MERICS take: Responding to criticism of the Comprehensive Agreement on Investment with China, finalized at the end of 2020, the Commission replied that EU strategy on China should be assessed in the context of all its new tools. Indeed, these have the potential to rebalance its approach between cooperation and competition, especially as they fill a few empty spaces in the EU’s international competition toolbox. The foreign subsidy tool, for instance, would enable the EU to shield the Single Market from goods and services, produced by firms subsidized abroad or State sponsored acquisitions. They also reinforce the EU’s negotiation position ahead of discussions about international rules on trade and market access.
What to watch: These new tools are all still at the proposition stage and there is quite a way to go before they can be used. Even then, the EU would need to demonstrate its resoluteness and ability to use them to make the changes effective. Such efforts are likely to be part of international discussions, first and foremost with the United States and China. Macron and Merkel are reportedly planning joint trips to both countries, while Biden – whose administration has yet to clarify its positions regarding Chinese distortive economic practices – is expected in Europe in June.
You are reading an excerpt of our latest MERICS EU-China Briefing.
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