Mr. Lange, in her State of the Union address to the European Parliament at the beginning of September, European Commission President Ursula von der Leyen defended the agreement reached in the “tariff dispute” between the European Union and the United States, calling it the “best deal.” What is your take on this?
I wouldn’t even call it a “deal” or agreement: it’s a set of loose arrangements. This so-called “deal” made on July 27 basically just said: There’s a 15 percent basic tariff; for steel, aluminum and copper, the tariff is 50 percent; there are going to be investments in the American energy and industrial sector; and there will be more talks on military technology. That’s basically it.
I think this very defensive stance taken by Ursula von der Leyen has to do with the fact that she made this decision based on security policy considerations rather than economic ones. And what I heard about this hour-and-a-half conversation in Scotland confirms this: Mr. Trump very strongly linked these tariff and economic policy issues with international security policy. In this respect, Ursula von der Leyen initially presented it in a very positive light when she said, “This is the best deal.” That’s it, game over!
But if you look at the facts objectively: There’s no standstill clause, and that really is a problem. The Europeans repeatedly demanded this in the weeks leading up to the agreement, but the Americans rejected it, arguing that trade policy and tariffs are instruments for defending national security and we won’t let ourselves be tied down on that.
And without a standstill clause you’ll always keep getting something else. On August 18, 407 products were placed into the category “Tariffs on steel, aluminum, and copper.” I know of a company that specializes in agricultural technology that subsequently stopped exporting to the US. Overall, the German mechanical engineering industry is at risk of shrinking 10 percent this year. That’s a big problem. In this respect, I do notthink the “deal” can be defended quite so assertively.
The chair of your Socialists & Democrats alliance, Iratxe García Pérez, said the EU’s “strategic autonomy” now lay “buried under a golf course,” in reference to Trump’s Turnberry golf course in Scotland where the talks took place …
This weakens us economically, there’s no question about that. We’re currently in an economic situation where pressure is coming from both the United States and China. And this isn’t just since Trump took office. It started with the global economic crisis of 2008/09, which resulted in the US moving very strongly toward protectionism; even already under Barack Obama, the first Trump administration, and under Joe Biden. So, our export situation has been at risk for quite some time.
And in China you’ve got the shift away from strongly development-oriented policies and toward dominance in industrial policy under the banner of the “Made in China 2025” strategy. The Chinese have achieved their goals in nine out of 10 sectors. All of this has led to an increase in their competitiveness and has put us Europeans in a difficult situation in this regard as well.
Both of these factors together make it clear how necessary so-called “strategic autonomy” is for the EU. But I wouldn’t go so far as to say that our sovereignty is currently buried on the golf course. However, the whole situation highlights our weakness—in terms of security policy, but also in terms of economic policy. And that’s what we need to tackle.
Your parliamentary group wants to renegotiate. Do you think that has any chance of success?
This is the normal democratic process: The agreement has implications for the economic situation in Europe as well as European citizens, and that’s why we will examine it closely.
I could imagine us proposing amendments in three areas: First, what really concerns me—these 407 products that are to be classified as “steel and aluminum.” These range from wind turbines to agricultural machinery, pumps, compressors, all the way to motorbikes. This affects about one-fifth of the EU’s industrial production. I don’t see why we should set tariffs on US goods to zero for these products.
Second point: As there’s no standstill clause, we need to be able to react more quickly if the US comes up with other mechanisms. There’s already been the threat of imposing tariffs and export restrictions because of our digital market regulation. There’s negotiating leverage here.
And thirdly: I think we need to make it a little more WTO-compatible. That means opening the door to a larger trade agreement or incorporating a sunset clause, i.e., setting a time limit on the agreement in order to return to the most-favored-nation standard on which EU trade is actually based.
Should the EU have taken a tougher stance and responded with high counter-tariffs, as China did?
The reality is what it is. I would have pursued a different strategy, as would some member states, and even some members of the European Commission. But that’s water under the bridge. The agreement is in place. And now we’ve got to look at how we can reduce the economic burdens.
Turning to China: Many in Europe fear a new “China shock”; last year, the European Commission imposed punitive tariffs on imports of Chinese electric vehicles due to unfair subsidies. Is this the right approach?
Yes, because we are doing it based on evidence. Over the past five years, we have significantly modernized our toolbox of defensive instruments, with a focus on anti-dumping measures and measures against unfair subsidies. We as the EU are investigating Chinese companies—including, incidentally, when it comes to investments in Hungary; we want investments, but on fair terms—right up to “anti-coercion instruments” designed to prevent economic blackmail. So that we’re prepared, but in an evidence-based way.
That’s the difference between us and the US. Under Biden, tariffs of 100 percent were imposed on Chinese electric vehicles for political reasons and to protect the US market. We’re not doing that. We’re complying with WTO rules and, yes, we have imposed countervailing tariffs on just over 100 products at the moment—the term is much more accurate than “punitive tariffs”—including e-bikes, for example. Almost half of all bicycles in Europe are now e-bikes, most of which come from China. Their imports are now subject to countervailing tariffs of between 17 and even 70 percent.
My experience with the Chinese is as follows: If you can really prove it, there will be some grumbling, but then it will be accepted. We’ll certainly have further discussions in many areas in the future.
Firstly, because we’re seeing detour flows of products that would otherwise be destined for the US. That’s why, back in 2018/19, we imposed a 25 percent countervailing tariff on steel for certain volumes that exceeded normal imports. We’re currently monitoring 50 other products for possible detour flows and volume increases. This may also lead to a few conflicts with China.
And secondly, because there’s overproduction in China due to internal structures, political guidelines, and competition between provinces. All of this leads to overproduction. In addition, domestic demand has declined, especially in the construction industry. We’ll have to engage in dialogue to generate reasonable, sustainable production volumes and also ensure that our own production is not jeopardized by Chinese overproduction.
China is increasingly flexing its military muscles, supporting Russia's war against Ukraine, and seeking to create a new world order. Is the country still the right partner for the EU?
That’s right, that’s what’s happening. But we can't choose our partners. As the EU, we are very strong in import and export, in trade, in our relations with other countries—for good reasons that aren’t just economic. And you can't ignore a country like China with 1.4 billion people. That's why we need dialogue, but also a clear stance where unfair processes are taking place.
What instruments and options does the EU have, beyond those mentioned so far, to protect the single market in general and its own industry in particular from unfair competition?
As I said, we have significantly modernized and expanded our toolbox—and it’s proving successful. Take anti-subsidy legislation, for example: Above a certain volume of orders or activities in the single market, if there are grounds for suspicion, it must be proven where the funds come from and what subsidies have been paid. For example, 30 trains were to be purchased in Bulgaria. There was an offer from China Railway Rolling Stock Corporation (CRRC) that was 50 percent lower than the one from the European suppliers. As a result of the new legislation coming into force, CRRC then withdrew its offer. There was a similar example in Spain with solar parks.
These instruments are relatively new. As is the International Procurement Instrument, which is designed to prevent discrimination against European products in tenders abroad. I believe that the toolbox must now be used. And if something is missing, we’re prepared to enlarge it further.
What is needed to counteract internal barriers in the single market? And how can member states, not least Germany, contribute to improving the single market?
We still have national egoisms. In many areas, countries protect their own economies. We’ve got to overcome this because we’re so closely linked that barriers definitely need to be broken down. This was very extreme in energy policy, which was long regarded as the domain of national policy, and there are many other examples. We must exploit our potential. Mario Draghi, the former Italian prime minister and president of the European Central Bank, said in his report last year that EU GDP could be increased by up to 10 percent, so that’s an opportunity we must seize quickly, no question about it.
Is more uniform taxation and regulation the necessary instrument here to contribute to greater harmonization?
That would be desirable. Alongside foreign and security policy, taxation is the policy area that’s still subject to the unanimity rule in the European Council. For example, it took 10 years—and that was quick—to reach an agreement on the withholding tax on interest payments. It’s desirable, but difficult given the decision-making structures.
Mario Draghi warned against “overregulation,” which he says needs to be reduced. Do you agree? And should the EU also focus on having fewer regulations and rules when negotiating new trade agreements?
We need to examine closely what has caused failures or delays in trade policy matters to date. The problem has often been agriculture. There have been suggestions that agriculture could be excluded. But I don’t think that's realistic, because there’s also an offensive interest. European agriculture generated a trade surplus of €70 billion last year from raw products and, above all, processed products. That’s an offensive interest. That’s why I don’t believe that removing workers’ rights would lead to faster results.
The most recent example is Australia. Shortly before the agreement was to be signed, a demand for a few thousand tons of beef and sheep meat was put on the table. There was a similar situation with India on the issue of sustainability. I support the ruling of the European Court of Justice that workers’ rights, sustainability, and climate protection are part of trade policy. I don’t think this is a question of standardization. Rather, we need to think about our agricultural sector and its different elements.
A further point is that it’s indeed true that a large export surplus has been generated. However, this doesn’t reach the first link in the value chain, the dairy farmers, whose margins are low. Then comes the cheese maker. He gets a larger slice. And those who sell the product get the biggest piece of the pie. This needs to be tackled internally. We’re currently revising the legislation on unfair trading practices. This is an internal European issue that we have to resolve.
On the subject of simplifying single market rules: We passed around 450 pieces of legislation during the last legislative term. In my area, for example, the issue of deforestation regulation was addressed. This led to measures being introduced that were neither in line with reality nor with the stage of dialogue with our partners. That needs to be tackled.
Another issue is reporting requirements. A general standard is needed here—including in the supply chain law when it comes to reporting sustainability performance. Many small and medium-sized enterprises have to contend with requirements that go far beyond those imposed on large companies. That shouldn’t be the case. There are many elements that need to be tackled quickly to avoid slowing down innovation.
After many years, the EU-Mercosur free trade agreement is now awaiting ratification by the European Council and the European Parliament. What potential do you see in this agreement?
This is a very important agreement—geopolitically, but also economically, because we can’t compensate for what’s happening elsewhere, but we can diversify to a certain extent. And that’s of key importance.
New partnerships and investment opportunities are crucial for the European economy in the current situation. But so is the opportunity to give greater weight to cultural and historical ties with Latin America. We should build on what we have in common with the countries of Latin America. We weren’t entirely satisfied with the outcome of the European Commission’s negotiations in 2019. Our opinion was that a bit more work was needed. At first, it was only about an additional protocol, but then some articles were changed after all, which is why it took longer. We now have the text, and I think it’s good.
There is an obligation to comply with the Paris Climate Agreement; this is enforceable through the ability to suspend parts of the agreement or the entire agreement—not only at the request of the EU, but also at the request of the Mercosur states; so it can also be directed against the EU. I assume it will get majority backing in the European Parliament when it’s voted on in December or January.
Now the EU appears to have its next free trade agreement in the bag, with Indonesia. Are US protectionism and Chinese mercantilism creating new trade opportunities for the EU? Or to put it another way: Where will future growth come from?
Primarily from the domestic market. We need to get our act together on this and boost our own demand. In addition, we’ve got government procurement with clear criteria to ensure that European production gets even more support for innovation.
And then there’s the network of trade agreements. We currently have 44 agreements with over 70 countries. That covers about half of our trade, which is good. The other 50 percent is based either on WTO rules or on arbitrariness.
We need to get even better. Indonesia is an important country in the ASEAN community, but also in the Indo-Pacific, with enormous potential and a largely democratic constitution: I worked very hard to ensure that we achieve this. Particularly because Indonesia has always been a country that has been very strongly committed to the Non-Aligned Movement and has always tried not to tie itself down. And now the country sees that the European Union is a reliable and trustworthy partner. I was in Jakarta when the Trump administration imposed what it called “reciprocal tariffs” of 39 percent; there was great disappointment and frustration. That wouldn’thappen with the EU. And it’s nice to note that our policies mean we’re being acknowledged as a different player than China and the US.
The interview was conducted by Henning Hoff, Paulina Maerz, and Joachim Staron. Translated from the German by David Crossland.
Bernd Lange MEP (SPD) has been a member of the European Parliament from 1994 to 2004 and since 2009. Since 2014, he has been chair of the Committee on International Trade and rapporteur for trade and investment relations between the EU and the US. Since 2022, he has also chaired the Conference of Committee Chairs in the EP.
