Draghi's comments came just days after the European Union announced a sharp increase in customs duties on imports of Chinese electric cars, which was opposed by some EU members, including Germany and Hungary. The former head of the European Central Bank has been commissioned by the European Commission to prepare a report on how the EU is dealing with its declining global competitiveness.
In his speech, Draghi stressed that Europe faces greater challenges than the United States in terms of inaction on trade and exposure to retaliation. He cited estimates indicating that China, relative to the size of its economy, spends about three times what Germany or France spends on industrial policy. Draghi warned about this for Europe
It must act aggressively against “the wave of cheaper and sometimes more technologically advanced Chinese imports,” which could lead to a decline in employment in the EU.
Draghi proposed a “foreign economic policy” to reduce Europe's dependence on countries it can no longer trust in strategic areas such as defence, space exploration, vital minerals and medicine. He suggested that the EU should begin imposing clearer domestic manufacturing requirements on products made in the EU and components used in military procurement.
Meanwhile, Draghi also stressed the need for a “practical, cautious and consistent” approach to raising tariffs and subsidies. He called for efforts to revive multilateral trade rules and increase foreign direct investment in Europe. Draghi acknowledged that the financing needs for the green and digital transformation are enormous and must largely be provided by the private sector.
Cover photo: Mario Draghi, former President of the European Central Bank and former President of the Council of Ministers of the Italian Republic, speaks after receiving the Charles V European Prize on June 14, 2024 in Cuaco de Yuste, Cáceres, Extremadura, Spain. Image source: Europe Press 2024 via Getty Images
