France pushes EU for measures to re-balance trade with China

France will lobby the European Union for measures to re-balance trade with China based on environmental criteria as it sees an economic threat from a glut of Chinese products flooding the bloc’s market.

Finance Minister Bruno Le Maire will discuss options on Monday in Paris with German Economy Minister Robert Habeck and Italian Industry Minister Adolfo Urso. Later the same day, he will meet with China’s trade minister, Wang Wentao.

“We must show our teeth to economic rivals,” Le Maire told reporters on Thursday. “The era of happy globalization is over and everyone needs to wake up — the era of a globalization of rivalries has begun.”

According to the minister, Europe needs “re-balancing instruments” to better defend its economic interests and avoid being squeezed between US protectionism and Chinese interventionism. He said action is necessary as China has produced a mass of semi-conductors, electric vehicles, and solar and wind equipment that it’s looking to sell in the EU.

Paris is amping up its rhetoric on economic and trade policy as it aims to set the agenda for the EU after June parliamentary elections. While the call for a tougher stance has in the past run into German concerns about endangering commerce with the US and China, French officials see an opportunity for a shift as European economies struggle with prolonged stagnation.

“If we want to re-balance trade, it is necessary to have a re-balancing of environmental rules,” Le Maire said. “Everyone knows Germany is reluctant but it’s vital to work on this, otherwise we risk leaving wide open a path into the EU single market for goods that don’t respect environmental rules and don’t have the same cost of production.”

Possible measures are yet to be defined. One option, according to the French Finance Ministry, would be to have rules that reserve part of EU public tenders for European companies. Another would be to provide bonuses and grants only for products that meet strict green criteria, as France has done for electric vehicles.

Helping Business

At the meeting with German and Italian ministers, the French finance chief plans to push for an “omnibus directive” after the European Parliament elections that would simplify and strip back all norms weighing on business.

“It’s unthinkable that Europe should continue to have growth levels 1 or 1.5 percentage points below the US and it’s unthinkable that Europe should continue to advance divided,” Le Maire said.