EU Commission to Develop Diversification Tool, von der Leyen Announces
Poinews.com – European Commission President Ursula von der Leyen outlined plans for new measures to address macroeconomic challenges, particularly the rising and “unsustainable” trade deficit with China. These initiatives include a diversification mechanism aimed at reducing Europe’s reliance on single-country supply chains, she revealed during a press conference closing this week’s European Council summit.
“Europe has amassed a comprehensive set of tools in recent years. Now we must use them more aggressively and strategically to defend our interests,” von der Leyen said.
European Council President António Costa added that the current situation demands decisive action, stressing, “Our strategy is de-risking, not decoupling, while we engage in dialogue. But we need to address the challenges we are facing. A daily trade deficit of €1 billion is simply unsustainable. We cannot continue to raise these issues without any concrete results.”
Diversification Instrument and Member State Divergences
The proposed diversification tool will be country-agnostic, focusing on assisting European companies in specific sectors to accelerate risk mitigation. This approach seeks to counter the slow progress in supply chain diversification, which has left critical chokepoints vulnerable to exploitation.
While the timing of the new trade defense instruments remains unspecified, several EU officials suggest the State of the Union address in September is the likely platform for their unveiling. However, the unity among member states may be tested as some prioritize maintaining stable commercial ties with China.
Germany, which depends heavily on exports to China, and Spain, acting as a gateway for Chinese investments, generally favor a measured approach to avoid provoking Beijing. In contrast, France has led calls for stronger tools to tackle China’s overcapacity and market-distorting subsidies, reflecting a shift toward a more assertive stance from Brussels.
“We want to modernize these [trade] tools, and the Commission now has the mandate to respond more quickly—saying that as soon as there is a suspicion of unfair competition, or when we see positions that pose problems, we must be able to react and protect,” French President Emmanuel Macron stated.
Other EU leaders emphasized the need to enhance economic competitiveness through internal market reforms, acknowledging that retaliatory actions from China are expected if Brussels takes firm measures. Von der Leyen reiterated, “The pressure is high. And if the pressure is high, the instrument will be used, because there is a need for it. The figures speak for themselves, and we have to rebalance them.”
