One part of a larger whole. Today's subject will be China, because this is the clearest and most topical example, but for my money, the following considerations are somewhat more general. They refer to trade policy being taken on board not as an isolated field subject to the simplistic rule of the opening of borders and constituting an end in itself, but as one part of a larger whole which encompasses industrial policy (see this column of 25 February), environmental protection, safeguarding agriculture, the countryside and its traditions, the quality of products, and so on. It is true that the European institutions are increasingly aware of these issues; but it is vital for trade policy to be included and that it is not seen as just an area apart, the sole aim of which is to develop trade.
A brave speech, but… Returning to China, the speech European Commissioner Peter Mandelson made in Beijing last week was of remarkable clarity. Anybody who has not had time to read the text in full, most of it can be found on page 6 of our bulletin on 26 February. The link between the EU granting China market economy status and China stamping out counterfeiting and piracy was made quite clear: “If China appears to be reaping the benefits of free trade without observing fair trade standards, this will attract a negative response from Europe and elsewhere”. The possibility of safeguard measures against the vertiginous increase of Chinese textile exports was raised by the Commissioner. The request to link the value of the Chinese currency not just to the dollar but to a range of currencies (including, of course, the euro) was explicit. Mr Mandelson even hinted at a link between trade policy and other policies, when he said that the attitude of Europe and other WTO members would “depend on a broader perception of China's political, economic and social behaviour within its own borders and on the international scene”.
The catch. Very well, as long as all of this can be turned into concrete behaviour and is not just the stuff of a brilliant speech at a Beijing university. Mr Mandelson did not ask for any tangible proof of a change in any Chinese practices and announced no European precautionary measures. His speech was made up of support, incentives, encouragement, plus the hint that Europe would be more likely to lift its embargo on arms sales to China if the latter takes on board the EU's concerns in other fields. I don't think this was enough. China must respect the rules on counterfeiting and piracy, because this is one of the conditions of enjoying free trade, rather than just something in return for concessions elsewhere. It is true that the Financial Times feels that Mr Mandelson said too much as it was, and reprimanded him severely, accusing him of protectionism. But I can't imagine a European Commissioner with all the responsibilities that go with the territory paying too much attention to a newspaper, albeit a quality one, but which sees red as soon as the interests of the City or its traders might be affected. China gives a few minor concessions on moderating its textile exports and a few forays against piracy: 6,860 cases of counterfeiting dealt with and 551 convictions. How dainty the statistics look against the backdrop of such an overwhelming reality! The reality is that Europe would be quickly swept away by trade without rules. China would quickly work out how to do everything, and do it well. Everyone would rush to transfer their investments in order to join the party and open all borders without calling first for the application of “fair trade standards”, and it would be the death of the European model of society.
The image the Chinese have of the time and duration is not ours; a slight deceleration in its quest for half the world clothing market or in any other objectives means what? In an article published in several European newspapers, Peter Mandelson gave his recipe for facing up to the Chinese textiles invasion: a “clear and transparent” indication of European origin on a shirt or a jacket, completion of the Euro-Mediterranean trade zone covering the entire textile production chain (from the fabric to sales of the finished product), stepping up the fight against counterfeiting, specific labels indicating the conditions under which imported products were produced, stamping out fake logos… These, no doubt about it, are useful measures; but not a word in the “Mandelsonian” prose about safeguard measures or the link between opening borders and genuinely eradicating counterfeiting. When Europe's industrial sectors have disappeared, it will be too late to start talking about the EU's industrial policy.
(F.R.)