Discovered by the media. Just as we anticipated. There were no surprises for our readers in the latest developments in relations between the EU and China. What's changed is that the media have discovered the “Chinese problem”, meaning that the European public is more aware of it. Neither the new steps taken with the European Commission's decision to open procedures which may lead to restrictions on Chinese textile imports, nor the declarations and clarifications resulting from contact between the Chinese and the European authorities (either Community or national) change the situation I laid out in the two recent editorial comments on these relations (bulletins 8929 and 8932), or their general conclusion: commercial, economic, political and strategic relations between the EU and China are more than a sum of their parts and should be looked at and discussed with Beijing as such.
It is true that everyone sticks to their own competencies. When announcing and explaining the trade procedures he was about to open, Commissioner Peter Mandelson only talked about the specific objective of his initiative, which was to bring pressure to bear on Chinese textiles exports and their repercussions on European markets. Sunday evening's exchange of views between the European trade ministers focused solely on this. But at the same time, Chinese sources were stressing that the EU's hesitations on removing the embargo on arms sales “could make trade relations more difficult”, and the French Prime Minister, Jean-Pierre Raffarin, on an official trip to China a few days ago, spoke of a discrepancy between Franco-China relations (which he described as intense and satisfactory) and the relative weakness of France's exports to China. Some thirty heads of large French (Alstom, EDF, Thomson etc) or European (Airbus) companies accompanied Mr Raffarin, and France is waiting for a few big contracts to be concluded in high-tech sectors (energy, aeronautics, space, terrestrial transport). But Mr Raffarin added: we must “secure greater market opening from China. Big contracts are not enough”.
Conditions for free trade. As anticipated, China is opposing the unilateral European safeguard measures against its textiles, and will agree to nothing more than to reduce some of its textiles imports autonomously, when it feels the right tactical moment has come. And this will bring the EU to give up its autonomous restrictions and will be welcomed in Europe with gratitude, as a proof that China has grown aware of its global responsibilities. In fact, the brief slowdown on the world's textiles markets will be almost imperceptible to a colossus who plays in the medium and long term, and who will have consolidated its places on the European and American markets in the meantime in many other industrial sectors, including automotives. At the same time, China is keeping up the pressure on the world energy markets (its oil purchasing has been quite impressive) and many raw materials: steel (to the point at which its production will have reached levels allowing it not only to become independent of all imports, but also to start exporting), iron ore, aluminium, and coal.
What happens reinforces one of my long-held beliefs: free trade is only possible between countries which play by the same rules and the opening up of borders must follow (not precede) the observation that these rules are being adhered to. Which ones? End of piracy and counterfeiting of labelled goods; respect for basis social norms (I don't mean salaries, I mean child labour, union rights, etc); acceptance of essential environmental standards. On top of this comes the monetary aspect. According to American calculations, the Chinese currency is under-estimated by about 20-40% compared to the dollar, and therefore an awful lot more compared to the euro. What good is customs duty (around 10% in the EU) when you've got monetary under-valuing of 50% or more? The Chinese authorities know that sooner or later they will have to do something about this, but they are delaying this as long as they can and their measures are as small as possible. Whatever the case may be, the EU absolutely must discuss and negotiate on a global footing, covering trade, monetary, political and strategic issues at one and the same time. This is not what the Europeans are doing: some of them home in on the textiles problem, others look no further than human rights, and others concentrate on the arms embargo. On each of these points, when you take them individually, China will make a few concessions to overcome sectorial issues, when it's the whole that counts. And for the monetary plank, Europe will have to- not act together with the United States, but coordinate with them. And on no point make do with vague or ill-applied promises for future action. (F.R.)