EU Faces Overcapacity Challenges: Balancing Domestic Industries and International Competition

The European Union has a history of dealing with overcapacity issues, such as butter mountains and milk lakes caused by its common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to excess production. However, the EU’s current worry is focused on the flood of electric vehicles and steel coming from China. This influx of products has the potential to displace industries and jobs within the EU.

During a recent meeting in Paris, the president of the European Commission, Ursula von der Leyen, expressed concerns to Xi Jinping about China’s “structural overcapacities” in manufacturing. In response to this issue, the EU is considering imposing “countervailing” tariffs to counterbalance the subsidies that have contributed to the growth of China’s industry. This action is being considered to protect European industries and prevent job losses within the union.

To safeguard its economy and workforce, the EU is taking steps to address the overcapacity issues in manufacturing. This includes implementing measures to improve efficiency and productivity in European industries, as well as increasing investment in research and development to stay ahead of competitors in emerging markets. By taking these steps, the EU hopes to maintain its position as a leader in global trade while protecting its domestic industries and workers.