France, Germany propose new rapid EU trade response tool

By Philip Blenkinsop and Andreas Rinke

BRUSSELS/BERLIN, Oct 5 (Reuters) - France and Germany have proposed the European Union toughen itself up with a new rapid-action measure to strike back against countries that harm the bloc economically in a new world where trade is increasingly used as a weapon.

German officials said the EU needed a tool as powerful as the Section 301 tariffs imposed by the United States or China's restrictions on exports of critical minerals.

The new measure would not target any specific country, but highlights dumping, widespread subsidies and restriction of currency convertibility — market distortions that many EU leaders say China is engaged in.

A French-German document published on Monday, 10 days before EU leaders discuss Chinese trade imbalances at a summit in Brussels, said "systemic and persistent market distortions" jeopardise the European economy and particularly its industrial base, with widespread job losses.

The bloc, said the document, needs to deploy its trade defence tools more swiftly and efficiently, with more investigations and a broader approach to cover whole sectors.

France and Germany also said the European Commission should propose two new instruments as soon as possible to focus EU efforts on diversification and securing economic security.

The first, which the Commission has already mentioned, would seek to limit companies' reliance on single sources for certain critical supplies.

The second would limit access to the EU single market for countries that undermine fair market conditions through political or economic means, without specifying what the trigger for EU reaction would be or what action the EU should take.

The paper said that any proposal by the Commission to activate counter-measures against another country should be adopted unless a qualified majority of EU members opposed — a lower hurdle than for some trade measures.

The paper also said the Commission should be able to activate such new measures swiftly, which German government officials said could mean a matter of days.

Legislation to enact a new instrument would still need approval by EU governments and the European Parliament.

A French presidential adviser said it was urgent for the EU to take action, that the imbalances with some trade partners had become unsustainable, and that France and Germany were keen for the bloc to deploy existing anti-dumping measures as soon as possible.

"France and Germany are very keen to put an end to the naivete on trade," the adviser told reporters.