Brussels, 28/01/2016 (Agence Europe) - At an event organised in Brussels on Thursday 28 January by the European Chamber of Commerce in China, European Commissioner for Trade Cecilia Malmström made two pre-conditions for possible talks for a free trade agreement between the EU and China: the conclusion of the negotiations for an investment agreement between the two partners, and the disengagement of the state in the Chinese economy.
Malmström first said that she thought an “ambitious” EU-China agreement on investment was “within reach”. In mid-January, the negotiators from the Commission and Chinese government came to an agreement on the scope of this future agreement, and established a text from which to work as a basis in the final phase of the negotiations, she said (see EUROPE 11469).
This agreement will have five advantages, Malmström said: it will guarantee European investors better access to the Chinese market and encourage their Chinese counterparts to invest more in Europe; it will guarantee companies from both parties can operate competitively on the other's market, whatever the origin or ownership structure of the companies; it will protect Chinese investors in the framework of a single agreement which will replace the 26 bilateral agreements between the EU and China; it will offer more legal security and improve the balance between the protection of investments, sustainable development and the ability of states to regulate in the public interest; and it will offer a “source of inspiration” to China for greater efforts at reforming its investment system.
On the issue of the EU granting China market economy status and changing the method of calculation in anti-dumping investigations, Malmström said that the debate is still “quite premature”. “What is clear is that certain provisions of China's protocol of accession to the WTO related to this issue will expire in December. The Commission is now examining the implications of this, including the economic impact of any change to our anti-dumping rules. We are looking at this for all member states and for all sectors”, she stated.
In addition, Malmström gave assurances that the EU was taking China's request “seriously” to negotiate a bilateral free trade agreement. “While we may be favourable to such an agreement, two conditions must be met first. Before any next step, we must reach a good outcome on the investment negotiations (…) In addition, China needs to make progress in its internal reforms, and particularly the goal of giving the market a more decisive role”, she said.
“Any free trade agreement with the EU would have to address a whole range of issues related to creating a level playing field for EU industry on the Chinese market. This includes the state moving from an economic operator into an economic regulator. It also includes allowing non-efficient companies to go bankrupt and adjustments to reduce overcapacity”, Malmström added.
“The current massive overcapacity in industries like steel is simply not sustainable. It is not sustainable for the economy and it is not sustainable for the environment. Millions of CO2 is emitted to produce cheap steel and cement that nobody wants to buy. Highly polluting coal-fired power plants are generating electricity to produce aluminium and other raw materials despite lower domestic consumption. There is an urgent need to adjust supply, and this will be the real test of the reforms in China”, she concluded. (Original version in French by Emmanuel Hagry)