The EU faces flak from trade partners on its domestic manufacturing drive, as China threatens “countermeasures” over the ‘Made in Europe’ scheme and the UK’s business and trade secretary criticised the EU’s policy as ‘protectionist’.
Elsewhere, Brussels offers more support to industry in the form of subsidies amid supply chain struggles stemming from the Iran war, and the US has undertaken two very different interventions in the world of international shipping.
China pushes back against ‘Made in Europe’ plans
Chinese trade officials have warned that Beijing could retaliate against the EU’s domestic production push.
Brussels’ Industrial Accelerator Act, known informally as the ‘Made in Europe’ plan, could require EU governments to purchase goods from other members or “trusted partners” with which it already has a trade deal in place. Although the finer details of the policy are currently being discussed, the plan could exclude China from a number of supply chains.
Speaking at an event held at the Chinese Embassy in Brussels yesterday (29 April), Politico reports that minister for trade at the Chinese mission to the EU, Suo Peng, said:
“If the European side insists on adopting these proposals, and treats Chinese companies in a discriminatory manner, China will have to take countermeasures.
“We hope the EU side will not underestimate China’s firm resolve to safeguard our national interests.”
Earlier this week, China’s commerce ministry made a statement claiming that Chinese investors would “suffer discrimination” as a result of the act. This, it added, “runs counter to basic market economy principles such as commercial voluntariness and fair competition”.
The European Commission (EC) has defended the proposed policy as “carefully calibrated to achieve certain economic and wider goals for our citizens and businesses”.
Brussels hopes to revive domestic manufacturing through the policy, increasing its share of EU GDP from 14.3% last year to 20% in 2035.
This drive follows persistent concerns from within the bloc that China’s substantial trade surplus is undermining domestic industry. Prominent EU leaders have been vocal about the need to counter China’s export dominance – which is attributed to heavy subsidies and state planning – with more aggressive measures.
UK critique
It’s not only China raising concerns about Brussels’ domestic manufacturing drive. UK business and trade secretary Peter Kyle offered a strong rebuke this week (29 April) too.
Speaking to Politico in Berlin, Kyle labelled the policy “protectionism” and said it runs the risk of turning the continent into “a closed shop”.
“Protectionism doesn't lead to magnetism when you're looking outside in. It's the opposite.
“And what we don't want to be doing is sending off messages that we're a closed shop.”
Kyle also alleged that other officials he had spoken to across Europe had raised concerns that the policy wasn’t the right decision for Brussels to take.
His comments come amid ongoing negotiations for an EU-UK ‘reset’ agreement that should make economic cooperation between London and Brussels easier post-Brexit.
While the UK is set to be granted “trusted partner” status in the context of the Industrial Accelerator Act, its exit from the bloc has excluded it from other EU initiatives.
One example is the EU defence fund Safe. The EU proposed a joining fee for the UK to participate in the scheme, which was promptly rejected. However, other third parties, like Australia have secured access for their businesses.
EU subsidies for firms hit by Iran war
The EC has announced a package of support for sectors badly hit by the Iran war, with hauliers among the companies eligible to receive up to €50,000 to cover extra costs.
Those responsible for transporting goods across the bloc, including, rail, inland waterways and intra-EU short sea shipping are eligible for support. Despite concerns over dwindling supplies of jet fuel across the continent, support for airlines is not included, although this hasn't been ruled out.
Energy-intensive industries like chemical and steel manufacturing, as well as rail firms, will be able to claim up to 70% of extra electricity costs, as the price of oil climbs higher and higher as a result of the ongoing Middle East conflict.
The Guardian reports that Brussels will provide subsidies for extra fuel and fertiliser costs as part of a new emergency package to protect industry.
EC vice president Teresa Ribera said she wanted to “reassure European citizens, national governments and European institutions are monitoring and are ready to react in cases when it is needed”.
The intervention appears to be timely, as the Brent Crude oil benchmark surpassed the US$120 per barrel threshold, reaching US$126 yesterday (29 April) – its highest level since 2022.
This followed US President Donald Trump’s comments that the US blockade of Iranian ports could last months, amid an impasse in peace talks.
US shipping dilemmas
Following the surge in crude prices, the US is again pushing for greater international cooperation to open the Strait of Hormuz, according to Reuters.
A state department cable seen, by the publication, reportedly calls for countries to create a coalition to reopen the supply route, through which an estimated 20% of the world’s oil and gas is shipped.
International cooperation on the strait has so far centred on a coordinated release of strategic oil reserves by the 32 members of the International Energy Agency (IEA).
UK and French-led efforts to convene military planners from 30 nations to advance plans to reopen the strait have also been announced. No outcomes have yet been published and nations reliant on the thoroughfare have been reluctant to commit military resources to the region amid the conflict.
Elsewhere in shipping, the US is seeking to thwart international cooperation on lowering carbon emissions produced by the sector.
Politico reports that the US has been lobbying other nations to block a proposed carbon tax at the International Maritime Organization (IMO).
At an IMO gathering held this week to outline further details for the levy, US officials distributed materials alleging the costs of shipping for different countries if they were subject to a carbon tax on shipping emissions. Sources close to the subject matter anonymously told the publication that they believed the figures to be “skewed” and “not credible”.
In October, the Trump administration delayed an IMO vote on the matter for a year by threatening sanctions on countries that supported the measure.
Elsewhere in the headlines
- The US Trade Representative’s office is calling for US businesses to comment on the planned update to the African Growth and Opportunity Act, which grants African nations more favourable access to the US market. Concerns had been raised last year that the legislation would be scrapped, rather than renewed, amid the Trump administration’s tariff-heavy trade policy
- The International Air Transport Association (IATA) revealed that air cargo demand fell 4.8% in March amid the fallout from the Middle East conflict
Yesterday in Trade
- HM King Charles III’s speech to Congress helped smooth diplomatic relations with the US
- An OECD report found a fivefold increase in critical mineral export controls over the past 15 years
- The UAE announced it would be leaving the Organization of Petroleum Exporting Countries (Opec)
You can read those stories and more here.
