Europe’s Battle Against Overcapacity: Tackling Surplus in Agriculture and Manufacturing

The European Union has a history of dealing with overcapacity issues, such as butter mountains and milk lakes caused by its common agricultural policy. This policy guaranteed high prices to dairy farmers, leading to excess production. During a recent meeting in Paris, the president of the European Commission, Ursula von der Leyen, expressed concerns to Xi Jinping about China’s “structural overcapacities” in manufacturing.

While Europe has previously dealt with overcapacity in agriculture, its current worry is focused on the flood of electric vehicles and steel coming from China. This influx of products has the potential to displace industries and jobs within the EU. In particular, China’s steel exports have increased by over 28% in the first three months of this year, while exports of new-energy vehicles have risen by almost 24%.

To address this issue, the EU is considering imposing “countervailing” tariffs to counterbalance the subsidies that have contributed to the growth of China’s industry. This action is being considered to protect European industries and prevent job losses within the union. The EU is taking steps to address the overcapacity issues in manufacturing to safeguard its economy and workforce.