{"text":[[{"start":9.15,"text":"Germany and France have proposed a last-resort trade instrument with the power to immediately cut off access to the EU single market if needed, in an effort to counter economic coercion such as China’s export restrictions on critical rare earths."}],[{"start":25.05,"text":"The Franco-German initiative marks a big shift for Berlin towards a more protectionist stance, as Europe’s largest economy struggles to cope with cheap Chinese electric vehicles and US tariffs."}],[{"start":37.65,"text":"In a letter sent to Commission President Ursula von der Leyen on Monday, German Chancellor Friedrich Merz and French President Emmanuel Macron urge Brussels to sharpen and expand the bloc’s trade toolbox in the face of increased “weaponisation of trade, systemic market distorting-practices, and global macroeconomic imbalances”. "}],[{"start":57.25,"text":"This includes creating a “powerful” instrument to be activated quickly in case the bloc is faced with restrictions of vital supplies, including measures “up to an immediate cut-off from the internal market if needed”."}],[{"start":70.2,"text":"The Franco-German proposal is designed to shape consensus ahead of an EU Council meeting next week, during which the Commission plans to update leaders on its talks with China over reducing the bloc’s trade deficit. "}],[{"start":83.25,"text":"While the letter does not name a specific country and states that the instrument is “country agnostic”, analysts see it as a response to Beijing’s restrictions on exports of rare earths and magnets last year. Those curbs led to warnings from the European automotive suppliers’ trade association that some plants and production lines had to stop because of shortages of these materials."}],[{"start":105.45,"text":"The tool would come in addition to a new “diversification instrument” to ensure the bloc does not become too reliant on one country for critical imports, the letter reads."}],[{"start":115.95,"text":"“We need a comprehensive framework to complement our toolbox with new legal instruments — in a lean and non-bureaucratic way,” the leaders add."}],[{"start":123.85000000000001,"text":"“It is a watershed moment for Germany,” said Sander Tordoir, chief economist at the Centre for European Reform. “Berlin is officially no longer naive about the trade and industrial policy war China has been waging on its industry, nor the currency manipulation that supercharges it.”"}],[{"start":141.8,"text":"Long a staunch believer in free trade, Merz has become convinced of the need to adopt a stronger posture in recent months after seeing the massive pain inflicted on swaths of Germany’s industry, government insiders have previously said. "}],[{"start":155.5,"text":"The shift also coincides with growing worries among car manufacturers, who had until recently been reluctant to support any coercive instruments against China for fear of retaliation, these insiders have also said."}],[{"start":168.05,"text":"Merz’s shift was in particular visible at a Franco-German cabinet meeting in July, where the German chancellor echoed Macron’s concerns over China, saying the EU needed to address its €1bn-a-day trade deficit with the country."}],[{"start":183.25,"text":"The German and French leaders suggested the instrument’s use could be triggered by a minority of member states, reversing the usual voting rules that require a qualified majority. "}],[{"start":192.7,"text":"The last-resort instrument would be like a “second-strike weapon”, a German official said, able to “cause similar damage to the damage that is caused” to Europe. "}],[{"start":202.14999999999998,"text":"“We have safeguards, we have subsidies, we have anti-dumping instruments, which we already use to create a level playing field. But that’s not enough,” another German official said. “That is why [Merz and Macron] are proposing that existing instruments be sharpened again.”"}],[{"start":217.89999999999998,"text":"However, some EU diplomats question whether the bloc has the will to take on China. It already has an anti-coercion instrument with sweeping powers to hit goods and services exports, but it has never used it."}],[{"start":230.7,"text":"“I am not sure the world gets very scared by the EU proposing a new instrument,” said one. "}],[{"start":236.35,"text":"“The problem is not the lack of instruments, it is the lack of willingness to use them,” they added."}],[{"start":249.45,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791217417_6487.mp3"}