners.
The fact that France and Germany are making the case together is itself significant. Just two years ago, the EU imposed anti-subsidy duties on Chinese electric vehicles (EVs) of up to 35 percent. These duties were the outcome of a long-established investigative process sanctioned by the World Trade Organization (WTO) aimed at countervailing WTO-inconsistent subsidies.
Even these modest tariffs, imposed a full thirteen months after the initiation of the investigation, proved limited in effect, as Chinese automakers absorbed the duties and shifted toward hybrid exports not covered by the EV duties. Yet Germany voted against even this modest, very ordinary imposition of WTO-sanctioned duties, citing fears of Chinese retaliation. France, by contrast, was a proponent of the duties.
It is therefore hard to overstate the significance of Germany and France now jointly urging strong, coordinated measures. Of course, what really matters is how the EU implements the recommendations, but the agreed paper itself is significant in several ways.
First is the strong acknowledgment of the serious problem of global trade imbalances and persistent trade deficits resulting from market-distorting practices, which must be addressed by new instruments. Not long ago, the EU dismissed US concerns about persistent trade deficits and imbalances as misguided; now it appears to embrace the concern, albeit in perhaps a fuller and more nuanced manner.
Second is that the paper calls for greater use of traditional trade-defense tools, including anti-dumping, anti-subsidy, and safeguard measures. It also urges the EU to use existing discretionary powers more aggressively: imposing duties below calculated dumping or subsidy margins, self-initiating investigations, protecting broader categories of goods, and allocating more resources to investigations. The self-initiation point is notable because it was considered the forward-leaning aspect of the Chinese EV subsidy investigation.
It is hard not to recall that the very inadequacies of the current WTO-endorsed investigation structure—its time frame, its high hurdles for proving injury, its lack of fitness for measuring subsidies and dumping in a non-market context—are what prompted the need for new instruments in the first place. Current tools, even used more aggressively and creatively, are likely not the answer. This is low-hanging fruit because it does not require regulatory amendments, but the effect would likely be marginal.
More significant for trade defense instruments will be the recommendation, if implemented, that time frames be shortened and that broader authority be granted, including to address circumvention.
Third, and most notably, is the agreement on a new tool to move quickly to impose a broad range of tailor-made trade and other remedies to respond to coercion or retaliation from trading partners (which they term “third countries”). The paper proposes that this tool could be activated by the European Commission unless a qualified majority of member states opposes the measure.
The European Commission currently has tools to do something similar, such as the anti-coercion instrument, but it requires member states to affirmatively support the measure, which is a big obstacle. Giving the Commission this significant additional power to act in the absence of majority opposition would be meaningful and would send a powerful signal to “third countries” that the Commission has the power to act.
Fourth, and speaking of “third countries,” China is not mentioned by name anywhere in the paper. Everything in the paper could therefore equally apply to other trading partners, notably the United States. In US-EU relations over the last decade, citing “China” by name has been somewhat of a litmus test of whether the EU is serious about confronting China in coordination with the United States, so this omission is significant.
On the one hand, the lack of reference to China reflects a European conviction, also referenced in the paper, that measures should be country-neutral—that is, not obviously discriminatory. On the other hand, there is a veiled—or maybe not so veiled—implication that these measures could be employed against the United States, which will undoubtedly raise eyebrows in the Trump administration.
On balance, a Europe that is stronger, more unified, and more agile in responding to economic threats is probably a better long-term partner for the US in responding to China. This is even the case, perhaps ironically, when the EU specifically declines to name China as the target and reserves its ability to act against any threat, including from the United States. This administration values strength and sovereignty and has been wary of an EU that seeks to be “paid” for helping with threats from China. An independent and agile Europe committed to confronting threats from market-distorting practices is a better partner for the US than one that is perceived to be doing so to curry favor.