Source: The Conversation – France
The world was closely watching the high-stakes US-China summit in Washington from September 23 – 25, which resulted in the US and China agreeing, among other things, to extend their trade truce by two months. Now, the spotlight has shifted to Beijing, as the EU and China enter the final stretch ahead of a decisive round of trade talks seeking to remedy export/import imbalances. On October 8 and 9, trade negotiators from both sides will gather in Beijing for the second meeting of the newly established EU-China Trade and Investment Consultations Mechanism (TIC).
The TIC was launched in June this year, marking a significant step for both sides in restoring an institutional channel for dialogue on trade and investment after a period of relatively limited engagement. The forthcoming meeting is therefore more than a routine round of talks. It will be the first real test facing the new TIC: whether it is useful in stabilising EU-China relations and pulling the two back from the brink of a looming trade war. It is far too early to tell. What is already clear, however, is that some of the most difficult and pressing issues are on the negotiating table.
The TIC has four working streams:
-
Trade and investment balancing
-
Export controls
-
Intellectual property rights
-
World Trade Organization reform.
If the two sides cannot strike a deal at the forthcoming meeting on the most pressing issue of rebalancing trade – the EU’s considerable trade deficit with China, could any of the other three working streams provide room for common ground and help sustain the TIC?
It is argued in this piece that the WTO reform track, which would play out via efforts to update WTO rules, reform WTO institutions and decision-making, and address new trade issues, may offer a pragmatic avenue for sustaining long-term EU-China engagement.
A ‘tipping point’ in EU-China relations
In her State of the Union speech this year, President of the European Commission Ursula von der Leyen described the trade deficit with China as having reached a “tipping point”. But the problem goes far beyond trade. The entire EU-China economic relationship is under mounting pressure, with the considerable trade imbalance at the heart of the dispute. Von der Leyen put the figure at a striking €1 billion a day. She called the situation “unsustainable” and said that dialogue with China must now deliver results. The message is clear: if the October talks fail to produce meaningful progress, the EU is ready to consider other tools to rebalance the relationship.
For Brussels, the situation appears quite pressing, calling for a much stronger stance toward China. In 2025, the EU recorded a trade in goods deficit of around €360 billion with China, a figure expected to reach a new record high in 2026. Behind these figures lies a more structural debate about China’s economic model, including industrial policy, currency policy and state-owned enterprises.
These pressures are more tangible in European industries, particularly in the automotive sector, where Chinese electric vehicle brands can offer more affordable models and attain market share across Europe. Growing competition from their Chinese counterparts adds to the challenges European carmakers face in a period of transition. Volkswagen, one of Europe’s largest carmakers, has agreed to plans to cut tens of thousands of jobs across Europe, while the future of several German plants remains uncertain. This is not to suggest that these difficulties can be attributed entirely to Chinese competitors. It nevertheless shows how industry pressures could be increasingly felt in local communities and capitals, adding to Brussels’ demand for concrete outcomes from trade talks with Beijing.
What can the bilateral trade talks deliver?
Since the TIC was launched in June, the European Union and China have engaged in intensive negotiations on these issues, with trade officials reportedly meeting virtually almost every three days over the summer. Yet much emphasis now lies on whether the two sides can deliver anything concrete by the October deadline.
As far as is publicly known, the EU has asked China to introduce a voluntary export restraint. Beijing has pushed back against the proposal, arguing that it would be inconsistent with World Trade Organization (WTO) rules. The disagreement runs both ways. According to negotiators familiar with the talks, the EU has rejected a Chinese proposal for increasing its purchases of European products through public procurement as part of efforts to reduce the deficit. So far, there is little sign that the two sides have moved closer to a concrete agreement.
In this context, it would be unrealistic to expect the TIC meeting to resolve all the key issues at once. Many of these issues reflect structural problems developed over decades, as well as broader divergences in economic policy and governance models. The value of the TIC may therefore lie, first, in providing both sides with a platform to put their disagreements on the table and seek constructive ways to manage them, rather than allowing them to escalate into broader legal confrontation. On this basis, the two sides can use the TIC to identify common ground, map out specific areas of shared interest, and build on them to develop further engagement. This may be a more constructive way of understanding what the TIC can realistically achieve.
Could the WTO offer a way forward?
Taking this as a starting point for the TIC, the more important question may not simply be what the two sides can agree on in October, but how they can make full use of the TIC to address their key disagreements. The talks may therefore be less about reaching a comprehensive deal than about finding enough common ground to develop more constructive and sustainable bilateral engagement.
The TIC’s four workstreams offer several possible avenues for both sides, but progress may be easier in some areas than others. Some difficult bilateral issues may be hard to resolve through bilateral negotiations alone and may therefore need to be addressed in a broader multilateral context. This is particularly relevant to questions about subsidies and industrial policy, which are global issues with implications beyond the EU-China relationship.
Therefore, the WTO reform track may offer a pragmatic avenue for longer-term engagement. The Chinese government has recently put forward its policy documents on WTO reform. Separately, Professor Guohua Yang and John Alistair Clarke, two veteran trade negotiators, have proposed that the two sides could make better use of the WTO reform track to identify areas where their interests overlap and translate them into a concrete agenda for cooperation. As noted by Professor Bin Ye of the Chinese Academy of Social Sciences, the multilateral track could complement the ongoing bilateral negotiations by bringing some of the bilateral concerns into the WTO agenda. Some issues that prove difficult to resolve bilaterally could be addressed through the WTO reform track, allowing the two sides to work on both tracks in parallel.
There is already some experience to draw from. China and the EU were among the WTO members that joined the initiative to establish the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) in 2020, an interim alternative to appellate review under the WTO dispute settlement system. Their involvement shows that bilateral disagreements need not preclude cooperation within the WTO. A similar approach could potentially be extended to some of the substantive issues under negotiation.
So what can we expect from the October talks? Beyond any “concrete results”, perhaps a modest surprise could be a joint statement reaffirming support for WTO reform and identifying industrial policy and subsidies as areas for further discussion within the WTO. Such cooperation could help address some of the underlying issues in the bilateral relationship while also contributing to the broader global trading system. It would not resolve the trade disputes in the short term, but it could give both sides something concrete to build on and, more importantly, keep the dialogue moving.
A weekly e-mail in English featuring expertise from scholars and researchers. It provides an introduction to the diversity of research coming out of the continent and considers some of the key issues facing European countries. Get the newsletter!
Kunhao Yang is a PhD researcher at the European University Institute and an academic editor of the Chinese Journal of European Law, hosted by the Institute of European Studies at the Chinese Academy of Social Sciences.
Original source: https://analysis1.mil-osi.com/2026/09/29/how-world-trade-organization-reform-could-help-address-the-eu-china-trade-imbalance/