How to stop "securonomics" from killing growth
SPY•The column argues that trade rules based on companies’ ownership nationality could undermine growth by restricting competition and technology transfers. It says the EU should favor stringent inward investment screening and joint ventures over rewriting trade rules around corporate control.
1. Ownership-based trade rules
The column warns that linking industrial and foreign policy through “securonomics” could lead governments to discriminate against companies based on their owners’ nationality rather than where products are made. A proposal by former World Trade Organization director-general Pascal Lamy would let the EU impose tariff-rate quotas on imports affected by Chinese overcapacity and assess a product by who controls its maker, rather than where it was substantially transformed.
2. Trade and investment measures
The column cites measures including US tariffs and audits for some Chinese-owned steel exporters, investment screening involving Newport Wafer Fab and Pirelli, and the 2024 US action against TikTok’s parent, ByteDance. It also says the 2022 CHIPS Act disbursed billions to Intel, TSMC and others in exchange for restrictions on expanding leading-edge capacity in China for a decade. The EU has agreed with Beijing to cap annual hybrid-car exports from China to Europe at 350,000 units from December; BYD has announced plans to expand factory capacity in Europe.
3. Growth and security trade-offs
The column says a Federal Reserve analysis found that less than 1% of the nearly $125 billion rise in annual Mexican goods exports to the US after USMCA came from Chinese goods simply being transshipped. It argues that foreign firms can bring local production and competition, while acknowledging concerns about subsidies and geopolitical sourcing risks. The author says the EU probably needs stringent inward investment regimes requiring Chinese players to form joint ventures, rather than trade rules based on corporate control.
