EU countries to seek import curbs on chemicals, plastics, sources say

Brussels: European governments plan to press the EU to deploy a rarely used trade defence tool to protect the chemicals and plastics sectors against surging imports, mainly from China, sources familiar with the discussions told Reuters.

The European Union is toughening its trade stance as its industrial base, including a crisis-hit chemicals sector, comes
under growing threat from cheap imports even as it faces the partial closure of many U.S. markets due to Trump administration
tariffs.


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France, Italy and likely Germany — the bloc's three largest economies — plan to submit requests within weeks for broad
import quotas, known as "safeguards", ‌three sources told Reuters.

The requests ⁠would focus ⁠on polymer resin polyethylene terephthalate — commonly known as PET and widely used in
packaging — along with chemicals epoxy resin and glass fibres.

The EU has over 150 trade measures in force, mostly as tariffs on narrowly ​defined products, to counter dumping or
unfair subsidies. But it has only one set of safeguards, targeting ferro-alloys, along with a separate system covering
import curbs for steel.

New trade climate toughens EU thinking

While not confirming any specific request, France said it was in principle in favour of a safeguard investigation into
certain chemicals and plastics.

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"France ... considers that particular attention should be paid to the situation of the European chemicals sector, which is
currently facing significant difficulties," an official on French Trade Minister Nicolas Forissier's staff said.

Italy was ​also interested in an investigation into certain chemicals used in the defence, automotive, energy, shipbuilding
and infrastructure sectors, ⁠a source ‌from an EU government said.

The German economy ministry said it was also open to such measures in principle. A source with ​the ministry said the
chemical industry ​was preparing an application for a probe on certain products, and the government would take a view based on the European ⁠Commission's findings following that investigation.

France and Italy were already among governments pushing for more robust EU trade ​defences.

Germany, meanwhile, which opposed EU tariffs on China-built electric vehicles two years ago, now faces increasing pressure
from industry ​to take a tougher line with China, its most important trading partner.

Safeguard requests can only be submitted by EU members. They also vote on final measures, which require support from a
"qualified majority" of EU members — at least 15 representing 65% of the EU's population — a threshold that until recently was
considered out of reach.

A Commission spokesperson declined to comment on prospective cases.

More wide-ranging than targeted measures, safeguards impose a tariff for volumes over set quotas and apply to all trading
partners, even those with which the bloc has free trade agreements, such as Japan or Canada.

Brussels has tended to avoid safeguards, with many EU countries seeing them as protectionist.

However, a new ‌geopolitical climate, with U.S. tariffs and a burgeoning trade deficit with China, has changed EU thinking as
industries warn that surging imports are putting European jobs at risk.

The Commission has seen a rapid increase in the number of trade complaints from companies and industry groups ​in recent
years, and EU ​trade lawyers say there is now a backlog ⁠of around four months before a case is opened.

European Trade Commissioner Maros Sefcovic acknowledged on Tuesday that the EU had been reluctant to use safeguards in the past but said the Commission was reviewing that stance, noting that free-trade partners were also deploying them against the EU.

European chemical industry in crisis

Europe's chemical industry is ​facing one of its worst crises in 30 years with high energy prices, weak demand, competition
from China and Asian suppliers flooding the global market.

Companies including BASF, Lanxess, and Wacker are cutting thousands of jobs.

The German chemical industry's trade association, VCI, said companies were preparing to assist EU member states' possible
safeguard requests.

VCI did not name the companies. It added that the association itself was not involved in the requests and was not
calling for a broad chemicals safeguard.

"We expect the European Commission, in its investigations, to take proper account of the differing interests and
circumstances across the value chain," VCI said.