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EU pushes for 'free and fair' trade with China, US

US President Donald Trump has been warned by German Chancellor Angela Merkel that if the US does not play fair in trade, the Europe Union will respond in a similar manner. In addition, EU leaders are looking into screening investments by state-owned Chinese companies.

The 28 EU leaders signed a document stating they and the European Commission should consider ways to increase reciprocity in government procurement and investment, reported THE Australian, quoting Reuters.

"Reciprocity is the right way. If we have for example access to public contracts in the United States, then we can say 'yes' to access to public contracts in Europe," Ms Merkel said recently, but if full access was denied then Europe would "need an answer."

The leaders called on the Commission to analyse foreign investments in strategic sectors, adding they would return to the issue at a future meeting.

The written conclusions to the European Union summit made no mention of the bloc's two largest trading partners, the United States or China, but both were in the background of its "free and fair" trade push.

Beijing is also in the sights of the "protection agenda" of new French President Emmanuel Macron, described as an embracer of free trade, but with limits on foreign takeovers in areas such as energy, banking and technology, where China seeks Europe's expertise.

An earlier EU-China summit, designed to show the two as allies in climate change after the US withdrawal from the Paris accord, was overshadowed by disagreements over trade and over-production of steel.

France, Germany and Italy have backed the idea of allowing the EU to block Chinese investments, partly because European companies are denied similar access in China.

More pro-trade countries such as Sweden have said this is a step down the path of protectionism, while smaller eastern and southern European economies that are dependent on Chinese investments have rejected measures against Beijing.