Trade Deficits and Growing EU-China Tensions | The Trade off

Today on the trade off, the EU ran a goods deficit with China of about 360 billion euros last year, about a billion euros a day. Now trade tensions are rising between the Union and China. That and more today on the trade off. >> [music] >> I'm Philip Le director of the economics program here at CSIS and today I'm very pleased to be joined by our guest Francesca Ghiretti, uh the director of the economic security and resilience initiative and senior and newly minted senior associate non-resident here at the economics program. Um she works at Rand, she's worked at uh Merics in the past. Her PhD is from King's College in London. She's an excellent colleague and one of the best voices on economic security, Europe, China, and the rest. Uh Francesca, welcome. Thanks for having us or thanks for being here. >> Thank you Phil. Thank you for having me. >> Excellent. Uh well, as I was saying, it's uh things are heating up and it's not just uh the temperature there in Europe. Um uh there's a lot of discussion these days around sort of a China shock 2.0. Um you know, let's put aside the fact that I think the first shock was a little misinterpreted and misunderstood, but the second shock does appear to be relatively real and I feel like the narrative around this shock is really taking hold in Europe. Um what are you seeing in Europe today? How have moods changed? What are people thinking about trade with China today? >> I think a lot of the um grievances that have been boiling for a few years across Europe are really coming to some sort of uh um some sort of synthesis, right? So, when we think about China shock 2.0 and obviously we're seeing quite a few papers arguing that this is happening, others arguing that this is not happening. So, I would say, you know, the debate is kind of the same that it was in terms of the China shock 1.0. But, what is really at the bottom of it is an a grievance around China's unfair economic practices. And we're talking about specifically two elements. One is the unfair and illegal subsidization of specific sectors, and the other one is the devaluation of the RMB. And basically, how these are contributing to the EU loss of manufacturing and of market share in third countries. So, basically, the core issue is really the production substitution. Not as much deficit per se, not as much just the simple growth in import from China to the European Union, but this production substitution that is happening. And there have been really good good papers looking into these. One is from Brad Setser and Sandra who have looked specifically at Germany, the heart of the manufacturing production in Europe. But, also you have a number of papers, for example, from the Kiel Institute who argue that when it comes to exports, at the end of the day, really only 1/3 of the loss of global market shares that the EU is seeing in its products are to be attributed to the China shock or China production substitution. The rest of the 2/3 are more of internal issues that the EU needs to solve for itself. >> So, that's really fascinating. So, I mean, I I think you know, obviously, Europe often sort of looks inward when they sort of see challenges and they think about sort of the ways in which they need to reform. Are you seeing more energy put into actually actualizing those reforms? I feel like one challenge there is it's always like, well, yes, so here's the problems and then you kind of talk about the problems for a while and then kind of nothing gets done. Like, are we seeing more momentum there or is this kind of the same old story? >> Depends what we mean by Europe and here is going to be a sort of the the underlying tension throughout this podcast this web webcast and throughout the whole debates that have to do with Europe. I think since 2023 we've seen tremendous momentum in Brussels not only in the recognition of the China challenge itself and the actions around how to try to tackle this China challenge but also in terms of recognizing that there are some structural issues that the European Union itself is facing. You know, if we think about the letter report the Draghi report they were all meant to diagnose what was going wrong propose something new and Institute Montaigne has just recently published a very interesting report in which they're assessing that at the end of the day step forwards have been made when it comes to the Draghi report. So there's been a lot of momentum in in the European Union in Brussels specifically and maybe we can talk about some of these measures in the course of the webcast one of these is the industrial accelerator act which is sort of this industrial policy that the European Union has to at the end of the day grow the positive spillovers of investments in into the European Union and maybe we can talk about the new measures that may be proposed in the autumn in relation to China specifically. Now if >> you go ahead sorry. >> I was I was going to say this is Brussels though. This is like my short comment was going to be this is Brussels member states have somewhat shifted and you have seen some seen some shifts in Paris definitely in in The Hague and we'll talk about this probably in Berlin as well but not as significantly so you do still see a lot of the usual trying to preserve and safeguard the country interest before that of the European Union. >> Yeah. So, that's always a tension in European policy. And you know, I certainly don't don't begrudge them that. It's an incredibly hard problem to solve. So, before we get to The Hague and and specifically sort of some issues that that they have been having recently. This sort of brings us in there. You know, there's kind of two sides of the coin on the China challenge. One of course as you mentioned is the policies that they see the the the PRC taking that are harming competition, therefore harming sort of the industrial base and other issues. The second, which I feel like is a newer focus, at least from my experience from Europe, is the sort of looking more critically at dependencies on China, right? So, whether that be rare earths or semiconductors or you know, any net manner of thing, even chemicals I think are becoming more of a focus. How does that fit into this conversation? And and you know, obviously, for every country, economic security or economic block, economic security is a sort of new and hard thing to think about. But for the European Union specifically, economics and security being sort of interlinked is is a challenge given sort of national competencies versus the EU. So, what's the conversation there like? >> Right. So, a lot on the table. I totally agree with you. You know, sort of the the more long-term issues that the EU and China have had since the early 2000s really, since the so-called textile war of 2004, 2005, 2006, right? So, very very early on when people say, you know, that the issue started in the mid-2010s, yes, but there were some a lot of things still brewing. And those had to do with the so-called lack of level playing field, right? Now, I'm afraid of using the term so-called because China has just published a paper on so-called excess capacity. So, I feel like I'm also having using the same term. That's not what I meant. Um so the lack of a level playing field, unfair competition, and so on and so forth have been there for 20 years, right? So, that is sort of the most traditional issues that the two have that in theory should have been solved with a comprehensive agreement on investment and then everything that happened around that in the early 2020s. Um in terms of the dependencies, this is likely So, there are two debates that are important. One is the economic security argument. So, basically when those security enter the conversation of the economic relation between the European Union and China. So, when it's not just about imbalances, but it becomes about an element of security. And that is with FDI screening in 2016. And specifically, there's an element of thinking about the know- Sorry, the knowledge transfer and how that knowledge transfer could have military um applications as well. And that grows into then the whole debate that we get until 2023 and the economic security strategy. The dependency side really emerges with COVID-19, right? When there is an evident case of oh, our supply chains are heavily dependent on this one single point of failure. And if things don't go well, not just because there is a political intent or a geopolitical intent, just because something can happen, then we don't have the supply that we need. And some of the supplies are obviously vital. So, there starts the thinking around supply chain diversification, production at home of critical imports, and and all these sort of things. This somewhat materializes in a series of policies from the sort of 2021 to now, whether it has to do with semiconductors, whether it has to do with critical infrastructure, critical minerals, and so on and so forth. But we get to a point in 2025, before that actually, but you know, sort of 2025 where we realize we do need something to incentivize or force the hand of companies to diversify in critical um areas. So, that is where the proposal of what could be seen as a resilience instrument or a diversification instrument emerges. And the idea behind it are two, in general. So, one is to ask companies in relevant sectors with relevant items to have more than three, sorry, at least three um suppliers. And the other one is, well, we raise the barriers. So, basically, we impose tariffs to increase costs so that companies in the areas of interest, in the items of interest, are forced then to um diversify because it becomes too costly to import from that one single point of of import. So, dependency really entered the core of the debate from the 2020s, but they do develop throughout those six years until now. 2021, you have the um economic coercion against Lithuania, obviously, which is another instance in which, you know, the European Union realizes, "Oh, it's not just that we have dependencies, it's that these dependencies can be weaponized." Uh 2021 is also the year of the exchange of sanctions between the European Union and and China as well. And so, you have all these developments also in relation to Russia's invasion of Ukraine in 2022 and the supply uh Chinese supply to to to Russia and so on and so forth. >> Yeah. So, I think the the situation of Lithuania, I think is a really great example, at least from my perspective, about how much things have changed over the last few years. Because, you know, I was in government at the time and and, you know, it actually took, uh at least from my perspective, it took us a lot of time to make sure the European the some of the bigger countries actually responded kind of the right way to that. Cuz some of the initial comments from, say, like the Germans was not super productive, right? They sort of laid this at the feet of the Lithuanians in a way that, you know, I just don't think would happen today. So, it is something that I think is evolved quite a bit. Um, so thinking a little bit So, I'd be curious, do you do you have any sense of like where is are those conversations going and cuz you start you kind of laid out two different approaches. One is sort of a a price mechanism, so a tariff on concentration. One is, you know, in my sense sort of uh uh creating a price through the administrative burden to industry of sort of of having these pliers. I mean, where is that shaking out right now as far as you can tell and and like do you have any sense of what strategy the Europeans might adopt? >> I mean, to be totally transparent, I do not have a sense of which of the two they're going for. Um, if you asked me a few weeks ago what I I would have said, well, probably DG Trade also doesn't have a sense, but by now I think they do have an idea of where they'd rather go. Um, but in the meantime, you also had and we'll know and, you know, we get to that, but we'll know probably by the State of the Union that Ursula von der Leyen is going to um is going to deliver on the 16th of September, right? So, by then we we should know. Um, that is the case also because in the meantime, obviously, three working dialogues have started between the Europe- Sorry, four working dialogues have started between the European Union and China. So, when uh when Šefčovič, the Commissioner for DG Trade and Economic Security, and Wang Wentao, the Minister for Economics from China, met, four work streams started between the EU and China to debate progresses in four areas. Now, I'm not going to be able to list them. Let's try. It's trade and investments, IP, WCO reform, and export controls. Actually, I was able to do that. Um, and they should make progress by October. So, basically, two things happened more or less at the same which is at the end of June, mid-June, the council, the leaders of the European Union gathered and in theory there was a rumor that they could have adopted some serious tariffs against China. Instead, they mandated DG Trade to create new instruments potentially and a solidarity measure, which, you know, should be launched again, I think, during the State of the Union. And shortly after that, the dialogues with the Chinese started on these four work streams. And so, we have this timeline, which kind of overlaps between State of the Union, the visits from Denisa Dones, Sefcovic, the October deadline, and then obviously at the same time, the November deadline of the extension on Sorry, on on the pause for the export controls on railroads. >> Yeah, absolutely. And that's something where I think the the export control extension, you know, Europe is in kind of a position of almost being a bit a bit on the sidelines in terms of sort of like they're sort of watching what happens with high interest as as we all have. But, it's in a bit of a awkward situation in that sense, right? As this is happening at the same time. Um I'd love to touch really briefly. You mentioned Nexperia and sort of that we've mentioned the Dutch bid. I'd love to just chat about that a little bit. So, for those who haven't been tracking, you know, um we've seen an increase in sort of investment screening mechanisms that have come up on board. Um Nexperia was a situation where the investment screening kind of came after the investment had happened. So, as a result, the Dutch government used a law they would they would we reached way back in the in the bag and used a law from 1952 to basically force a divestiture of a Chinese companies from or Chinese from from a Dutch semiconductor company. And that led to sort of immediate sort of actions that led to disruptions of um supply chains, especially for automakers. Um you know, I think this is an area where, [snorts] you know, we've had a lot of shocks in the recent years. This is another shock to supply chains. Um do you have a sense of like how how how big a deal was that? I think it for an American audience, many just candidly don't know about it. How big of a deal was it on on the continent? And how do you have any sense of like how this might have changed or how this may change in the future the way that Europe handles these issues? >> It was a huge deal for three reasons. The first one is that it was a headache to understand what was actually happening. [laughter] There's a lot of things were moving at the same time. So, we were kind of okay, so what exactly is happening and what are the consequences? The second reason is that it was a case that developed very quickly and the escalation also happened very quickly. And as Europeans, we weren't necessarily used to that pace, like fast pace, right? >> Yeah. >> And also in terms of strength and speed of Chinese response, I think that is something that we should go back to. And then the third reason is that it hit at the core of the dependency / supply chain issue that we we were talking about, right? So, these chips are absolutely fundamental for the automotive sector, which is at the same time reason of pride and pain for all Europeans these days, but also it brought to the realization that the automotive sector doesn't really have a proper plan B, right? So, you know, either those chips were going to arrive or production could have stopped. Um so, these are the three reasons why it was huge. Um and I'm going to mention I'm going to try to walk us through the bit of the timeline. I have notes down because [laughter] But, I'm going to mention one thing that I find quite interesting. The acquisition by Wingtech of Nexperia, if I remember correctly, it happened in 2019. And you correctly highlighted that in 2019, the Netherlands didn't have an FDI screening mechanism because their screening mechanism became active in 2023. But, interestingly enough, 2019 is the year in which the EU regulation on FDI screening became active. Um so, you know, there's always that idea of oh, the EU is so nagging. They pass so many regulations. And then member states take Sometimes they do take their sweet time before having their version implemented and passed. But, you know, had the had the Dutch has had a screening mechanism in 2019, I I'm not saying we would have seen something completely different, but perhaps, you know, it would have been a different process in terms of scrutiny and asking for certain requirements before the acquisition was completed. Now, maybe now somebody will come back and they will say, "Oh, but you know, the screening mechanism from the EU was active from October 2019 and this happened before." Yeah, fair enough. But, you know, I was trying to make a point. >> [laughter] [gasps] >> No, it's a very good point. Yeah, yeah. And you know, this I feel like we just keep finding new tools that we wish we had slightly earlier. So, you know, that's very few of them have not happened yet. So, speaking of you know, deterrents and instruments, you've recently written that Europe remains extremely weak on economic deterrents. I'm curious you wrote that about a year ago. What do you sort of diagnose? Is it still the case or have they built all the tools they've needed and and shown their commitment to using them? Um and to the degree to which they still have a problem around sort of their ability to create deterrents, um what do you assess as what do they need to do and and do you think they're going to do it? >> Right. So, I agree on the point that the issue is credibility. So, if we look in terms of tangible ways in which the EU could deter actions, especially economic coercion or, you know, the use of economic levers to impose costs, there are so many papers that show that the EU, if it wants, it does have that lever and it can find ways to deter such an actions such actions. What we're facing at the moment is not a lack of means, is clearly a lack of credibility. And it's not just Beijing, even in Washington, I'm pretty sure that people don't believe that the EU would be willing to impose impose any real costs because it's not really willing to pay any of the costs often time imposing economic restrictions or using economic levers comes with, right? So, whether it is Okay, you confirm that, great. So, whether [laughter] it is is whether it is because they think simply that the EU is kind of this beast from the liberal economic system, they will try to negotiate until the end sort of an agreed solution before they actually act, or whether it is because people think that, you know, at the end of the day, even for decisions where you need qualified majorities and not all the 27 on board, you still need political support. Like, you won't be taking very difficult decisions if you do not have political support. So, the convention is that well, the 27 will never be able to agree on something like that. Somebody will always emerge and say, "Well, no, let's try something different." So, we lack credibility for that reason. And I don't think that, again, that particular meeting of the council in June helped because it gave once again the impression that the EU prefers to kick the can down the road and do something technical rather than take a rather strong strong action. Now, why does that in their deterrence? Well, because you can have the most perfect measure in the world and you can be the most you know well placed economically speaking and economic lever wise country in the world, but if nobody believes you're going to you you're going to ever use any of them, then you're not deterring anyone. And I think that up to a little while ago the convention was that eventually the other people were exercising restraint as well. Obviously that kind of crumbled when the second Trump administration got in into the White House and with the tariffs of April 2025, but in relation to China, I really do think that between the next period case and the rare earth export controls, that also create a situation and awareness of well, maybe are not exercising restraint anymore. And and just recently the EU imposed sanctions in relations to the Russian invasion of Ukraine is sanction 14 Chinese entities, gave plenty of notice to China that this was happening, but China responded sanctioning 14. Sanctioning, yeah, basically posing on the export ban list 14 European entities. So this happened quickly. And what we see is that not in this particular sanction case, but in other cases China is willing to escalate. So sort of the bottom line is evidence is showing to the Europeans that whatever type of deterrence they'd like to be able to do, for example by adopting the anti-coercion instrument, other countries don't see that as as working. They don't see they They see the European deterrence. So, I suppose feel the difficult question is how do you change this? >> Yeah. >> And I don't know what you think. I would love to know what you think, but part of me is you need to show that you are willing to do this, right? That you are indeed willing to act. >> I I totally agree. I mean, I think even when I was So, I was in the last administration, we at the time did not think it'd be very likely the EU was going to use the anti-coercion instrument. Um we thought if they were going to use it, they're going to use it against us. But what we were really saying >> wrong, no kidding. [laughter] >> Yeah, exactly. Uh yeah, look, uh E-EAS and and DG Trade were always very uh quick to remind us that they they put it into place because of the first Trump administration, you know, it was it was >> [laughter] >> so um but and I think the the challenge here, to your point, is the more episodes of like bonafide coercion the Europeans experience without using their anti-coercion instrument, it just every single time it becomes less and less credible um because there's ample opportunity to use it. Um I'd be curious I mean, there's two things you sort of hit on there with the one is the credibility, which I think at some point you just got to use it or just admit that you're never going to use it. Um the other is sort of the thing you've hit on twice, which is sort of speed. Like the speed which with China responds and you know, maybe Europe I don't think anyone's really necessarily set up to to respond that quickly in the sort of democratic system. Um but maybe Europe is sort of uniquely poorly set up to to respond quickly. Um say a little bit more about sort of like the the the speed of gameplay here and how you how you think Europe might be behind. >> What I've been So, for a while I've been thinking about timing, right? Which seems to be something when we think about strategies or statecraft. For a long time, we've sort of forgotten about timing as one of the elements that are fundamental to winning a contest or a conflict or something like that, right? And it may be because, you know, lately I'm exposed to a few colleagues who've been doing defense, like hardcore defense, and so they're a little bit more aware of these things than than I am. Uh but I've been thinking about timing, and I think that it's not as much the fact that the speed of response, so it's not as much how quickly if China hits the EU adopts something as quickly, I think it is really the timing that something takes in order to impose pain on the on the adversary or on on the subject that is being hit, right? And China has a major advantage, which is they are an export-led type of economy, which means in this particular case, that they supply other countries with a lot of very important and critical things. Upstream, rare earth, and critical minerals are one example, right? So, if they cut off that supply, we've already seen that the pain can be felt relatively quickly. Right? Which means that very quickly you will have companies and individuals feeling the impact of this restriction. Now, the European Union is a really great market with a fantastic consumers, and we know that, for example, a company like China Sorry, a country like China needs um economies and uh markets such as that of the European Union. So, were the European Union indeed close its market, eventually it would impose quite a bit of pain on China. But that eventually is the problem. The pain wouldn't be as quickly felt as it has been for the supply-driven type of restrictions. So, demand-driven type of restrictions take a longer time to impose that pain, and in the meantime, you are in an escalation ladder, right? So, you are very likely to feel the pain yourself. And I think this awareness is becoming much, much more real in in the European Union of the fact that we can impose pain, but that pain will take a long time to bring the desired effects. And in terms of just one more thing about speed, I think that Yeah. In the case of an Xperia, for sure, there was a lot of surprise that the Chinese were able to respond so quickly, and they they were able and willing to respond so quickly and so assertively, and we're seeing that being the case more and more in in most recent cases as well. >> That's fascinating. I think that's a real it maps well onto I think the sort of change in China's approach between the first and second Trump administration, too. I mean, I think they're, you know, obviously the escalation was much smaller, but, you know, that at the time, the 301 in China was a really big deal, and they didn't like it. Um, but their response was shutting off the Chinese market to US agriculture, right? And I think that, you know, by all accounts, they were sort of surprised how little impact that had, and to your point, it was it was a demand channel, right? Yes, farmers in the US weren't happy, but we were able to subsidize a little bit, and it and it didn't have sort of that immediate pain point. Whereas this time, you had executives from our the big three automakers saying, "Lines will shut down within a few weeks unless you do something, right?" And so, that's a to your point, it's a very different sort of calculus of pain. And the one thing I also want to add really quickly, it's just to get your thoughts on was that, you know, this is kind of the irony of having a a responsive government in sort of a democratic society that, you know, one reason Europe might be less willing to take pain is because there's elections. Like where where as policy makers are responsive to their to their people in a way that like obviously I wouldn't want it any other way, but it makes economic statecraft a little bit more challenging than in other societies. >> I would argue is perhaps worse than that because it's not even the normal election cycle where in theory you get 5 years to do something average you right. We are in constant election. Right, you do notice that our governments are in a constant state of election by which a government can fall any moment and a new prime minister can be can be voted in or not voted in or appointed, right? Which makes it really difficult to any sort of trade-offs. And so you end up in this spiral by which yeah, statecraft becomes almost impossible. >> Okay, well you bum me out even more. >> I have great faith in the European Union though. I just wanted [laughter] to >> Excellent. Excellent. I'm glad to hear it. All right, one last thing before we sort of close out here. You've recently talked about another sort of potential vulnerability of our sort of economic dependence, which again as a trade economist I hate talking about all these things, but you know, a trade still is very useful. Which is to say sort of the the increase sort of reliance on Chinese products that are not just sort of the you know, mechanical assets, but they're sort of overall smart connected systems themselves. So whether this be sort of you know, cellular modules or or software or anything that even even certain you know, solar panels depending on sort of the the technology goes along with it. You've written recently written really excellently on this. Tell us a little bit of more about like where you see concerns here and where do you see Europe in sort of the understanding of this problem? And where are there solutions that that aren't sort of throwing the baby out with the bathwater, if there are any? >> Yeah. So, we we're talking about connected technologies um at large, which are I would I would recommend people reading what Charlie Parton has been writing about this for I would say years literally, you know. Um so, a- anything that we've written kind of piggybacks on the amazing work that Charlie has been doing. But basically, I think this really embodies very well the two souls of the China issue that we're facing at the moment. One is the competition one, and so is basically what the Industrial Accelerator Act is trying to solve, which is if you invest in Europe and you want to build a green technology in Europe, then we need to make sure that that particular tech is uh you know, being built possibly by as many European workers as possible, bringing positive spillovers to the economy at at wide. So, it's not just basically an assembly plant. So, it's this idea I I think we can't really call it local content requirement, but we're going in that direction, right? In terms of the the requirements that would bring positive spillovers to the economy, and possibly even knowledge transfer. And this is one side of the story about the connected um technologies, because a lot of these technologies have to do with electric vehicles, photovoltaic panels, wind turbines, and so on and so forth, right? So, all those kind of things that perhaps in the past didn't necessarily have a specific connection, but now they they do. And that is one one side of the story. So, it's the competitiveness, making sure that Europe is still able to manufacture and sell these these items. The second part of the story is very much well embodied by the Cybersecurity Act 2.0, which is another regulation that the EU is working on, and is basically the idea that we don't for many of these products, we don't really have a good overview of what type of data they collect, if they collect data, where data go, and where data is stored, and how is used. We don't even know how easy it is to hack this platform or hijack these products once they are in the street, right? So, because we don't have the certainty, that creates a cybersecurity issue. And in that case, obviously, one of the approaches thinking about risky actors and trying to keep risky actors out of of these products. Another approach is thinking about is it even possible to mount, in this case, European or American software on a Chinese hardware, for example, is one of the solutions. So, the issue is that any kind of have some memories of the 5G debate, you know, the core-periphery dichotomy and all of that. But the issue at the moment is basically trying to find a way to bring home these two solutions that they matter for the same type of items and products, but they really do touch upon two very different types of challenges. >> Yeah. That's Yeah, that's fascinating. And the the challenge I think I I think we have over on this side of the pond, so to speak, is, you know, this these two require an immense amount of technical expertise just to even understand the problem. Uh and then, you know, the problem is not generally best solved by tariffs, which is the tool of choice these days over here. So, understanding the problem by itself really hard, and then sort of getting to a solution that sort of solves the underlying problem. And ideally doing that sort of uh you know, uh with with close partners, which is, you know, maybe a trade and technology council would be a useful plan or something, you know. >> If it's too late. Yeah, no. No, but you know, maybe just one last thing, these will become ever will become increasingly more relevant as we think about artificial intelligence and embodied artificial intelligence, right? So, we do see already a lot of collaborations between Chinese entities and European robotics entities. So, it does really seem that despite all the attempts of filling these regulatory gaps and making sure that especially the security element is well prepared for the future challenges, we're not in that position and the technology is evolving relatively quickly. And you have entities not just in China, but definitely in China, that they really do want to have the full tech stack under their own offer. So, these are things that are going to become very real and very tangible extremely quickly. >> Yeah, and more and more we're going to be dealing with things where we can't we don't have the technological lead. And so, you know, it's going to be more and more difficult to sort of to to convince especially industry to sort of forego good options, you know, in the name of competitiveness. Well, excellent friend, well, thank you so much for joining. Before we go, I just want to ask you like, you know, we we've just started a new presidency of the EU. We got the Irish in there. What are you thinking over the next 6 months? Like where for economic security policy or just broader economic policy vis-a-vis the EU and China? What are you looking out for and and what are you interested in seeing going forward? >> First of all, what's an amazing presidency, the Irish presidency. We're looking forward to it. Um who doesn't like the Irish, right? >> I do. I do. Listen, as as a quarter Irish, love the Irish, you know. >> There you go. >> [laughter] >> Not Irish at all, but you know, whatever. Um okay. So, let's start with the short term. Short term, any news that we get regarding the four working groups that are happening between the European Union and China is something to watch out for, especially when we think about market access. What are the sectors that, you know, these these phantomatic of potential market access offer from China is covering? What is the EU asking about that market access. And export controls, you know, specifically in the sense of both the for the rare earth export controls, but also in theory for the export ban that China had imposed on Experia's chip, they both uh ran out in in November. So, watching both the European negotiations, but then especially the US-China um summit and what comes out of that, you know that. Other things that I will be watching is the um state of the union as of 10th of September, and specifically what type of instruments are announced. Is going to be an overcapacity instrument, diversification instrument, resiliency instrument, all three of them, only two of them? And then the solidarity measure, right? On top of the instruments, the the council has tasked the DG Trade to work on a solidarity measure, which would be extremely interesting to watch. We know that one of the main challenges that EU member states have is showing solidarity to one another. So, these will be something very, very fundamental and and interesting to watch. In relation to the EU-China again uh negotiations, the Neelie Kroes will be going at the end of September, if I'm not mistaken. Uh Sevkovic will be going at the beginning of October. And I think now the um High Representative Vice President Kaja Kallas will be going this autumn as well. So, there are a lot of meetings. And what I'm wondering around that is are we is is is a situation by which we replicate something similar to what the US and China have even possible? So, can you try to stabilize the relationship while to a certain extent still hitting each other with some measures? Or our type of tension is much more existential because it has to do with China's economic system and approach. And so, it will will more difficult to reconcile the two. This is sort of the question mark that I have for the next uh few weeks a month. And then the last one again, development of the industrial accelerator act, how exactly does it come out of that, and the cybersecurity act. I'm sure I'm forgetting something, and I know there's things in the pipeline regarding chemical diversification and so on and so forth, but this is what I'll be watching I'll be watching for the next few months. >> Well, I think well, that's plenty. So, that's fantastic. That's it's a busy dance card for for Europe and China, and really excited to see or interested to see what comes out of those meetings. Uh Fran, thank you so much for joining us, and I I meant to do this at the beginning, but apologies. If you want to hear more from Fran, she has a fantastic podcast, Geoeconomic Competition, a weekly show about all these issues and and plenty more. Uh so, please check that out. Uh and thank you again, and see you soon. >> Thank you, Phil. >> All right. Bye. >> [music]