As we emphasized in a previous article, Europe in particular—and the West in general—is facing intense industrial competitive pressure from China, which, while there is still time, is attempting to gain market share, even through unfair means.
In the context of this competitive rivalry, Europe is not sitting idly by. It is pushing for the implementation of protective measures through legislation designed to bolster industry. Thus, the European Commission’s proposed Industrial Acceleration Act (IAA) is an encouraging step that must be strengthened as long as China continues to challenge the status quo.
As European industry analysts note, the law has many pitfalls. And from this perspective, a first pitfall is the provision allowing public authorities may purchase non-European products if suppliers from the Old Continent or eligible partners offer prices that are more than 25% higher—or even 30% higher in some cases. However, Chinese products are often 40% cheaper, precisely because of the distortions the European Union is trying to address. If the thresholds are not lowered, the text risks creating a loophole rather than providing real protection.
Second, the IAA proposes an overly broad definition of European content. By treating imports from the EU’s 76 trading partners as “local content,” this regulation paves the way for Chinese content incorporated via third countries, rendering the criterion of European preference largely meaningless.
Of course, in the long term, the interinstitutional agreement will serve as a basis for trade negotiations, which could allow Europe to open its markets in exchange for reciprocity. But this is only one piece of the puzzle that must fall into place to change the "Competitiveness 2.0" framework imposed by China.
Beyond the IAA, however, Europe has other cards at its disposal. But what are they?
"...The first concerns the supply of rare earths. There are active discussions between the U.S. government and European representatives about building a Western market. Admittedly, the price level would be higher. Furthermore, these efforts will take years. But I think they should give us more resilience...,” emphasizes economist Christophe Perigya.
"...Another, lesser-known advantage of Europe concerns chip manufacturing. In this sector, China is heavily dependent on European equipment. Machinery that can be found in Germany and the Netherlands. In fact, it could be said that without them, the Chinese chip industry would be in a precarious position.
This is obviously not a pleasant situation, because any European initiative could lead to retaliation. However, it could prove useful one day if China continues to overstep the mark...,” argues Sébastien Julliand, economic editor-in-chief of the French magazine “L’Express.”
Finally, as French President Emmanuel Macron recently noted, Europe can draw inspiration from Section 301 of the U.S. Trade Act of 1974. This allows the U.S. Trade Representative to respond to a wide range of foreign practices deemed unreasonable or discriminatory, even when these practices do not strictly correspond to violations defined by WTO law.
This instrument differs from conventional tools. It does not require proof of the existence of subsidies for each company individually. It allows for the imposition of targeted tariffs on entire sectors and their maintenance for as long as the underlying distortion persists.
Its scope is very broad: the U.S. has already used it against intellectual property theft, technology transfer, or currency manipulation. It was precisely by invoking this article that the Trump administration imposed tariffs on Chinese imports.
The EU lacks a comparable tool capable of addressing these distortions without triggering a full-scale trade war. In the future, we could consider a scenario in which China would revalue the yuan in exchange for the EU abandoning a Section 301 measure it might have adopted.
Before we reach that point, however, the European Union must strengthen its unity. Recently, Germany itself has contributed to weakening the substance of the IAA. And in reality, it is leaving the French to pull the snake out of the hole.