China warns of countermeasures over EU “made in the Union” proposal

Chinese authorities have reacted sharply to a legal proposal presented in March that would allow preferential treatment for certain European goods in the use of public funds within the EU.

In Beijing, it is seen as a barrier to investment and discrimination against companies from third countries. If their concerns are not taken into account, China is threatening countermeasures, CE Report quotes STA.

According to China, the proposals contain serious obstacles to investment and represent institutional discrimination against Chinese investors in key sectors such as battery and energy storage manufacturing, electric vehicles, photovoltaic technologies, and the extraction of strategic raw materials. They are also said to violate international agreements and undermine fair competition.

China’s Ministry of Commerce said in a statement released today that it had sent its concerns and proposals for amendments, or the removal of the most contentious parts of the draft, to Brussels last Friday. If the European Commission and the EU’s two lawmakers — the Council of the EU and the European Parliament — ignore them, Beijing warns it will take countermeasures to protect the interests of Chinese companies.

In response to Beijing’s accusations, the European Commission said it strives to ensure that all legislative proposals fully comply with the EU’s internal and international obligations, including those under the World Trade Organization (WTO). It added that it consults international partners as much as possible when drafting legislation and is open to hearing their views.

Brussels approved the proposal in early March as part of efforts to strengthen the competitiveness of the EU economy. Under the proposed “Industrial Accelerator Act,” priority in public spending would be given mainly to goods produced in EU member states.

Under the Commission’s proposal, goods produced in third countries with which the EU has commitments under the WTO Agreement on Government Procurement and free trade agreements would also be considered as “made in the Union.” This covers around 40 countries, about half of which are part of the WTO agreement.

If the Commission determines that a third country does not grant European companies access to public funds, it could restrict that country’s access to the European market.

The “made in the Union” principle would be limited to key industrial sectors, including cement and aluminum production, as well as net-zero technologies such as batteries, solar panels, wind turbines, heat pumps, and nuclear technologies.

The Industrial Accelerator Act also complements a broader legislative package supporting the European automotive sector, where the “made in the Union” principle would also apply.

According to the proposal, electric vehicles would have to be assembled in the EU, and their batteries would need to include at least three components produced in the EU or by trusted partners. This would also apply to 70 percent of the remaining parts. The requirements would be tightened three years after the rules come into force.

The proposal also includes special conditions for foreign direct investments exceeding €100 million in strategic sectors such as batteries and electric vehicles.

Foto: Thierry Monasse/STA