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In Trade War, EU Is Force to Be Reckoned With, Netherlands Warns

Bloomberg logoBloomberg 12/5/2019 Viktoria Dendrinou and Joost Akkermans

(Bloomberg) --

The European Union will act as one if the U.S hits France with tariffs and must stop being naive with powers like China, the Dutch Finance Minister warned.

Adding to growing calls for the bloc to do more to boost its economic sovereignty, Wopke Hoekstra said in an interview that the EU shouldn’t sit idly as countries like China subsidize their companies, or Donald Trump’s administration turns against its member states.

Faced with a global stage that’s increasingly dominated by the U.S. and China, the EU has come under pressure from some members to ensure a level playing field for its companies so that they can better compete with rivals that receive a helping hand from their governments.

“It is simply unacceptable that we are playing by the rules and some others just do whatever they like and by state support have the ability to out compete some of our companies,” Hoekstra said on Thursday. “If we look at the airline industry it’s bizarre that a great company like Air France-KLM is competing in a completely unlevel playing field with some of the carriers from outside the EU.”

His comments follow a recent initiative by the Netherlands calling on the EU to overhaul its competition framework by granting the European Commission powers to perform checks on companies that could potentially distort markets.

The Dutch push comes as a new executive has just taken the EU’s helm in Brussels and as the issue of protecting the region’s industry is gaining more prominence amid the rise of economic nationalism across the world, including with Trump’s America first policies in the U.S.

Rail Merger

In Europe, the issue came to the fore earlier this year after the commission decision to block the merger of the rail operations of Germany’s Siemens AG and France’s Alstom SA. The French government called the ruling a political and economic error for Europe that would serve the interests of Chinese competitors.

France and Germany voiced concerns that existing EU rules are at odds with the need of European companies to grow globally and to contend with companies from China and other competitors that may receive state aid to drive their expansion.

“We learned to stop working with state aid, but the reality is that state aid is the thing that is applied all over the place” Hoekstra said. “You can be naive and say that it is unfair and just continue your business as you were or you can change it.”

An area where Hoekstra didn’t doubt the EU’s strength is trade. There, he echoed France’s conviction that the EU would be ready to retaliate should the U.S. proceed with tariffs against Paris over its digital tax.

“Economically we are a force to be reckoned with,” he warned. “I am convinced that within a trade war as Europeans we will act as one,“ he said, though he added that the bloc should still prevent “anything that feels, smells or looks like a trade war with the Americans.”

To contact the reporters on this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.net;Joost Akkermans in Amsterdam at jakkermans@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Peter Chapman

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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