China must “adapt its behaviour” to solve an escalating tariff row with Europe, EU chief Charles Michel said Friday, warning of the dangers of the dispute escalating into a full-blown trade war.
The European Council president met Chinese Premier Li Qiang on the margins of a Southeast Asian summit in Laos as Beijing and the European Union impose tit-for-tat penalties on each other’s imports in a row about subsidies and protectionism.
Michel said in an interview with AFP that he hoped a deal could be struck in the coming days or weeks, but warned that getting there would be tough.
“I have the impression that the door is not closed, but it’s a very difficult situation, it’s very challenging,” he said.
“We count on China to adapt its behaviour and to understand that we have to rebalance the economic relationships for more fairness, for fair competition, for a more level playing field.”
China and the 27-member bloc are bitterly at odds over Beijing’s generous subsidies for its industries, which Brussels says unfairly undercut European competitors.
Brussels has decided to impose swingeing new tariffs of up to 35.3 percent on imports of Chinese-made electric cars.
A furious Beijing has responded with new tariffs on EU-made brandy, alarming French producers, while Brussels is also investigating Chinese subsidies for solar panels and wind turbines.
Michel said the EU would no longer be “naive” about massive government subsidies, but he hoped that ongoing dialogue between the two sides would find a way out of the row.
“I still hope that it will be possible in the days to come, in the weeks to come, to make an agreement to find some solutions,” he said.
“But we have very strong and legitimate interests and it is the responsibility of the European Union to defend our people, to defend our citizens.”
Beijing’s new brandy tariffs of up to 38.1 percent — officially an anti-dumping measure to protect domestic spirit producers — were due to take effect on Friday.
China imported more brandy than any other spirit in 2022, most of it from France, and French cognac makers earlier this week pleaded for an end to the spat.
The EU has said it will challenge the “unfounded” measures at the World Trade Organization.
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