The German Mechanical Engineering Industry Association (VDMA) is calling for a more aggressive trade policy toward China, with President Bertram Kawlath urging the European Union to implement stronger defensive measures to protect domestic manufacturers. In a recent interview, Kawlath advocated for a reversal of the burden of proof in anti-subsidy proceedings, arguing that current frameworks leave European firms vulnerable to unfair competition.
Shifting the Burden of Proof in Trade Disputes
At the center of the VDMA’s proposal is a fundamental change to how the European Commission handles anti-subsidy investigations. Currently, European companies often bear the heavy task of documenting state-backed competitive advantages that foreign rivals enjoy. Kawlath suggests that the burden should shift, requiring entities under investigation to prove that their pricing and market position are not the result of state-funded subsidies.
The VDMA, which represents thousands of companies in one of Germany’s most significant industrial sectors, views this as a necessary “shield” against what it characterizes as incoming “arrows”—a metaphor for the competitive pressures currently facing European machinery manufacturers. By demanding this regulatory shift, the industry seeks to level the playing field against Chinese manufacturers that benefit from state-directed industrial policies.
Market Access and Industrial Stability
The German machinery sector, a backbone of the national economy, has long relied on global trade but is increasingly wary of the risks associated with market distortion. Kawlath’s comments reflect a growing consensus among European industrial leaders that the traditional approach to trade defense instruments is too slow and cumbersome to address the speed at which market dynamics are changing.
The VDMA’s push comes amid broader discussions within the European Union regarding “de-risking” its economic relationship with China. While the machinery industry remains deeply integrated into global supply chains, the association is signaling that the era of passive trade policy is over. According to the organization, the European Commission must prioritize domestic industrial stability, even if such measures risk triggering retaliatory trade actions.
Broader Implications for EU-China Relations
This development arrives at a critical juncture for EU trade policy. The European Commission has already initiated several investigations into Chinese subsidies, most notably in the electric vehicle sector, which has set a precedent for more assertive trade enforcement. The VDMA’s demand for a reversal of the burden of proof would, if adopted, represent a significant escalation in this strategy.
For businesses, the uncertainty surrounding these trade relations remains a primary concern. Investors and operational managers are currently monitoring how these policy debates might affect the cost of components and the accessibility of the Chinese market. Should the EU adopt the VDMA’s recommendations, it could alter the legal framework for all future trade disputes, requiring Chinese firms to navigate a more stringent verification process when entering the European market.
The VDMA has indicated it will continue to press the European Commission for policy updates as the global trade landscape evolves. Stakeholders in the manufacturing sector are expected to receive further guidance during the association’s upcoming industrial briefings, where the focus will remain on securing long-term competitiveness against non-market economy practices.
