EU trade ministers on 22 May 2026 broadly agreed on the need to diversify supply chains and reduce exposure to critical chokepoints, but diverged on how to approach China, during a Foreign Affairs Council (Trade) chaired by Cyprus Energy Minister Michael Damianos. The debate, held amid the Middle East conflict, also covered WTO reform and advancing free trade agreements (FTAs).
Executive Vice-President for Industrial Strategy Stéphane Séjourné presented an emergency action plan triggered by the Strait of Hormuz crisis, urging businesses to integrate geopolitical risk into supply chain planning. Ministers concurred on de-risking and closer industry coordination, but Séjourné defended a balanced approach toward China, noting a €300 billion trade deficit while pushing for diversification. Asked whether the US is a like-minded partner, both Damianos and Séjourné affirmed it is a strategic partner.
On WTO reform, the EU reaffirmed commitment to a rules-based system, though Séjourné acknowledged slow progress due to unanimity requirements. Ministers underlined advancing FTAs with India, Australia, Mercosur, Mexico, and ASEAN partners. Next steps include a Commission debate on China guidelines and continued FTA implementation.
The debate exposed a cleavage between those favouring a tougher line on China and those prioritising engagement, with implications for EU businesses reliant on imports of fertilisers, chips, and minerals, as well as supply chain operators and trading partners in the Middle East, Asia, and Latin America. The balanced approach may reassure Chinese partners but could slow diversification, while a harder line would accelerate de-risking at the cost of trade friction.