EU chief expects trade agreement with China but warns of challenges: Video

Speaking on Friday after meeting Chinese Premier Li Qiang at a Southeast Asian summit in Laos, Michel emphasised that China must "adapt its behaviour" to resolve an escalating tariff dispute with the European Union. 

Both sides have imposed penalties on each other's imports in response to issues surrounding subsidies and protectionism.

Michel hopes a deal could be reached in the coming days or weeks but warned it would be "tough." He stressed the importance of transparency and compliance with World Trade Organisation (WTO) rules in any potential agreement, asserting that the EU must defend its interests while maintaining an open economy.

European Council President, Charles Michel told the AFP that, "We have very strong and legitimate interests and it is the responsibility of the European Union to defend our people, to defend our citizens. We believe in an open economy, we believe in international trade, we believe in investments. But we also believe that it is not possible any more to be naive and that’s why we appreciate the fact that it was possible today to have a very frank and candid conversation about what is at stake."

China’s new tariffs on French brandy, up to 38.1%, took effect on Friday as part of an anti-dumping measure to protect domestic producers. The EU plans to challenge these tariffs, which have been met with concerns from French cognac makers.