Is the EU a promoter of free trade or a double dealer?

Editor's note: Jian Junbo, a special commentator on current affairs for CGTN, is director of the Center for China-Europe Relations at Fudan University, Shanghai. The article reflects the author's views and not necessarily those of CGTN.

The United States recently floated the idea of invoking Section 301 to levy a 10% import tariff on products originating from the European Union (EU) and other economies. Nevertheless, Brussels moved in the opposite direction.

On May 20, the EU secured a provisional internal deal to scrap tariffs on US-manufactured goods, though the US recently imposed a 50% tariff on steel imports from third countries. Brussels also slashed duty-free quotas by almost half.

On the other hand, before the G7 Summit in France, alongside other Western participants, some EU member states tried to shift the discussions to rolling out protectionist policies and stringent regulatory restrictions to tackle what they described as China's "overcapacity" issue. Plus, though the joint declarations of this G7 summit did not directly mention the so-called overcapacity problem against China, they did implicitly involved the importance of the stability of getting key minerals and the principled statement on the security of the Asia-Pacific. This clearly reflects the growing importance and the need for China's market and international influence in international affairs.

Nevertheless, by observing the EU's narrative and policies over the past five years, these developments reveal a curious paradox. The EU has opted to make concessions to the United States in response to US tariff threats, while simultaneously raising market-entry barriers against key third countries – especially China. This stance is particularly noteworthy given that the EU relies heavily on developing economies, including China, as its primary suppliers of steel and steel products.

These developments highlight a deeper contradiction characterizing the EU's foreign trade strategy over the past five years. The bloc champions two mutually conflicting guiding philosophies: trade liberalism and protectionism.

Besides adopting a conciliatory, liberal trade stance toward the United States, the EU has vigorously expanded its network of free trade agreements (FTAs) with a wide array of countries and regions – with the notable exception of China.

It has concluded FTA negotiations and sealed a corresponding deal with the Mercosur of Latin America, and has hailed its FTA with India as the "mother of all FTAs." The bloc is also advancing FTA talks with Association of Southeast Asian Nation countries and Australia.

Back in 2002, it even launched negotiations for Economic Partnership Agreements – a specialized variant of free trade pacts – with African, Caribbean and Pacific countries. Till now, the EU has put in place and scaled up over 40 different agreements with more than 70 countries, all proof of its commitment to trade liberalism.

However, in its economic engagement with China, the EU has, in stark contrast, resorted primarily to "de-risking" strategies and tariff barriers. Proposed legislative frameworks including the Industrial Accelerator Act and Cyber Security Act 2.0, alongside the already enforced Foreign Subsidy Regulation, constitute stringent regulatory instruments that will create substantial headwinds for China-EU economic and trade ties. These regulatory rules are rooted not in the tenets of trade liberalism, but in protectionist impulses and geopolitical calculations.

The EU has evolved into an economy that embraces trade liberalism toward nearly all economies except China and a handful of other nations, adopting an increasingly protectionist stance specifically targeting China's market, goods and capital inflows.

This anomalous and self-contradictory approach can be attributed to a confluence of factors.

Europe faces mounting pressure to shield its obsolete industrial capacity from being outcompeted by Chinese products. The rational path forward would be to sharpen its competitive edge via innovation upgrading and deeper market integration – recommendations explicitly laid out in the bloc's own Draghi Report and Letta Report.

Nevertheless, lacking both the capability and near-term political resolve to deliver on these reform objectives, the EU has resorted to stringent protectionist regulatory tools under the pretext of alleged "overcapacity," sacrificing China's legitimate interests to cover up its own structural inadequacies. This despite the fact that the EU is fully cognizant that its protectionist restrictions run afoul of World Trade Organization regulations.

At the same time, the EU has consolidated economic and trade partnerships with numerous developing economies anchored in liberal trade norms. Through such ties, it secures stable access to critical mineral resources, with the underlying aim of advancing geopolitical rivalry chiefly directed against China. Viewed in this light, the EU's liberal and protectionist trade postures ultimately converge on a single target – China.

In addition, the EU has adopted a conciliatory stance toward the US to secure Washington's acquiescence. Its core calculation is to free up room to address perceived challenges from China, given that it lacks the capacity to manage frictions with Russia, the US and China simultaneously.

Such skewed strategic calculus not only undermines China's legitimate interests but will also boomerang on Europe itself in the long run. Protectionism cannot prop up its aging, uncompetitive industrial capacity nor restore its erstwhile dominant position. On the contrary, it will erode the EU's inherent competitive strengths and make it forfeit vast opportunities stemming from engagement with fast-growing emerging markets.

Beyond that, excessive protectionism disrupts the global economic governance system, which in turn triggers headwinds for the EU's already fragile economic recovery momentum.

Past experience bears testament to the fact that hostility in economic affairs neither boosts industrial competitiveness nor defuses frictions with peer economies. A more adversarial posture toward China's economy will not help the EU resolve its own domestic woes, or untangle the difficulties plaguing its economic and trade ties with China.

To properly respond to the "China challenge," the EU needs to adopt a two-pronged approach. It must discard its neocolonial mindset, reconcile itself to the erosion of its long-standing monopolistic edge and the rising influence of emerging economies led by China, and conduct economic exchanges on genuinely equal terms. The bloc ought to opt for bilateral coordination over unilateral coercion and choose mutually beneficial cooperation over head-on confrontation.

Only in this way can Europe achieve self-growth while benefiting from the opportunities created by the transformation of the global economic landscape. Its selective application of liberalism and protectionism will not resolve its strategic dilemmas. It will merely deepen them, triggering reciprocal losses and leaving both sides worse off.

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com. Follow @thouse_opinions on X to discover the latest commentaries in the CGTN Opinion Section.)