Europe First Trade Rift Tops EU Agenda Before Leaders’ SummitBy and
EU leaders to discuss trade defense, investment screening
Draft summit conclusions show differences between countries
The European Union is struggling to agree on how to protect the bloc’s industries and citizens from unfair trade practices, including foreign direct investment, threatening a split as leaders meet in Brussels.
Hours before the summit began on Thursday, the EU’s 28 governments were still tweaking language on screening investments from third countries in strategic sectors, according to draft summit conclusions obtained by Bloomberg.
The differences illustrate the divisions between EU countries as they combat nationalist parties backed by voters who feel left behind by globalization. While some governments want to bolster the bloc’s defenses to protect industries from foreign takeovers, others are concerned that would be a step back from open-market commitments, especially at a time when the EU wants to lead on free trade.
“Despite gloomy predictions, it’s Europe that again is becoming a stable and positive point of reference for the whole world," European Union President Donald Tusk said on Thursday. “However, we can’t be complacent or naive. We have to prove to the people that we are capable of restoring control over events which overwhelm and sometimes even terrify us.”
Spain is seeking a more protectionist approach that would “explore how member states could better control and screen investments from third countries in strategic sectors,” according to the draft. Ireland, in contrast, only wants the European Commission to “develop guidance to support” nations, which would appraise foreign investments on their own.
A revised draft was expected to be circulated to member states on Thursday.
China amassed a record $248 billion of overseas deals in 2016, raising concern in countries such as Germany, Europe’s biggest economy. Chancellor Angela Merkel’s government called for greater scrutiny of Chinese purchases after a series of approaches, including for semiconductor supplier Aixtron SE. In the U.S., the Trump administration moved to prevent Chinese investors from purchasing Westinghouse Electric Co.’s nuclear business.
French President Emmanuel Macron is pushing for the EU to be able to react more quickly when foreign companies threaten jobs by dumping goods such as steel in Europe. He said the draft covers France’s demands.
“I am absolutely not in favor of any form of protectionism,” Macron told reporters in Brussels. “But I am in favor of a fair protection.”
EU policy makers “want Europe to be opened to free trade,” Macron said, “but a Europe that protects, because some are not respecting the rules.” He said “there will be a mention of controls over foreign direct investment in some specific fields.”
The EU is already discussing ways to strengthen its anti-dumping procedures, something that is also expected to feature in the leaders’ final statement, with a call to "swiftly agree on modern, World Trade Organization-compatible trade defense instruments."
On market access for the EU and its trading partners, the draft calls for “fair reciprocity,” Macron said. “All of this goes in the right direction: openness, but a reasonable openness."
— With assistance by Ian Wishart, Jonathan Stearns, Esteban Duarte, Marine Strauss, Arne Delfs, Helene Fouquet, Robert Hutton, and John Martens