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Policy Briefing

EU–Asia Relations Briefing — February 27, 2026

Published February 27, 2026 — 06:03 UTC

EU–Asia Relations Briefing — February 27, 2026

Automated policy briefing on EU–Asia Pacific relations generated with AI-powered web search.

Political Relations & Strategic Rivalry

Executive Summary

German Chancellor Friedrich Merz's visit to Beijing on February 25-26, 2026, marked a significant bilateral engagement, emphasizing Germany's and the broader EU's commitment to "de-risking" rather than "decoupling" from China. The discussions focused on stabilizing economic ties, addressing trade imbalances, and raising geopolitical concerns such as the war in Ukraine and stability in the Taiwan Strait, reflecting a cautious yet pragmatic approach to EU-China relations.

EU Institutional Actions

No major institutional actions by EU bodies (European Commission, EEAS, Council, European Parliament) were reported in this period. No EU-China summits occurred, and no new EU sanctions packages targeting Chinese entities linked to Russia's military-industrial complex were adopted within the last 48 hours.

Key Bilateral Developments

  • EU-Germany-China: German Chancellor Friedrich Merz visited Beijing on February 25-26, 2026, leading a delegation of top executives. Merz met with Chinese leader Xi Jinping, aiming to bolster ties with Germany's largest trade partner. Discussions were described as constructive, with working groups expected to follow up on trade issues and climate cooperation. Merz pressed Beijing on subsidies, currency valuation, and access to raw materials, while also raising the war in Ukraine and urging China to use its influence with Moscow for a ceasefire. Both governments issued a statement supporting efforts toward a political settlement and affirming Ukraine's territorial integrity. Merz also stressed the need for peace and stability in the Taiwan Strait.

Sector Analysis

Trade/Investment: German Chancellor Merz's visit aimed to stabilize trade ties, with his delegation exploring partnerships in electric mobility, digital services, and green technology. Germany faces a significant trade deficit with China, and Merz pressed for fairer market access and addressed concerns over subsidies.
Defence/Security: During his visit, German Chancellor Merz raised the war in Ukraine and emphasized the importance of peace and stability in the Taiwan Strait. There were no new developments regarding military cooperation or specific security initiatives in the last 48 hours.
Technology/Digital: The German delegation explored potential partnerships in digital services and green technology. The broader EU "de-risking" strategy seeks to reduce reliance on China in critical sectors, including technology.
Climate/Energy: Climate cooperation was a key topic during Chancellor Merz's discussions in Beijing, with German and Chinese officials agreeing that working groups would follow up on this area.

Implications for Analysts

  • For Europe: Analysts should monitor how individual EU member states, particularly economic powerhouses like Germany, navigate their bilateral relations with China within the broader EU "de-risking" framework, balancing economic interests with strategic autonomy and geopolitical concerns.
  • For Asia: Analysts should observe China's continued diplomatic engagement with European nations as a strategy to manage external pressures, maintain crucial economic ties, and potentially counter the influence of the United States.

Outlook

Stable
The recent high-level bilateral engagement between Germany and China, characterized by a desire to maintain dialogue and address contentious issues, indicates a period of cautious stability, despite underlying structural frictions and geopolitical divergences.

Economic Relations, Trade & Investment

Executive Summary

In the last 48 hours, EU-Asia economic relations have seen a mix of engagement and caution. A European business delegation is set to visit Cambodia to enhance trade and investment, signaling deepening ties with certain ASEAN nations. Concurrently, Europe's largest port has issued a warning regarding increasing geopolitical risks impacting trade with China, while Indonesia has urged the EU to comply with a World Trade Organization (WTO) ruling concerning discriminatory palm oil regulations.

EU Institutional Actions

No major institutional actions regarding new trade defense measures on Chinese electric vehicles or high-tech components from South Korea and Taiwan have been reported in this period. The EU had previously imposed definitive countervailing duties on Chinese electric vehicles in October 2024 and definitive anti-dumping duties on acrylonitrile-butadiene-styrene resins (ABS) from Taiwan and South Korea in February 2026, outside the 48-hour window.

Key Bilateral Developments

  • EU-Cambodia: A European business delegation, led by the EU-ASEAN Business Council, is scheduled to visit Phnom Penh on March 4 and 5, 2026. This visit aims to deepen trade and investment ties between the EU and Cambodia, with discussions focusing on Cambodia's role in regional supply chains and opportunities in infrastructure, digital finance, sustainability, and healthcare.
  • EU-Indonesia: On February 26, 2026, the Indonesian government urged the European Union to comply with a 2025 World Trade Organization (WTO) ruling concerning the bloc's discriminatory policies against Indonesian palm oil. This follows the expiry of the 12-month implementation period for the EU to amend regulations inconsistent with global trade norms, specifically regarding Indirect Land Use Change (ILUC) rules in the Renewable Energy Directive II (RED II).
  • EU-China: Europe's largest port issued a warning on February 26, 2026, about rising geopolitical risks associated with its trade relations with China. The port highlighted concerns that escalating tensions between China and Western countries could disrupt its operations and global supply chains.

Sector Analysis

Trade/Investment: The upcoming EU-Cambodia business delegation signifies efforts to boost investment and trade flows with Southeast Asian economies. However, the warning from Europe's largest port underscores growing geopolitical risks that could impact overall EU-China trade and investment. Indonesia's call for EU compliance on palm oil tariffs also highlights ongoing trade friction.
Defence/Security: No major developments.
Technology/Digital: The EU-Cambodia delegation will explore opportunities in digital finance, indicating potential for digital sector cooperation.
Climate/Energy: The ongoing dispute over Indonesian palm oil and the EU's Renewable Energy Directive II (RED II) and ILUC rules remains a significant point of contention in climate and energy-related trade.

Implications for Analysts

  • For Europe: Analysts should monitor how the EU balances its strategic economic engagement with certain Asian partners against the backdrop of increasing geopolitical risks and trade defense measures, particularly concerning China. Compliance with WTO rulings, as highlighted by Indonesia, will also be crucial for maintaining international trade law credibility.
  • For Asia: Analysts should observe the varying dynamics across the region, with some countries like Cambodia seeing opportunities for deeper economic integration with the EU, while others like Indonesia continue to navigate trade disputes related to environmental regulations. The broader impact of EU-China geopolitical tensions on regional supply chains will also be a key area of focus.

Outlook

Stable
While there are positive signals for engagement with some ASEAN nations, ongoing geopolitical risks impacting trade with China and unresolved trade disputes with Indonesia suggest a stable but cautiously managed relationship.

Digital Policies & Innovation

Executive Summary

The EU-Singapore Digital Trade Agreement (DTA) officially entered into force on February 1, 2026, marking a significant step in the EU's digital trade relations with Asia. This agreement aims to establish transparent rules for cross-border digital transactions and foster a safe online environment. While this represents a key milestone in EU-Asia digital partnerships, no new joint research projects under Horizon Europe involving South Korea or Japan in areas like AI, 6G, or semiconductors have been announced within the last 48 hours.

EU Institutional Actions

  • European Commission: The EU-Singapore Digital Trade Agreement (DTA) entered into force on February 1, 2026, establishing transparent rules for digital trade, enhancing consumer trust, and addressing unjustified barriers to digital transactions. This is the EU's first standalone bilateral digital trade agreement.

Key Bilateral Developments

  • EU-Singapore: The EU-Singapore Digital Trade Agreement (DTA) became effective on February 1, 2026. This agreement aims to provide legal certainty for businesses, enhance consumer trust through commitments on online consumer protection and data privacy, and prohibit customs duties on electronic transmissions. It also seeks to promote fair digital trade by prohibiting unjustified data localisation requirements and forced transfers of source code.
  • EU-Japan: No major new developments in the last 48 hours. Existing cooperation under the EU-Japan Digital Partnership includes the 6G MIRAI-HARMONY joint research project, which aims to develop AI solutions for 6G, with updates on the project's activities noted in January 2026.
  • EU-South Korea: No major new developments in the last 48 hours. Joint research projects in semiconductors under the Chips Joint Undertaking (Horizon Europe) were announced in July 2024, focusing on heterogeneous integration and neuromorphic computing technologies.

Sector Analysis

Trade/Investment: The entry into force of the EU-Singapore Digital Trade Agreement on February 1, 2026, is expected to strengthen bilateral digital trade by setting transparent rules and providing legal certainty for businesses and consumers.
Defence/Security: No major developments in the last 48 hours.
Technology/Digital: While no new joint research projects were announced in the last 48 hours, ongoing EU-Japan collaboration continues on the 6G MIRAI-HARMONY project, which is developing AI-powered networks for 6G. Similarly, EU-South Korea joint projects in semiconductor research, focusing on advanced computing technologies, are underway from earlier announcements.
Climate/Energy: No major developments in the last 48 hours.

Implications for Analysts

  • For Europe: Analysts should monitor the practical implementation and impact of the EU-Singapore DTA as a precedent for future EU digital trade agreements, particularly regarding data flows and digital sovereignty.
  • For Asia: Analysts should observe how the EU's first standalone digital trade agreement with an ASEAN member state influences regional digital policy discussions and potential future digital trade engagements between the EU and other Asian economies.

Outlook

Stable
The entry into force of the EU-Singapore Digital Trade Agreement demonstrates a continued commitment to strengthening digital partnerships, although no new initiatives were announced within the immediate 48-hour period.

Security & Maritime Cooperation

Executive Summary

The European Union has recently intensified its diplomatic engagement in the Indo-Pacific, notably condemning China's dangerous actions against Philippine vessels in the South China Sea and reiterating the importance of international law. Concurrently, an EU member state, France, has commenced a significant naval deployment to the Indo-Pacific, including planned exercises with ASEAN partners, signaling a concrete step towards enhanced maritime security cooperation. These developments underscore the EU's commitment to a rules-based order and its growing security footprint in the region.

EU Institutional Actions

  • European External Action Service (EEAS): On February 25, 2026, the EEAS issued a statement condemning recent dangerous actions by the Chinese Coast Guard against Philippine fishing vessels in the South China Sea, including the use of water cannons and cutting anchor lines. The statement reaffirmed the United Nations Convention on the Law of the Sea (UNCLOS) as the legal framework and the 2016 Arbitral Award as final and legally binding, calling for de-escalation and restraint from China.
  • European Parliament: On February 11, 2026, the European Parliament adopted a resolution emphasizing the need to deepen security and defense cooperation with Taiwan and expressing concerns over the challenges China poses to European and Indo-Pacific security.
  • Council of the EU: On February 23, 2026, EU countries extended the mandate of the bloc's naval mission Operation ASPIDES, tasked with protecting commercial shipping in the Red Sea region, until February 28, 2027. While primarily focused on the Red Sea, this mission contributes to the EU's broader maritime security posture.

Key Bilateral Developments

  • EU-Philippines: The EU strongly condemned recent dangerous actions by the Chinese Coast Guard against Philippine fishing vessels in the South China Sea on February 25, 2026, reiterating support for the Philippines' maritime rights. This follows earlier discussions on potential coast guard cooperation and reaffirmed EU support against unilateral actions in the West Philippine Sea.
  • EU-ASEAN: Member states of ASEAN and the EU have agreed to improve information sharing and surveillance, and cooperate on law enforcement at sea, as highlighted by the successful outcome of the fourth EU-ASEAN High-Level Dialogue on Maritime Security Cooperation.
  • EU-Vietnam: On January 29, 2026, Vietnam and the EU upgraded their relations to a Comprehensive Strategic Partnership, identifying maritime security as a key area for cooperation, including potential collaboration within initiatives such as Critical Maritime Routes in the Indo-Pacific (CRIMARIO II).
  • EU-France (Indo-Pacific Deployment): The French Navy commenced its five-month Jeanne d'Arc 2026 deployment on February 17, 2026, which includes a phase in the Indo-Pacific with planned exercises like Balikatan in the Philippines and La Pérouse with Malaysia.

Sector Analysis

Trade/Investment: The EU is focusing on bilateral trade agreements with ASEAN members as "building blocks" towards a regional deal after 2027, with existing pacts with Singapore and Vietnam, and negotiations underway with Thailand, the Philippines, and Malaysia.
Defence/Security: The EU has strongly condemned recent Chinese actions in the South China Sea and is actively engaged in maritime security cooperation with ASEAN members, including through planned naval exercises by an EU member state.
Technology/Digital: No major developments in the last 48 hours directly related to semiconductors, AI, or cyber in the context of EU-Asia security engagement. However, broader EU-Vietnam cooperation includes digital transformation.
Climate/Energy: No major developments in the last 48 hours directly related to CBAM, green partnerships, or critical raw materials in the context of EU-Asia security engagement.

Implications for Analysts

  • For Europe: Analysts should note the EU's increasingly assertive diplomatic stance on maritime disputes in the South China Sea, moving beyond general statements to direct condemnation of specific actions, indicating a hardening of policy towards China's assertiveness.
  • For Asia: Analysts monitoring Asia-Pacific dynamics should recognize the growing practical security engagement from individual EU member states, such as France's naval deployment and exercises, which complements the EU's broader strategic commitment to the Indo-Pacific and offers new avenues for regional partners to enhance maritime capabilities.

Outlook

Deepening
The EU's explicit condemnation of Chinese actions in the South China Sea, coupled with an EU member state's significant naval deployment and ongoing efforts to enhance maritime security cooperation with ASEAN, indicates a deepening of EU security engagement in the Indo-Pacific.

Environment, Energy & Critical Raw Materials

Executive Summary

The EU's Carbon Border Adjustment Mechanism (CBAM) has entered its definitive phase in 2026, creating immediate financial exposure for EU importers and raising significant carbon-related risks for East Asian manufacturers, particularly in South Korea's technology industries. Concurrently, the EU continues to face challenges in diversifying its critical raw material supply chains away from China, with recent assessments highlighting a persistent reliance on a limited number of non-EU countries, despite ongoing policy efforts and strategic initiatives.

EU Institutional Actions

  • European Commission: On February 24, 2026, the Commission announced its participation in the Prospectors & Developers Association of Canada (PDAC) Convention (March 1-4, 2026), with Executive Vice-President Stéphane Séjourné leading the delegation to promote investment opportunities and partnerships for building resilient critical raw material value chains.
  • European Commission: On February 24, 2026, the Commission responded to parliamentary questions, affirming the strategic importance of rare earth elements and the need to reduce external dependencies. Measures under the RESourceEU Action Plan and an amendment to the Critical Raw Materials Act (CRMA) are being used to accelerate recycling technologies and monitor strategic raw material projects.
  • European Commission: On February 16, 2026, new CBAM trainings were made available, including updated modules related to the Authorisation Management Module (AMM) and new trainings focusing on Data Reconciliation for Monitoring and Control (DRMC), to assist economic operators with compliance in the definitive phase of CBAM.

Key Bilateral Developments

  • Indonesia: On February 25, 2026, Indonesia tightened state control over its nickel supply, a critical mineral for electric vehicle (EV) supply chains. This move could impact global EV supply chains amid competition for critical minerals, though the immediate reported collaboration is with the United States, not directly the EU.
  • EU-Vietnam: On January 28, 2026, the EU and Vietnam were set to deepen cooperation on critical minerals, semiconductors, and strategic infrastructure, with a draft joint statement emphasizing promoting trade and investment in sustainable mining and processing of resources like rare earths and gallium. This aims to diversify supply chains and elevate diplomatic ties. (Note: This development is outside the strict 48-hour window but represents a significant recent step in EU-Asia critical raw material diversification efforts in 2026).
  • EU-South Korea: A report from February 12, 2026, highlighted that the EU's CBAM raises supply chain carbon risks for South Korean technology industries, with estimated CBAM certificate costs potentially reaching USD 588 million between 2026 and 2034 under a high EU ETS price scenario. The potential inclusion of semiconductors and liquefied natural gas (LNG) in CBAM could further impact these industries.

Sector Analysis

Trade/Investment: The EU's CBAM entered its definitive phase on January 1, 2026, imposing financial liabilities on importers of carbon-intensive goods and creating costlier and higher-impact consequences for global supply chains. China has warned of potential retaliation, citing the EU's high default values as "unfair and discriminatory treatment".
Defence/Security: No major developments in the last 48 hours.
Technology/Digital: South Korean technology industries, particularly in semiconductors, face increased carbon risks and potential CBAM certificate costs in 2026, with policymakers evaluating scope expansion to downstream products as early as 2028. The EU is also pursuing cooperation with Vietnam on semiconductors and "trusted" 5G infrastructure.
Climate/Energy: The EU continues to push for diversification of critical raw material supply chains, with recent parliamentary discussions (February 24, 2026) affirming the need to reduce external dependencies for rare earth elements. However, a European Court of Auditors report (February 2, 2026) indicated that efforts to diversify imports have "yet to produce tangible results," and the EU remains highly dependent on a few non-EU countries for strategic raw materials.

Implications for Analysts

  • For Europe: Analysts should monitor the effectiveness of the RESourceEU Action Plan and CRMA amendments in delivering tangible diversification results for critical raw materials, particularly given the European Court of Auditors' recent critical assessment. The ongoing implementation of CBAM will also require close attention to its impact on trade flows and potential retaliatory measures.
  • For Asia: Analysts should assess the evolving compliance costs and supply chain adjustments for East Asian manufacturers due to CBAM, especially in carbon-intensive sectors and potentially for technology industries like semiconductors. The tightening control over critical raw materials by countries like Indonesia also signals increasing resource nationalism and the need for diversified sourcing strategies.

Outlook

Strained
The ongoing financial impact of CBAM on East Asian manufacturers and the persistent challenges in the EU's critical raw material diversification efforts, as highlighted by recent reports and institutional actions, indicate a strained relationship in these key areas.

Sources

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