Summary

Wednesday, May 6th, marked the fifth appointment of the new edition of “Europa sul Sofà” the series of meetings organized by Punto Europa on themes related to the European Union. During the event, Professors Eugenia Baroncelli and Manuela Moschella, together with Professor Matteo Dian, analysed and discussed the topic on European competitiveness in a multipolar world, focusing on trade policy and competition with the US and China.

Professor Eugenia Baroncelli

Associate Professor in Political Science - DSP Unibo; she teaches Politics of the World Economy, International Relations, Politics and Development in the Global World. She had been World Bank Consultant (2001-2006), she taught at SAIS-The Johns Hopkins, HSE-Moscow, SNS-Pisa. She has coordinated projects and modules that have won competitive European and national funding, and has been an evaluator for Horizon Europe, the EU's key funding programme for research and innovation. 

Professor Matteo Dian

Associate Professor at the Department of Political and Social Sciences at the University of Bologna.  Previously, he held research and teaching positions at the University of Bologna, University of Oxford; London School of Economics and Political Science, the European University Institute and Ca' Foscari University in Venice. I earned my PhD at the Scuola Normale Superiore in Florence. His research focuses on International Relations Theory, Security in East Asia, Japanese and Chinese Foreign policy, and US foreign policy in the Indo-Pacific region.  

Professor Manuela Moschella

Professor of Political Science in the Department of Political and Social Sciences at the University of Bologna, where she also serves as Director of the research centre CONNECT – Transnational Connections and Governance. She is an Adjunct Professor at Johns Hopkins University SAIS-Europe and one of the editors of the Review of International Political Economy. She has served as Associate Fellow at the Europe Programme at Chatham House and as Senior Fellow at the Centre for International Governance Innovations (CIGI). Her research focuses on the political dynamics of economic policymaking, the evolving interplay between technocratic governance and democratic accountability, and the transformation of European political economy and European economic governance. 

EUJE Moderators:

Noemi Incani and Gabriele Ametta.

The Post-Consensus Crisis of Multilateralism and Protectionism – PROFESSOR BARONCELLI

The fifth meeting of this edition of “Europa sul Sofà” opens with Professor Baroncelli speaking about crisis of multilateralism caused by the shift from global trade liberalization toward economic nationalism.

She argues that pre-2008 trade liberalization, while broadly beneficial, was structurally flawed from the start. It systematically favoured industrialized nations by excluding key sectors like agriculture and commodities, and it ignored growing pressures on low-skilled workers in wealthy countries facing competition from emerging economies. These imbalances were never properly addressed, planting the seeds of the problems we face today.

In the current moment, she sees the aggressive tit-for-tat trade protectionism of the Trump administration as damaging for all parties, but rather than treating this as a crisis, she frames it as an opportunity for the European Union to assert itself. Her core argument rests on a quantitative reality that is often overlooked: the EU is the world's largest trading bloc and leading collective exporter across nearly every sector, surpassing even the United States. This gives the EU enormous leverage that has historically been underused and poorly translated into political influence.

She calls on the EU to exercise that leverage with confidence, accepting that strict WTO compatibility can no longer be the guiding framework given how thoroughly the rules-based order has already eroded. Instead, the EU should focus on realistic short-term political horizons, such as the US midterm elections and the end of the current presidency, while pursuing new trade agreements in a mini-lateral context. Most importantly, she argues that the EU possesses something neither China nor the current United States can offer not just economic weight, but normative credibility and a genuine vision for a more inclusive and collaborative global order. That unique combination, she concludes, makes the EU the only actor truly capable of leading global trade in a more constructive direction.

The European Response to China’s Strategic Market Expansion – PROFESSOR DIAN

The discussion continues with the consideration of Professor Dian tracing the trajectory of China's economic and strategic evolution from the 2008 global financial crisis to the present day.

He begins by describing the pre-crisis symbiosis between China and the United States, which China exported and saved while the US consumed and accumulated debt. When the financial crisis shattered confidence in the American model and its capacity to provide hegemonic stability, China began reassessing its dependence on that relationship, particularly as the Obama administration started treating China increasingly as a competitor.

In response, China doubled down on the role of the state in the economy, investing heavily in strategic industries and infrastructure both domestically and abroad. This logic gave rise to the Belt and Road Initiative, an ambitious effort to connect China with Eurasia and build an economic system centered on Chinese centrality, compensating for the unreliability of the US relationship. When Europe then fell into its own crisis in the early 2010s and demand from Western partners weakened, China shifted again, scaling up technologically through the Made in China 2025 strategy, investing massively in semiconductors, AI, high-speed rail, automation and surveillance technologies. The result is a China that today not only dominates lower-value manufacturing but competes directly in the most sophisticated high-tech sectors, something that would have seemed unimaginable a generation ago.

This technological leap created a structural competition with the United States that had not previously existed, and it fundamentally changed the nature of the relationship. Professor Dian also notes that China, while generally favouring a stable multilateral system, does not hesitate to weaponize trade for political purposes when it deems necessary, as seen in its responses to Australia, Taiwan, and human rights criticism.

For Europe, he argues, the key shift has been psychological. Trade with China continues and remains substantial, but the blind trust in economic interdependence as inherently positive has collapsed. Policymakers are now thinking in terms of dependency as a risk rather than a benefit, paying close attention to strategic and critical sectors. This new mindset, he concludes, is the reality Europe must navigate, made more difficult by Trump's undermining of transatlantic unity and by a world that has grown far more economically intertwined with China than it was in 2000.

EU Industrial Policy: Strategy or Reaction? – PROFESSOR MOSCHELLA

Professor Moschella, instead, focuses on what is currently happening in Europe that goes far beyond a simple embrace of industrial policy, instead representing a profound transformation in the EU's entire economic model, with deep political consequences that are not yet fully appreciated.

She begins by placing this transformation in historical perspective. At its origins after World War II, European economic governance was heavily interventionist. The European Coal and Steel Community was built around the idea of coordinating and stabilizing strategic industries, while individual member states relied on national champions, state-owned enterprises, and directed credit to shape their domestic economies. This interventionist phase was then decisively abandoned from the 1970s through the 1990s, when the EU pivoted toward a paradigm of market liberalism enshrined in the single market, competition policy, and strict state aid rules. Industrial policy became something of a dirty word, seen as incompatible with the European project as it had come to be defined.

The seeds of the current reversal, she argues, were planted during the 2008 global financial crisis, when Europe intervened massively to rescue its banking sector. From there, growing geopolitical rivalry, Russia's aggression, and the broader reshaping of the international order accelerated a rethinking of the European economic model. Today, the EU is openly embracing industrial policy again, investing in strategic sectors, rebuilding domestic capacities, and using state aid in ways that would have been unthinkable under the previous paradigm. She notes that this new industrial policy is more horizontal than the postwar version, with greater involvement of market actors, but the underlying logic is recognizably similar: markets alone cannot be trusted to deliver strategic security and technological sovereignty.

The most important point Professor Moschella wants to stress, however, is about consequences. This shift is not merely technical or economic: it fundamentally challenges the identity of the European Union as an open, competition-based, market-driven project. The moment the EU decides to nurture domestic industries and close off certain sectors, it is no longer the union it used to be. These economic transformations, she concludes, always carry political implications, and Europe is likely heading toward a significant rethinking of what the EU actually is.

The consequences for European Union of US controversial behaviour – PROFESSOR BARONCELLI

Professor Baroncelli continues the debate by pushing back against the notion of purely structural consequences, arguing that while the current disruptions are serious and long-lasting, it is not sustainable for a contested and declining hegemon like the United States to maintain such an aggressively predatory approach indefinitely. History shows that predatory hegemons tend not to endure, and she does not believe the current confrontational posture can be maintained at the level of global leadership. That said, she acknowledges that the impacts on the global political and economic system are already real and will extend well beyond the short term.

Her central argument is that the European Union must finally come to terms with a truth that has been visible for decades but consistently ignored: the United States has not been a reliable partner in economic terms since the late 1960s, when it began behaving as what she calls a malevolent or negligent hegemon, discriminating against European interests across monetary and trade matters through Nixon, Reagan, and beyond. The EU's persistent fear of being abandoned in security terms kept it in a subordinate position, preventing it from asserting genuine autonomy. That calculus has now fundamentally changed, and the EU must shed that fear and think in truly autonomous strategic terms.

In practical terms, she outlines two main paths forward. The first involves signalling resolve through the use of coercive instruments, particularly the Anti-Coercion Instrument, which she compares to nuclear deterrence, most effective precisely when it does not need to be used. She notes that Trump has historically backed down when faced with firm pushback, citing China's assertive posture and financial market reactions as possible examples. The EU has sectors where it holds genuine market primacy and where the US could not easily find substitutes, making targeted pressure a credible threat.

The second path involves building new partnerships across the Global South, Latin America, India, and beyond, leveraging the EU's vast network of political relationships. However, she is candid about the internal tension this creates between the EU's liberalizing identity and its protectionist industrial impulses, as well as the chronic underfunding of instruments like the Global Gateway that would be needed to make such partnerships genuinely credible and development oriented.

The place of Europe between China and Us hegemony – PROFESSOR DIAN

Professor Dian builds on the previous discussion by stressing that the structural dimension of Europe's current challenges lies not so much in the consequences of today's geopolitical turbulence, but in its causes and chief among those causes is Europe's dramatic technological lag. Across electric vehicles, artificial intelligence, and semiconductors, Europe is simply absent from the frontier. With the partial exception of the Dutch firm ASML in one segment of chip production, European actors are not competitive in the technologies that will define the next decades. This was not always the case, a generation ago Europe was roughly comparable to the United States in technological sophistication, but that gap has now grown to the point where it shapes Europe's bargaining power in fundamental ways.

Professor Dian then turns to what he sees as an underappreciated dimension of the current US pressure on Europe: the Trump administration's core demand is essentially that Europe refrain from regulating American technology monopolies. While this message rarely makes front pages, it is clear in policy conversations. The US wants to preserve its dominance in tech across European markets, and Europe currently has no comparable alternatives, neither domestically nor, in any acceptable form, from China. Chinese technology works, he acknowledges, but comes with deep data intrusion, censorship, and political control that make it genuinely incompatible with European values, as illustrated by the inability of Chinese AI tools to address basic historical questions about Tiananmen Square.

This leaves Europe in an extraordinarily difficult position of deep technological dependence on the United States, one that he argues may be even more profound than military dependence, since substituting entire digital infrastructures is far more complex than building weapons systems. His proposed response mirrors Professor Baroncelli's signalling logic: Europe should assert its regulatory power over the tech sector, resist bowing to US pressure, and begin imposing real costs rather than negotiating from a position of weakness.

He closes by cautioning against overly schematic thinking about a US-China binary, noting that the Trump administration lacks a coherent strategic priority and is as much directed against Europe as against China, which makes navigation genuinely complicated but does not change the underlying structural realities.

Impact of EU-India and Mercosur Deals on the European Market – PROFESSOR MOSCHELLA

The discussion came to an end with the Professor Moschella consideration regarding European Union’s capacity to use trade deals and regulatory power as effective signalling tools explaining her scepticism through both economic and political lenses.

She begins by acknowledging the genuine economic benefits of agreements like Mercosur, noting that they promise significant aggregate welfare gains through access to large markets, important sectors like chemicals and pharmaceuticals, and potentially critical commodity supplies. However, she immediately points out that economic consequences always produce political consequences, and the Mercosur negotiations already illustrated this clearly: the question of agricultural market access created deep divisions among member states and fed into the broader globalization backlash that has fuelled the rise of the far right across Europe. The benefits of trade liberalization tend to be diffuse while the costs are concentrated, and societies have repeatedly reacted against that asymmetry.

This political fragility is precisely what makes her sceptical about the EU's ability to use trade partnerships as credible signals of strategic autonomy. She poses the question directly: is it a convincing signal to the United States, to China, or to India, that it takes Europe decades to finalize a trade agreement? Does the slow pace of the EU-India negotiations inspire confidence in Europe as a reliable and decisive partner? She thinks not.

More pointedly, she argues that Europe never once seriously leveraged its tech regulatory power during negotiations with the United States, the one tool that could have imposed real costs and demonstrated genuine resolve. Instead, the deal eventually signed with the US was deeply asymmetric, with Europe accepting significant tariff concessions and committing to purchases of American LNG and defence equipment in exchange for very little in return.

She attributes this weakness to two factors: the security dimension, which tied European hands given the war in Ukraine and dependence on American security guarantees, and the profound internal political divisions within the EU itself. Even though trade is an exclusive EU competence, the political fragmentation among member states and societal pressures make coherent and assertive action extremely difficult, and that, she concludes, does not bode well for Europe's strategic position in the current moment.

Overall conclusion of the session

The debate concluded by highlighting a fundamental tension at the heart of the European project: the European Union possesses considerable commercial and normative weight, but structurally struggles to translate it into real strategic influence. The old multilateral order is now in crisis, and European dependence on the United States, both in security and technological terms, has proven deeper and more problematic than previously believed. China represents an economically relevant but normatively unacceptable alternative. Europe therefore finds itself in a tight space, called upon to reinvent its economic model by embracing industrial policies that challenge its original identity. The European technological lag, internal divisions among member states, and the historical inability to use its own instruments with determination remain the main obstacles. The path toward credible strategic autonomy exists but requires a political will that at the moment still appears insufficient.

Edited by Tecla Cantatore and Andrea Paolinelli