France, Germany want new EU trade tools against China

French President Emmanuel Macron and German Chancellor Friedrich Merz have urged the European Union to develop a new legal arsenal to respond faster to any potential trade war with China, according to a letter seen by AFP on Monday.

While it stopped short of explicitly naming the Asian giant, the letter to European Commission President Ursula von der Leyen was sent just days before the EU trade commissioner heads to Beijing to tackle trade frictions.

"We need a credible instrument in the hands of the commission" for decisive action, including the ability to cut off access to the European single market "if needed", Macron and Merz wrote.

The proposed weapon could be deployed in a trade war, for example if a country cut off supplies to critical raw materials.

If that happened, "the EU must be able to inflict damage comparable to that being done to us", a German government source said.

The United States and China can retaliate faster and more robustly in any trade war, the source said, warning that the EU's tools were not "as effective".

Germany and France want to give the commission the power to respond to a trade aggression within days. Under their proposal, such action would not need approval from the EU's 27 countries, though a weighted majority of states could block it.

Merz and Macron are expected to present their ideas at an EU leaders' summit next week in Brussels.

The new tool could be used against any country but the EU's biggest trade concern is its deficit with China, which Brussels says is inflicting damage on key European sectors.

The commission is already working on new tools to protect its industries, with one option a European equivalent of "Section 301", the trade tool Washington has used to probe foreign practices it deems discriminatory, and retaliate with tariffs.

The EU's deficit in goods with China hit around 360 billion euros (around $400 billion) last year, meaning the EU imported far from the Asian nation than it exported there.

European companies say they are undercut on prices by Chinese rivals in sectors ranging from steel for wind turbines to semiconductors and batteries.

Europe also depends heavily on Chinese supplies of critical raw materials.

Macron and Merz also want a new tool to reduce European dependencies.