France, Germany vow to cooperate on industry transformation, back EU probe into Chinese EVs
In a display of unity amid mounting challenges to Europe’s role in the global economy, ministers from France and Germany have resolutely backed efforts by the European Union to investigate unfair competition allegations against China for electric vehicle production. Both sides stressed their determination to generally strengthen the two countries’ cooperation on industrial transformation: “Europe has to make sure its interests are being safeguarded,” German economy minister Robert Habeck said at a press conference in Berlin together with his French counterpart, Bruno Le Maire. The joint statement followed an announcement from the EU Commission president Ursula von der Leyen to start a probe into possible distortion of competition by the Chinese government through illicit subsidies for its booming electric vehicle industry.
A key EU policy aim is the transition to a low carbon economy, with France and Germany being among the greatest advocates for such a push. Both countries are hoping to reinvigorate national industries in the process. They have sought close cooperation to streamline efforts to obtain access to relevant EU support programmes, despite differences over key aspects of the energy transition, particularly regarding nuclear power. However, Paris and Berlin also share many industrial interests and have promised to intensify cooperation in light of the recent energy crisis and increasing protectionist tendencies in international trade.
Habeck said the “many subsidies” available in the EU should be better focused on supporting industrial transformation. Reducing regulation and speeding up procedures and licensing are among the steps both ministers said their countries will better coordinate in the future and integrate into wider EU efforts of the Net Zero Industry Act. “It’s not only about expanding renewables faster, but also expanding those industries that make those renewables faster,” Habeck said.
Speaking in German, Le Maire called the regular meetings between French and German ministers “a useful tradition” that underpins the “close and efficient cooperation of France and Germany in matters of climate action, competitiveness, energy, innovation or growth.” Faced with competition from China and a fast-recovering US economy, Europe must close its ranks to defend its position on global markets, Le Maire argued. “We cannot be satisfied with investments in innovation that are inferior to those in China or the US,” he added. Ensuring access to low-carbon energy “at attractive prices” for all member states is a topic that will preoccupy the EU for some time, the French minister said. This would be one of the conditions to enable “an equal game” with other major economic powers, he added. “I’m sure that we will be able to come to a common understanding with Germany about the energy issue and a reform of Europe’s energy market.”
EU "must defend economic and industrial interests” and “think big” about joint projects
Historically differing positions between the two countries’ energy systems should not stand in the way of a joint push, Le Maire stressed. The French minister explicitly backed an EU probe into possible violations of international trade laws, arguing that France continued to be open to cooperate with China on the basis of “fair competition.” While not mirroring his French colleague’s eagerness to open proceedings against China’s business practices, German minister Habeck agreed that an investigation is needed. “Not doing anything is not possible,” he said. The ministers’ joint statement comes after months of difficult negotiations between France and Germany regarding the EU’s strategy to achieve carbon neutrality by mid-century. The energy crisis revealed cracks in the countries’ energy policies that need to be overcome in order to improve the bloc’s chances of staying on course to meet its climate targets while protecting its economic prowess.
“Europe must defend its economic and industrial interests” and “think big” about joint projects to translate its ambitions into action, such as the battery production initiative France and Germany launched together in the past, LeMaire argued. “We are in the process of building up a battery production line that is just as competitive and innovative as that of China.” Paris and Berlin could mirror these successes in other areas too, including artificial intelligence, solar panel production, space exploration, raw materials or hydrogen. “I’m convinced of the power of the Franco-German partnership,” which by combining the clout of the EU’s two biggest economies would give every member state a better chance to stay afloat and address economic competition in the 21st century, Le Maire added.
German finance minister Christian Lindner stressed that “a solid economic foundation” is needed to “maintain Europe’s social standards and ecologic ambitions.” Lindner too said that a review of bureaucratic standards in Europe is needed to realise the flexibility required in a rapidly changing economic environment. Additionally, reforms and better alignment of Europe’s national capital markets would be needed to channel the vast private capital available in the EU into transformation projects. France and Germany sketched a joint roadmap for better common capital market across Europe that improves access to funding for small and medium-sized enterprises in particular. Integrating sustainable finance principles would play a major role in these efforts, the German treasurer added.
German energy industry association BDEW commented that the EU Commission president’s promise for implementation of the EU’s Green Deal is a welcome move in light of the challenges posed by the energy crisis and industrial transformation. Projects such as reforming the EU’s power market, a gas supply package, or the launch of a European hydrogen industry should be initiated before the European elections in 2024, said BDEW head Kerstin Andreae. “It’s equally important to reduce bureaucracy and achieve leaner procedures,” Andreae added. “These are currently among the greatest hurdles to the energy transition.”
Chemical industries association VCI also said excessive bureaucracy continued to be one of the biggest challenges for industrial companies in Europe. “We need a Burden Reduction Act,” said VCI head Wolfgang Große Entrup, arguing that the EU Commission had “killed off every last detail of the transformation through regulation” in the past four years. “We must quickly end a situation where our companies think about investing outside of the EU on grounds of costs and regulations.”