The myth and the reality. The European Commission is finally giving the impression that it is taking seriously the plague of counterfeiting and piracy, of which European products are the main victims. The Commissioners in charge of the Customs Union (Laszlo Kovacs) and the fight against fraud (Siim Kallas) are stepping up checks and fighting abuse, and Franco Frattini, who is in charge of security and justice, has proposed that infringements against intellectual property be considered as criminal acts (see this column yesterday). Among the panoply of initiatives and instruments, the silence of those in charge of trade policy is deafening. Peter Mandelson acted in the heat of the moment over the textiles business, with balanced results which were, therefore, positive overall, and as we know, the shoe sector is currently under the microscope; but on counterfeiting, nothing. For my money, though, we should be making it quite clear to the countries in question and WTO bodies that Europe cannot agree to any kind of hierarchy in international trade rules.
It is all as though a ban on quantitative restrictions, customs reductions and similar provisions enjoyed a privileged status, a priority within a kind of tacit "hierarchy of norms". We need to re-establish a balance: if the country can be held responsible for massive, sustained infringements in the field of counterfeiting, the countries which fall victim to these acts should have the right to react by dint of other commercial measures on a similar scale. Laszlo Kovacs has declared that over and above what it costs in terms of job losses, the piracy of brands and of counterfeit products costs EUROPE 10 times more than the common agricultural policy, which comes in for criticism from all sides, with people claiming that it distorts competition. The Laffineur report, to which I referred yesterday, states that in China, counterfeiting is "an economic system all of its own", employing 5 million people, with its own specialist factories in areas which are hard to access, with surveillance cameras and security guards to sound the alert if the authorities approach. In the cities, there are markets for the bulk sales of counterfeit products, along the lines of the "permanent trade fair", and which are attended by business people from Russia, Southeast Asia, the Middle East and Africa. These sites enjoy protection from the local police because, for certain cities, they are the only source of income.
A swift transformation. Marc Laffineur (who, as rapporteur for the French Assemblée Nationale, enjoyed the support of the diplomatic missions of his country and facilitated access to information sources) does, however, recognise that the central Chinese authorities are taking steps to change the situation and fight abuse. China has, moreover, concluded several cooperation agreements with the EU, and Commissioner Laszlo Kovacs visited recently, when he took part in the first meeting of the joint EU/China customs committee. In the view of Mr Laffineur, this change in course can be explained by the fact that "China is far more than an assembly line for the localised enterprises: it is also developing its own technological ambitions", to such an extent that it has become the "world's largest deponent of patents and models". The Chinese learn quickly and well, and then they innovate and invent: a few thousand years of civilisation do not count for nothing! The China of textiles, shoes and counterfeiting will soon belong to the past; soon, it will be producing and exporting its own industrial products, even high-technology ones, everywhere in the world, and these products will be top-notch and cheaper than anywhere else; what is more, in a few sectors, it has already started.
A mediocre, short-sighted policy. It is against this prospect that the EU's current policy appears mediocre and short-sighted. Whatever its current delays in terms of well-being and standard of living, China can no longer be considered as a developing country to be granted customs preferences, but as a powerful partner. Those who talk of delocalisations of European activities to China as an objective to help to balance out the effects of the opening up of our borders to Chinese textiles, shoes and various agricultural products, are worryingly naive. Delocalisations may make a few producers of luxury products and the heads of a few fashion houses rich, but will bring nothing to the European economy and employment at home. It won't be long before China will no longer need European knowledge and patents: it will be able to produce everything by itself. Europe must, therefore: a) in the immediate future, maintain an extremely firm and strict line towards counterfeiting and dumping, and make no concessions on agriculture; b) get ready to negotiate with China as equals in the industrial sector, on services, on finances and on currency. This should go for the economic aspects. For the directly political ones, such as human rights, we can trust the spur of the European Parliament. Any other behaviour would indicate that we have understood nothing about China, its admirable civilisation and its inexhaustible potential. (F.R.)