The European Union (EU) is positioning itself strategically against economic powerhouses the United States and China, despite being outmatched in sheer economic scale. Margrethe Vestager, the EU’s competition chief, emphasized the bloc’s shift towards strategic spending to counteract unfair trade practices and boost competitiveness.
Vestager, speaking to CNBC in Brussels, highlighted the EU’s improved defenses against unfair trade practices and the bloc’s commitment to equitable competition. “The point is to realize we can never outspend China or the U.S.,” Vestager stated. “We can spend strategically.”
This strategic approach was underscored by the EU’s recent decision to impose higher tariffs on Chinese electric vehicle imports. The move followed a probe revealing that these imports had benefited significantly from unfair subsidies, threatening to undermine European electric vehicle producers. This action demonstrates the EU’s attempt at a cautious balancing act: protecting its industries while maintaining crucial trade relationships.
Read more: Vestager Steps Down, Reynders Takes Charge of EU Competition Policy
In retaliation, China has initiated an anti-dumping investigation into specific pork products from the EU, escalating trade tensions.
Investing in Cutting-Edge Technology
Vestager highlighted a 100 billion euro investment fund targeting ten cutting-edge technologies, including hydrogen, electric batteries, microelectronics, cloud computing, and health technologies. She described these investments as having “common European interest” and being crucial for future competitiveness.
“That, I think, is a strategic way of using taxpayers’ money, crowding in private capital, in order to get what the market will not otherwise deliver,” said Vestager, who also serves as executive vice president of the European Commission.
This move is part of a broader trend among major economies. The U.S. has been investing heavily in technology and green energy through its $430 billion 2022 Inflation Reduction Act (IRA), while China continues substantial investments in tech and green industries.
Vestager emphasized that the EU is not merely copying its trade partners but is focused on making strategic investments that work for Europe. “Let’s not get distracted by what they are doing in the U.S. and China. Let’s stick to our guns and make sure that it actually works,” she urged.
Strategic Spending in a Global Tech Race
The EU’s strategic investments aim to secure its position in the global tech race. By focusing on innovative technologies and leveraging public funds to attract private investment, the EU hopes to develop industries that might otherwise struggle to compete on the global stage.
While the U.S. and China continue to pour money into their tech sectors, Vestager’s comments suggest that Europe is charting its own path, tailored to its strengths and economic philosophies. The emphasis on strategic spending rather than sheer volume highlights a nuanced approach to international competition.
Source: CNBC
