Prime Minister Alexander De Croo (Open VLD) has called for a "European Industrial Deal" to protect the continent's manufacturing base.
Speaking to German industry representatives in Berlin on Monday, the Belgian premier said that the initiative would complement the already-existing European Green Deal, which aims to address the ongoing climate crisis.
"The question we are facing is this: how are we doing to continue the growth of European industry? The answer is this: with a European Industrial Deal that would be on the same level as the European Green Deal. Not in opposition to each other but by strengthening each other."
Don't call it protectionism
During his speech, De Croo suggested that the imagined Industrial Deal would "mirror" the Inflation Reduction Act (IRA). Signed into US law in August last year, the controversial legislation provides up to $369 billion in government subsidies to stimulate green investment and consumption - with the vast majority of these subsidies available only for products manufactured in North America.
"We have to go from the stick to the carrot," De Croo said. "The EU has always taken the lead in the greening of the economy through regulation... But with their Inflation Reduction Act, the United States is holding out a mirror to Europe. America is not a country of sticks but of carrots. America has lower energy prices than Europe, lower industrial wages, and they don't add subsidies to the equation. It's time to change gears in Europe."
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Although he did not explicitly use the term "protectionism", De Croo did imply that Europe should not be afraid to adopt openly protectionist policies, so long as they are reciprocal – particularly against China.
"What is not possible for European companies in China should not be possible for Chinese companies in Europe," he said. "Let's give up our naivety once and for all."
"The trade deficit between the EU and China tripled in 10 years to €400 billion," von der Leyen said at the G7 Summit in Hiroshima last week. "This imbalance is partly due to non-market practices such as hidden subsidies, discrimination in public tenders and other distortions created by China's state capitalist system. We need to address these distortions."