France ‘certain’ united front with Germany pushed China into hybrid car deal

“I’m certain that it played a role, and it’s very important that the German and French engine, which is very essential to the future of Europe, starts again – and I think that’s going to be the case,” French Trade Minister Nicolas Forissier said as he arrived at a ministerial meeting in Dublin on Friday.

Earlier this month, Berlin made a dramatic U-turn on its China policy, joining Paris – which has for years backed a more protectionist policy to counter distortions caused by Beijing’s model – in calling for tariffs, quotas and muscular new trade weapons.

That same week, China agreed not to retaliate against a European Union move to cap the import of its hybrid cars at 350,000 per year from December 1. Across Europe, the shift was seen as a Rubicon moment for the bloc’s external policies.

Beijing, however, pushed back at that suggestion.

The EU should “harbour no illusions about extracting concessions through pressure, still less underestimate China’s determination and ability to defend its own interests”, the Ministry of Commerce said.

For years, Germany blocked Brussels’ efforts to steer trade strategy in a more hawkish direction. With the two biggest economies on board, however, things are likely to move more quickly.

The European Commission, which manages trade policy for the EU’s 27 members, is set to propose three new instruments by Christmas.

02:05

Emboldened EU readies China company ‘kill switch’ as Beijing warns Brussels not to ‘fantasise’

A “solidarity mechanism” will compensate companies hit by retaliation from trade rivals, which is seen as a way of ensuring that EU member states do not block trade actions against China. A “kill switch”, meanwhile, will give the bloc the power to kick Chinese companies out of the EU market with near-immediate effect.

Forissier urged the bloc to stay the course, despite China warning that it would retaliate.

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“Chinese authorities understand when you’re clear, when you speak frankly, when you’re firm on your positions, this is necessary. We have not done that for a long time, this has to be done not only country by country but also in an EU way,” he said, adding that Europe must “be able to say no” to China.

Arriving at the same meeting, Polish deputy economic development minister Michal Baranowski, said Warsaw supported the new approach and welcomed the deal on hybrid cars.

“It is a good beginning. But let’s acknowledge that this is just a beginning. It is a movement in the right direction because we have not seen changes on the Chinese understanding of the imbalances until now, and that’s a real movement,” Baranowski said.

01:52

European carmakers take on Chinese EVs at the Paris Auto Show

He said member states would use the meeting in Dublin to identify sectors where there was concern about the impact of China’s wave of exports.

The commission has said it will move quickly with more safeguards, which allow the quick imposition of import quotas – as with hybrid cars and before that steel – and sometimes tariffs.

“A number of countries will identify their sectors as well. I think the key here is where we go next. So that’s mostly for the negotiations,” Baranowski said.

“What I would emphasise is the need for us to keep building good, effective, and quick tools ... to make sure that we have a credible response if things get worse.”