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3 weeks ago
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The EU has spent the last several years vowing to protect domestic manufacturers from China.
(Bloomberg) -- The European Union is considering forcing Chinese firms to hand over technology to European companies if they want to operate locally, in an aggressive new push to make the bloc’s industry more competitive.
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The measures would apply to companies seeking access to key digital and manufacturing markets like cars and batteries, according to people familiar with the plans. The rules would also require the firms to use a set amount of EU goods or labor, and to add value to the products on EU soil.
Enforcing joint ventures is another option on the table.
While the rules — expected in November — would technically apply to all non-EU firms, the goal is to keep China’s manufacturing might from overwhelming European industry, said the people, who spoke on the condition of anonymity.
“We are welcoming foreign direct investment under the conditions that they are real investment,” EU Trade Commissioner Maros Sefcovic told reporters Tuesday following an EU trade ministers’ meeting in Horsens, Denmark. That means jobs created in Europe, value added in Europe and technology transfers to Europe, he said, “as European companies have been doing when they’ve been investing in China.”
The high-stakes maneuver comes at a pivotal moment for Europe. Subsidized Chinese products have overrun EU industries and Beijing’s looming restrictions on rare earth minerals are threatening to squeeze the continent’s manufacturers. But targeting China – with a page from Beijing’s protectionist playbook – is likely to provoke a backlash, potentially damaging what remains a critical trading relationship.
“Several measures are being considered to foster a strong, competitive, and decarbonised European industry,” said Thomas Regnier, a spokesperson for the European Commission, the EU’s executive arm preparing the regulations. He added that “no final decision has been made regarding the exact scope and nature of these measures.”
Tensions are already high between the two powers. The EU recently moved to double tariffs on steel imports, which would hit cheap Chinese imports. Days later, Beijing said it would adopt new export controls on vital rare earth minerals, prompting EU calls to further limit the bloc’s economic dependency on China.
