the EU must defend itself without protectionism against China, says Mario Draghi

The European Union must defend itself against the aggressive trade practices of China and the United States, without falling into protectionism which would be harmful to it, said former Italian Prime Minister Mario Draghi on Monday. “We are different from the United States, we cannot erect a protectionist wall because we would harm ourselves”argued Marion Draghi, author of a report on European competitiveness, unveiled at the beginning of September, which should inspire EU policies.

“The European Union is a more open economy than any other”he underlined, recalling that trade represented 50% of the GDP of the Twenty-Seven, compared to 37% in China and 27% in the United States. He was speaking at a conference organized by the Bruegel think tank in Brussels. To face American and Chinese competition, the former president of the European Central Bank (ECB) defends the implementation of an industrial strategy at EU level, with measures “very cautious, sector by sector” which must be “focused solely on re-establishing a level playing field”.

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Call for a review of WTO rules

“Competition abroad is not only driven by innovation, but also by subsidies”he argued. “Our main priority must be to restore respect for the rules of the World Trade Organization (WTO), but we must also know that the rules of the WTO came from a world where there was geopolitical harmony (… ). Things have changed”he warned, believing that these rules should “be re-examined and adapted in a multilateral framework”.

The measures adopted by the European Commission against imports of electric cars manufactured in China are already part of this philosophy. They are intended to be prudent, based on facts and consistent with WTO rules, with the objective of restoring trade fairness. On August 20, Brussels announced surcharges of up to 36% for five years on these vehicles accused of being massively subsidized by the Chinese authorities, in addition to the 10% already applied. This is significantly less than in the United States, where President Joe Biden announced in May a 100% increase in customs duties on these same products.