Brussels, 22/09/2011 (Agence Europe) - The EU-China summit on 26 October could give the go-ahead to negotiations on a bilateral agreement on investment. This decision would not, however, conceal the continuing trade friction between the two or calm renewed tensions following the EU's refusal to grant China the market economy status it so covets.
“The EU and China are already closely integrated economically. Nevertheless, there are still a large number of trade and investment irritants. Moving ahead, we would like to cooperate with China to address the imbalance of business opportunities through equal openness in China”, stated European Trade Commissioner Karel De Gucht at a seminar organised by the European Chamber of Commerce in China and held in Brussels on 20 September. “While Chinese investment into Europe is increasing, important sectors in China remain closed or restricted to EU investors. This is a significant impediment to the realisation of economic gains on both sides”, he added. “For the EU to engage further and consider a bilateral investment agreement we need to be firmly convinced that this will produce real added value for EU companies, both in terms of access to the Chinese market and the way their investments are treated in China”, he stated. The growth of foreign direct investment (FDI) from China to the EU, which trebled from €300 million to €900 million from 2009 to 2010, and the contraction of FDI from the EU to China over the same period, from €5.8 billion to €4.9 billion, mean that the EU has to negotiate formal investment rules. Confronted by Chinese restrictions which force European companies to agree to partnerships with Chinese firms, calls are being made in Europe for restrictions on Chinese acquisitions on sectors that are seen as being of strategic importance to Europe. De Gucht, however, rejects such a stance. “I believe that Europe's open investment regime remains our strongest argument for others to grant us similar access”, he stressed on Tuesday. However, he warned China that “the fundamental imbalance between our openness and China's restrictiveness plays into the hands of those in Europe who see Chinese investments as a threat and argue that we should selectively screen Chinese investments into the EU”.
Apart from new “retrograde” safety measures by China which make it more difficult for EU companies to invest in China and which “risk further aggravating the detrimental effect on our bilateral trade”, De Gucht also pointed to other areas of friction, such as intellectual property rights, “the fundamental differences” between Europe and China on subsidies and public companies, and also public procurement rules. “The problem is not so much what is foreseen in Chinese regulations, but that foreign actors are simply not winning contracts unless it is in China's interest”, he stated with regard to public procurement. This has led the EU to consider adopting new rules to force key trade partners, like China, to provide reciprocal openness of their public procurement contracts. Proposals from the European Commission are expected in the autumn. De Gucht hoped, nevertheless, that European and Chinese leaders, who will meet for their annual summit in Tianjin on 26 October will give the go-ahead, or at the very least their agreement in principle, for negotiations to be opened on a bilateral investment agreement to improve conditions for European investors in China while facilitating the flow of Chinese capital towards the EU.
China, however, which has been somewhat offended by Europe's refusal to grant it the market economy status that would make it less exposed to antidumping investigations, still has to be persuaded to further open its market, just at a time when the taxes on Chinese bicycles may possibly be renewed, duties on its ceramic tiles and polyester thread are about to be adopted, and measures against goods exported to the EU are increasing. The European Commission is still refusing to grant China the market economy status it craves because of the huge number of state companies in China which enjoy a number of privileges, in particular access to cheap credit. “China was very disappointed that the EU refused to grant the nation full market economy status despite its complete transition from a planned economy to a market economy after 30 years of reform and opening up”, commented the spokesman for the Chinese Trade Ministry Shen Danyang on 20 September. Giving China market economy status is “a political decision, not a technical one”, he stressed. In his opening speech at the Davos Forum summer event in Dalian in mid-September, Chinese Prime Minister Wen Jiabao urged the EU “to make a fresh move on strategic Sino-European relationships by accepting China's full market economy status”. Wen seemed, too, to link Chinese financial support for Europe mired in the sovereign debt crisis to the market economy status on which it said it expects progress at Tianjin. Shen restated that Beijing's support for European economies remained “unconditional”. “China has set no preconditions for offering help to others. We only hope that we can gain respect when treating others sincerely”, he said. (EH/transl.rt)