The global trade order is shifting from a multilateral trade system based on existing norms to a focus on national economic security. The European Union (EU), once seen as a symbol of free trade and a single market, is no exception. The transatlantic trade relationship with the United States is currently undergoing adjustments due to tariff issues, while oversupply from China is complicating the competitive landscape for European manufacturing in sectors like steel, automotive, and wind energy. The European Commission's release of the 'Competitiveness Compass' highlights the urgency of addressing innovation gaps with the U.S. and China and reducing external dependencies.
The U.S. factor is a significant variable in shaping Europe's trade and industrial policies. Following the rise in tariff and trade tensions since the start of the Trump administration, a temporary resolution seemed to be reached with an agreement on tariff caps, yet tensions remain high. The U.S. accounts for about 20% of the EU's exports, making it a crucial market. While additional tariffs are burdensome, the greater concern lies in the ongoing pressure and repeated threats of high tariffs from the U.S., which create persistent uncertainty for European investment and export strategies.
The Chinese factor is more directly impacting the industrial sector. The EU has determined that products benefiting from subsidies from the Chinese government are flooding into Europe, harming local manufacturing. In response, the EU is strengthening industrial protection measures, including countervailing duties on electric vehicles. These defensive measures extend beyond trade remedies. The EU is enhancing regulations based on the Foreign Subsidies Regulation (FSR) to prevent subsidies from third-country governments from distorting investment and public procurement markets within the EU, focusing investigations on Chinese companies involved in electric vehicle and solar projects.
The EU's protectionist tendencies are evident across key industries, including steel and defense. Following the steel safeguard measures, the EU is implementing a steel import tariff quota (TRQ) system designed to significantly reduce import quotas and impose high tariffs on quantities exceeding those quotas. The 'Made in EU' or 'Buy European' policy is also gaining traction. Notably, the Industrial Acceleration Act (IAA), proposed earlier this year, is expected to favor European products and local production bases in key strategic sectors.
However, it is not accurate to view the EU's trade policy as solely protectionist. The EU selectively protects its strategic industries while actively expanding its trade networks with external partners. This year, the EU signed a trade agreement with Mercosur and has reached negotiations with India and Australia, aggressively pursuing free trade agreements (FTAs) like never before. This approach is not about unconditional market opening but aims to meet EU standards and expand markets and cooperation with 'reliable partners' under the conditions of economic security and industrial competitiveness.
These changes present opportunities for South Korea. From the EU's perspective, South Korea is seen as a trustworthy partner with a stable and cooperative foundation. Since the implementation of the FTA in 2011, South Korea and the EU have established a solid basis for trade and investment, with common areas for cooperation expanding in digital transformation, green industries, and advanced manufacturing.
Particularly in sectors such as batteries, semiconductors, power equipment, automotive parts, pharmaceuticals and biotechnology, and eco-friendly materials, South Korean companies are viewed as 'reliable partners' that the EU needs. While Europe seeks to reduce its dependence on China and strengthen its local production base, it is challenging to build all strategic industries independently in the short term. Ultimately, the EU requires partners with excellent technology, mass production experience, and stable supply capabilities.
Crucially, it is important to view the EU market not merely as an export destination but as an opportunity to upgrade cooperation levels through local production and joint research and development (R&D), thereby becoming an integral part of the European industrial ecosystem. Additionally, efforts must be made to meet the standards required by the EU, such as responding to supply chain due diligence, complying with carbon regulations, and establishing recycling and circular economy systems. While the entry barriers set by the EU are high, those companies that meet these standards will find the most stable and long-term market opportunities.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.