Poland: EU will not turn to China even if US trade talks fail

The European Union will not try to mitigate the effects of Donald Trump's tariffs by intensifying trade relations with China, according to the Polish Trade Minister.

Rzeszów, Poland – Michał Baranowski told Euractiv that the EU's relations with Beijing are "independent" of its ties with Washington. Since Trump's return to the White House in January, the US has imposed sweeping tariffs on European exports.

"What certainly won't happen is that the EU says: 'Oh, it's a pity it's not working out with the US, so we'll just switch to China,'" said Baranowski, whose country currently holds the rotating Council Presidency.

These comments come against the backdrop of China's increasing efforts to exploit tensions in transatlantic relations, worth EUR 1.6 trillion, by strengthening diplomatic and economic ties with Brussels.

However, Beijing's charm offensive has been thwarted by its failure to address persistent sources of conflict in EU-China relations, including the increasing competitiveness of Chinese exporters and Beijing's deepening ties with Russia.

For example, this week EU member states agreed to restrict the participation of Chinese medical equipment suppliers in public procurement tenders, arguing that European companies were being discriminated against in China.

Relations have been further soured by Beijing's recent imposition of export controls on a range of key goods, including magnets and rare earth elements used to make products such as washing machines, semiconductors and cars.

Baranowski strongly condemned Beijing's export restrictions, arguing that they amounted to "oiling the fire" in EU-China relations.

The measures would "undoubtedly put pressure on European economies," he added, pointing out that they also affected Europe's ability to modernize its defense industry to counter the growing military threat from Russia.

Echoing the minister's comments, EU Trade Commissioner Maroš Šefčovič called on Beijing on Thursday to "address systemic problems affecting Europe and other partners," including export restrictions, market access barriers and state-sponsored "overcapacity."

"We value the economic and trade relations between the EU and China," said Šefčovič. "However, China's impressive rise must not come at the expense of the European economy."

Visible “progress”?

Šefčovič made his comments a day after the veteran commissioner said that “progress” had been made in talks with US Trade Representative Jamieson Greer in Paris.

At the meeting, “very concrete sectors, areas and also the possible runway” for a future trade agreement were discussed, said Šefčovič.

Baranowski also reiterated that the negotiations between the EU and the US are "absolutely making progress", adding that the situation "looks better the more US Trade Representative Greer gets involved and the more technical the negotiations become".

Although he declined to elaborate on the possible contours of a US-EU trade deal, Baranowski suggested it would be “more ambitious” than the previous US trade deal with the UK.

This agreement, reached last month, grants British exporters some exemptions from Trump's "sectoral" tariffs on steel, aluminum, and cars. However, the "universal" 10 percent levy, currently being challenged in U.S. courts, remains in place.

Beijing has also condemned the US-UK deal, saying it will restrict Chinese investment in Britain.

“We are aiming for an ambitious agreement,” Baranowski said, “more ambitious than the other agreements we have seen so far.”

The big club

At the same time, Trump's decision on Wednesday to double tariffs on steel and aluminum to 50 percent was "not helpful" for trade negotiations, Baranowski added.

"We are making progress, and for the other side, in this case the US, to impose new tariffs is simply not helpful for us to continue these negotiations productively," he said.

Baranowski said the EU was prepared to impose retaliatory tariffs on American exports if the negotiations were deemed to have failed, but declined to say exactly under what conditions the EU would do so.

The EU has suspended a €21 billion retaliatory package against US soybeans, diamonds and motorcycles until July 14 – five days after the planned entry into force of a 50 percent flat-rate levy on EU exports.

Brussels is also working on a separate 95 billion euro package that could affect American aircraft, wine, cars and machinery.

"As I like to say, 'We speak softly, but we have a big stick,'" Baranowski said. "That stick is on the table."