China and EU agree export controls ‘mechanism’ to ease trade tensions

China and the EU have agreed to set up a “mechanism” to discuss export controls, mirroring a similar effort between Beijing and Washington, as the two trading superpowers seek to ease growing trade tensions.

“European Union (EU) companies aim to be part of China’s success story, and that’s why it’s crucial to allocate time to discuss the business environment,” stated Valdis Dombrovskis, the EU’s Commissioner for Trade, during negotiations with China’s Vice Premier He Lifeng. The discussions covered topics such as market access, subsidies for electric vehicle production, and other trade-related matters.

Amid these discussions, Beijing agreed to increase its purchases of agricultural products from the EU and address issues like the backlog of licenses for European producers of infant foods.

These measures indicate reconciliation between the two parties after European officials warned of deteriorating trade relations. Earlier, Dombrovskis expressed concerns about European companies in China regarding their position in the face of China’s new stringent security laws. Concurrently, Beijing raised objections about the expected European investigation into subsidies for electric car manufacturers targeting the European market.

“Both sides will establish a dialogue mechanism on export controls,” said He, the leader of President Xi Jinping’s economic team, according to the Financial Times. While offering no further details, the two leaders mentioned that the mechanism would enable “discussions and communications on practices and policies.”

Beijing has criticized Western efforts to limit sales of more advanced semiconductor equipment to China.

On the other hand, the EU argues that China is also imposing export controls, such as the recent tax imposed by Beijing that restricted its sales of crucial rare earth metals, gallium, and germanium, which are vital for the production of high-tech semiconductors.

Source: Financial Times; Valor Econômico

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