Europe’s trade relationships in Asia are shifting fast. As the EU looks to secure critical supply chains, find alternatives to Chinese dominance in key sectors, and lock in partnerships with fast-growing economies like India and Indonesia, the stakes for getting trade policy right have never been higher. To help us understand what is really driving these changes — and what they mean in practice — we sat down with Professor Camille Nessel for a wide-ranging conversation. Camille Nessel EU-Asia trade expert & lecturer in EU politics at the Université libre de Bruxelles and has previously written on this topic for SEC Newgate EU’s TradeViews series, where she made the case that the EU’s very different approaches to Southeast Asia and China are not a sign of mixed signals, but of a deliberate and evolving strategy.
How would you describe the EU’s current approach to trade and economic relations in Asia, and what has driven its evolution in recent years?
We are at a particularly interesting moment in EU trade policy. For the first time, the EU appears to have softened its traditional position on public procurement in the EU India FTA negotiations. This is striking given that former Trade Commissioner Valdis Dombrovskis still declared in 2022 that public procurement would remain a crucial component of the negotiations. Since the launch of the talks, public procurement had consistently been one of the major stumbling blocks in EU India negotiations.
We also see early signs of adjustments to the EU’s traditional template approach in the negotiations with Indonesia. It remains to be seen whether these developments represent isolated exceptions or the beginning of a broader shift in EU trade strategy in Asia. This will become clearer as negotiations progress with Southeast Asian partners such as Malaysia and Thailand. Most Asian partners are not part of the WTO Government Procurement Agreement, which raises the question of whether the EU is gradually moving away from the “deep trade” agenda that has characterised its trade policy over the past two decades.
The EU engages with Asian partners in different ways. What explains this differentiated approach across regions such as Southeast Asia and China?
The EU’s differentiated approach largely reflects differences in bargaining power, positions within global value chains, and economic structures. China and Southeast Asia occupy very different roles in the global economy, and the EU therefore approaches them differently.
With China, the EU was never realistically pursuing a classical free trade agreement. In fact, since the 2006 Global Europe strategy, none of the major EU trade strategies have seriously discussed the prospect of an EU China FTA, despite China having joined the WTO in 2001. The focus has instead consistently been on market access problems, investment conditions, and the protection of European economic interests in China.
Even the Comprehensive Agreement on Investment was not about broad market liberalisation in the classical FTA sense. Rather, it aimed at creating more transparent and predictable investment conditions for European firms operating in China and improving conditions for outbound European investments. Similarly, agreements such as the EU China Geographical Indications agreement were designed primarily to protect European products and intellectual property in the Chinese market.
An FTA was therefore never truly on the table, partly because the EU could not politically or economically afford such an agreement given the already significant trade imbalance in China’s favour and the resistance some trade agreements have provoked in recent years. At the same time, China increasingly emerged not only as a trade partner, but also as a systemic competitor in strategic sectors and global supply chains.
The EU increasingly competes with China over access to raw materials and strategic sectors. China has become the dominant actor in Southeast Asia in areas such as mining, infrastructure development, and access to critical raw materials. The EU, by contrast, has fewer leverage instruments, particularly regarding large scale investment financing, which often places it at a disadvantage.
This is also why initiatives such as the Global Gateway, despite ambitious rhetoric, have not fundamentally changed the balance in Southeast Asia. Most projects focus on connectivity and sustainability transitions rather than directly competing with China’s economic footprint or investment scale. Southeast Asian countries themselves also have different priorities and developmental models than the EU.
The EU therefore seeks FTAs with Southeast Asian countries, while relations with China are likely to remain focused on investment regulation, de risking, and strategic competition. This reflects the broader geopolitical priorities linked to open strategic autonomy. China is increasingly viewed less as a partner and more as a systemic competitor, particularly in sectors where Chinese competition directly affects key European industries.
In this context, we should also not forget the EU’s broader industrial and protectionist turn, including initiatives linked to “Made in Europe” strategies. The EU India FTA fits within this logic. India is seen as a strategic alternative partner where competition does not threaten European industries to the same extent as China does. The EU’s greater flexibility on issues such as procurement therefore makes strategic sense.
What role has long-term engagement and persistence played in shaping the EU’s economic presence in Asia, particularly in trade negotiations?
Long term engagement and persistence, even when negotiations were difficult or incomplete, have helped the EU build a certain degree of credibility in Asia. This is particularly important at a moment when the United States is increasingly perceived as unpredictable and difficult for businesses to rely on in the long term. In comparison, the EU is often viewed more positively for its relative commitment to rules based cooperation and institutional continuity.
Questions of economic security and economic uncertainty are also increasingly shared concerns between the EU and Southeast Asian countries. This creates opportunities for the EU to overcome some of the earlier stalemates that characterised negotiations.
At the same time, the EU has started moving away from some unilateral trade measures that were often perceived by partner countries as unfair, unclear in scope, or overly coercive. If the EU continues to avoid returning to such approaches, it may create more space for constructive dialogue and improved market access.
These dialogues are particularly important because many Southeast Asian countries are themselves trying to navigate the double edged consequences of Chinese investment and infrastructure financing. While initiatives linked to the Belt and Road Initiative have brought infrastructure development, they have also generated concerns regarding debt, environmental impacts, policy autonomy, and local job creation. This creates room for closer EU coordination with regional partners on shared economic and strategic concerns.
How has the EU’s changing perception of economic risk influenced the way it approaches trade, investment and external partnerships?
Economic security and resilience have become central to the EU’s approach to external economic relations. The experience of supply chain disruptions, geopolitical tensions, the COVID pandemic, and increasing dependence on China in critical sectors have fundamentally changed how the EU thinks about trade and investment.
The EU is increasingly trying to balance openness with strategic concerns. This has translated into a stronger focus on de risking, industrial policy, and strategic autonomy. At the same time, the EU is also becoming more defensive and selective in how it approaches trade relations, particularly in sectors linked to technology, raw materials, energy, and manufacturing.
This shift also explains why the EU is showing more flexibility in certain trade negotiations. Strategic partnerships and geopolitical considerations increasingly matter alongside purely economic liberalisation objectives. The EU now appears more willing to compromise on issues that previously formed part of its rigid template approach if doing so helps secure broader strategic goals.
Japan is proving to be an increasingly important actor for EU trade, with many high-level meetings expected throughout the year and the ceremonial signature of Japan’s participation to the Horizon program expected in summer 2026; what do you make of this partnership?
Japan is proving to be an increasingly important actor for EU trade, with many high level meetings expected throughout the year and the ceremonial signature of Japan’s participation in the Horizon programme expected in summer 2026. What do you make of this partnership?
Japan is an important partner for the EU, particularly because both actors face similar structural economic challenges. Japan’s industries are under growing pressure from Chinese and Korean competition, while the country is also struggling with demographic decline and low growth rates. Take cars for example: Also Japan has been suffering from China’s competition and have been losing out to China’s EV rise. Japan has been very protectionist of its own market and build in several instruments to make BYD cars for example more expensive than Japanese, but also European cars.
Yet, the EU Japan partnership should not be “over-romanticised”. The implementation of the EU Japan FTA continues to reveal practical difficulties, particularly regarding actual market accessibility. Formally opening procurement markets is one thing. Ensuring that procurement opportunities are genuinely transparent and accessible for European firms in practice is another.
Nevertheless, the partnership is strategically important because both sides increasingly share concerns about economic security, technological competitiveness, and the stability of the international economic order. Cooperation through frameworks such as Horizon Europe also reflects a broader attempt to deepen strategic and technological ties beyond trade alone.
How do industrial policy initiatives such as the Industrial Accelerator Act interact with trade policy in shaping EU–Asia economic relations, particularly in key strategic sectors?
The key challenge for the EU is securing reliable access to raw materials and strategic supply chains. Without this, it will be extremely difficult for the EU to achieve its industrial ambitions or successfully implement its green and digital transitions.
What will be particularly interesting to observe in the coming years is how public procurement policy evolves within this broader industrial turn. The EU is becoming more inward looking and defensive, and its geoeconomic turn increasingly contains elements of mercantilism and economic nationalism. Initiatives linked to “Made in Europe” may ultimately signal a shift away from the EU’s traditionally open stance on procurement markets. If that happens, it will inevitably have consequences for EU Asia trade negotiations, particularly with partners that have long resisted the EU’s procurement demands.
At the same time, the central issue remains raw materials and supply chain dependence. If the EU continues sourcing key raw materials directly or indirectly from China, I do not see how it can genuinely achieve greater strategic autonomy. Diversifying export markets is important, but it is not sufficient to create real economic independence. China has effectively established a dominant position, in some cases close to a de facto monopoly, over many critical raw materials and processing stages, making itself indispensable within global value chains.
This interdependence cuts both ways. China also depends on external markets to sustain economic growth and absorb its industrial output. In many respects, China has been relatively consistent and predictable in communicating its priorities, particularly its focus on maintaining economic growth and industrial competitiveness. However, that does not mean it is strategically wise to allow China to dominate the economic landscape of key trade partners or critical supply chains.
Agreements with countries such as Australia or Canada on raw materials are important steps, but they are unlikely to be sufficient on their own. If the EU wants genuine leverage and resilience, it will need to become involved much earlier in the raw material sourcing chain, including extraction, processing, and infrastructure investment. I do not really see another way for the EU to reduce its structural dependencies in strategic sectors.
Looking ahead, what will determine whether the EU’s current approach to trade in Asia proves effective – for policymakers, businesses and partner countries alike?
A crucial question will be whether the changes we are currently observing, particularly in the EU’s approach to India and, to some extent, Indonesia, represent a genuine strategic shift or merely temporary exceptions.
If the EU genuinely moves away from its rigid template approach and becomes more open to negotiating the content and scope of agreements with partner countries, this could create significant new opportunities. One of the longstanding criticisms from both postcolonial scholars and policymakers in Southeast Asia has been that the EU’s highly prescriptive and often moralising approach was perceived as a form of neocolonial lecturing. Research has consistently shown that this perception undermined the EU’s legitimacy and influence in the region.
Interestingly, despite the EU’s broader protectionist and geopolitical turn, as well as the growing influence of more right wing, economically nationalist, and protectionist forces within European politics, the current adjustments in trade policy may indirectly address some of these earlier criticisms. By showing greater flexibility and willingness to listen to partner countries’ concerns, whether on procurement, sustainability measures, or investment rules, the EU may actually strengthen its long term influence and credibility in Asia.
That said, this shift is not necessarily occurring for normative reasons. It is also driven by strategic concerns linked to competition with China, economic security, industrial policy, domestic political pressures, and the EU’s own geopolitical repositioning.