A first step, but no real rebalancing in the European Union’s trade deal with China

According to Bruegel, EU Trade Commissioner Maroš Šefčovič returned from the 8-9 October consultations in Beijing with three 'shared understandings'[2]. Bruegel reports that Šefčovič declared: "This is far from the end."[2]Bruegel says the EU's headline gain is a 'shared understanding' on reducing Chinese exports of hybrid and plug-in hybrid-electric vehicles[2]. It notes that Europe's bilateral trade deficit with China is €360 billion, while Chinese automotive exports to the EU are worth around €15 billion[2].According to Euronews, citing the European Commission, the EU also secured tariff liberalisation for car parts, footwear, ice cream and olive oil, saving at least €225 million in duties[3]. Bruegel reports that the third understanding creates a 'green channel' to facilitate licences for rare earths and permanent magnets[1].Bruegel says Beijing's readout makes it clear that the softening of export controls must be reciprocal[2]. The think tank also says Beijing secured a technical dialogue on the EU Foreign Subsidies Regulation[2].In Bruegel's view, the agreement, made just before the European Council summit, is designed to prevent the Council from implementing its trade tools[1]. Bruegel concludes that Europe "needs instruments that give it real leverage[2]."Euronews reports that the Commission has framed the agreement as the first phase of talks launched in June to rebalance trade relations[3]. An anonymous EU official told Euronews: "It is quite a good deal, but I am afraid it might create relaxation at the European Council."[3]