© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 17, 2022. REUTERS/Yves Herman//File Photo
BRUSSELS (Reuters) – Europe and its partners must do more to combat the effect of Chinese subsidies for the manufacture of clean technology products, the European Commission is set to say on Wednesday in its “Green Deal Industrial Plan”.
The plan is designed to outline how Europe can keep its place as a manufacturing hub for green products such as electrical vehicles and respond to multi-billion dollar subsidy programs of China and the United States.
The EU draft document seen by Reuters will insist that trade and competition on net-zero industry be fair and say that some partners’ initiatives can have undesired effects.
Chinese subsidies, it says, have long been twice as high as those in the EU, relative to gross domestic product, with a pipeline of $280 billion of investments, distorting the market and ensuring China’s lead in a number of technologies.
“Europe and its partners must do more to combat the effect of these unfair subsidies and prolonged market distortion,” said the draft, which could still be changed before it is due to be published on Wednesday, a week from an EU leaders’ meeting.
The European Commission said trade openness was an essential part of the EU strategy to ensure the bloc is a leader in net-zero technologies.
The Commission will seek to increase the EU’s network of free trade agreements, build a global critical raw materials partnership and also deploy trade defence measures.
The Commission will make use of a foreign subsidies regulation that entered force this month to investigate if subsidies granted by third countries impact the EU’s internal market, according to the document.
“The EU will also work with partners to identify and address distortive subsidies or unfair trading practices relating to IP theft or forced technology transfer in non-market economies, such as China,” it says.