Getting Tough on China - The EU's Trade Defence and Investment Screening Reforms

From the time that the Xi Jinping administration took office in 2012/2013, it has become obvious that China has defied western expectations as regards its transition towards a market economy. The disillusionment in the EU (as in the US) regarding China rests very much with China’s political economy and the impression that an economic superpower is unfairly twisting the rules of the game to the detriment of its trade and investment partners in the west. The pervasive use of public subsidies for Chinese companies, dumping of Chinese products onto world markets, asymmetric Chinese restrictions on inbound FDI, discrimination of foreign bidders for public contracts in China, forced technology transfer and, finally, intellectual property theft are among the key and recurrent complaints of its western partners. This paper intends to look into recent reforms of the EU's toolbox to deal with this comprehensive challenge, in particular the two reforms of its trade defence instruments - the methodology reform in 2017 and the trade defence instrument moderninzation reform of 2018 - and the framework legislation on investment screening in 2019. Based on a number of interviews and using a multiple streams framework, the paper analyzes why a policy window for reforms opened in 2016/2017 allowing for important policy changes intended to reduce the "reciprocity gap" in EU-China trade and investment relations.