【By Liu Bai, Observers Network】Amid the U.S.-China summit, China and the EU held a closed-door meeting in Brussels, focusing on issues such as rare earths. However, the South China Morning Post, an English-language Hong Kong media outlet, pointed out in an article on November 1 that although the EU has been actively seeking diplomatic breakthroughs, the China-EU Brussels meeting does not seem to have alleviated the actual crisis faced by European companies. Now, with new progress in U.S.-China trade negotiations, the Brussels talks seem insignificant, highlighting that the U.S. and China remain the dominant forces determining the direction of global trade, while Europe is increasingly passive and embarrassed in the trade game between the two major economies.

Regarding the China-EU meeting in Brussels, Olof Gullstrand, a spokesperson for the European Commission, stated on November 1 that both sides "discussed how to maintain stable supply chains related to rare earths and committed to further promoting measures to facilitate licenses, including general licenses."

The article said that although the crisis talks between China and the EU at the end of October did not seem to free European companies from their substantive difficulties, the EU welcomed the consensus announced after the U.S.-China summit, considering it "an appropriate and responsible step in ensuring the stability of global trade flows in this key area."

The article described that due to the series of breakthroughs brought about by the U.S.-China summit that affect the global trade landscape, the Brussels talks seem insignificant.

In late September, following the release of the U.S. government's export control "penetrating rule," the Dutch government, under the pretext of "national security," forcibly took over the Chinese-owned NXP Semiconductor. Recently, the EU has become anxious about rare earth supplies and the NXP Semiconductor incident, worrying about risks in key sectors such as the automotive industry, with multiple car manufacturers issuing warnings of production shutdowns.

"We know all parties are trying to find diplomatic solutions. At the same time, our members report that some parts supply has already been interrupted due to shortages," said Sigrid De Vries, Secretary-General of the European Automobile Manufacturers Association. "This means that production line shutdowns may happen within days. We urge all relevant parties to make more efforts through diplomatic means to resolve this critical situation."

But it is embarrassing for the Netherlands that according to the results of the Kuala Lumpur consultations between the U.S. and China trade teams, the U.S. will suspend implementing 50% of the penetrating rules for one year, and China will suspend implementing the relevant export controls published on October 9 for one year, and will study detailed specific plans.

NXP Semiconductor employees walking in a clean room, Oriental IC

On the 31st, EU Commissioner for Technology Henna Virkkunen met with representatives of NXP Semiconductor, stating that the EU hopes to resolve the crisis through negotiations. "I reiterate our determination to achieve diplomatic breakthroughs. We discussed short-term and medium-term measures to strengthen supply chain resilience," she said.

Although the Dutch government insists that the takeover of NXP Semiconductor was not due to external pressure, court documents show that the U.S. had pressured the Netherlands to replace the company's management, or else the company would face the risk of being added to the entity list.

On November 1, the spokesperson for the Ministry of Commerce of China emphasized that the improper intervention of the Dutch government in corporate internal affairs has caused chaos in the global supply chain. As a responsible major country, China fully considers the safety and stability of domestic and international supply chains, and welcomes enterprises facing practical difficulties to contact the Ministry of Commerce or local commerce authorities in a timely manner. We will comprehensively consider the actual situation of enterprises and grant exemptions for exports that meet the conditions.

Analysts believe that this indicates that China is considering lifting export controls on NXP Semiconductor.

At the same time, it has been reported that the White House is preparing to announce that NXP Semiconductor's headquarters in the Netherlands will resume shipping wafers to its processing and testing plant in Dongguan, China, a move welcomed by the global automotive industry.

Milan Captein, a spokesperson for the Dutch Ministry of Economic Affairs, declined to comment on the report but stated that the ministry is working with China and international partners to seek a "constructive solution" to restore balance in the chip supply chain.

On the 31st in Rome, EU Commissioner for Trade and Economic Security, Valdis Dombrovskis, said that the agreement reached by the U.S. and China would benefit Europe.

"The agreement reached by the U.S. and China on this issue has universal effect, so it should apply to all parties, of course including the EU," he added, saying that he would "soon" call China.

The article mentioned that despite this, China's policy of tightening rare earth exports since April has affected the EU industry. European companies have long complained that some production has already stopped due to the shortage of rare earths, which are essential for many advanced manufacturing fields.

However, whether it is the rare earths control or the NXP Semiconductor incident, it highlights that the U.S. and China are the dominant forces deciding the direction of global trade, while Europe is caught in an awkward position between the two.

The European Commission is currently discussing a new trade rule, which may require some Chinese exporters, when exporting other goods to Europe, to also provide rare earths and other key raw materials. Bloomberg quoted sources as saying that these plans are still in the early stages, and various proposals are circulating within the European Commission office, and it is not yet clear whether new trade tools are needed.

However, such legislative processes may take months or even years, exposing the difference between the EU's legal and procedural approach and the strong and rapid approach of the U.S. and China.

According to the website of the Ministry of Commerce, on October 21, Minister Wang Wentao held a video conference with EU Commissioner for Trade and Economic Security, Valdis Dombrovskis, exchanging in-depth views on key Sino-European economic and trade issues such as export controls and the EU's anti-subsidy investigation on electric vehicles from China.

Wang Wentao stated that regarding the issue of rare earth export controls, the recent measures taken by China are normal practices to improve the Chinese export control system in accordance with laws and regulations, reflecting China's responsibility as a major country to maintain world peace and stability. China is committed to maintaining the safety and stability of the global supply chain and has always provided approval convenience for European companies.

Wang Wentao stated that regarding the NXP Semiconductor issue, China firmly opposes the generalization of the concept of "national security" and hopes that the EU will play an important constructive role, urging the Netherlands to adhere to the spirit of contract and market principles, and to propose a proper solution as soon as possible from the perspective of maintaining the overall interests of the global supply chain security.

This article is exclusive to Observers Network. Reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7567933172692877878/

Statement: The article represents the personal views of the author. Please express your attitude by clicking the [Top/Down] buttons below.