Strasbourg, 11/07/2007 (Agence Europe) - Responding to an oral question from the European Parliament on trade relations with China at the plenary session on Wednesday, Trade Commissioner Peter Mandelson defended his handling of the matter. The “fundamental argument” at the basis of the EU's new strategy with China (see EUROPE 9293), that “Europe benefits from an open and balanced economic relationship with China based on fair reciprocity”, “holds good today,” he said, acknowledging, however, that “we have not yet achieved the balance”. “Europe's trade deficit with China is growing. Now I accept that part of this deficit may be the natural result of market forces. But we also know that our export potential is being hampered by barriers in the Chinese market - that an important part of the current trade balance is artificial,” he added, quoting a recent study that showed that Chinese trade barriers represented lost export opportunities of the order of €20 billion per year (see EUROPE 9370). “China must take concrete steps,” Mr Mandelson went on, noting what Europe was demanding of Beijing: improved access to China's goods and services markets for EU investors; increased protection of intellectual property rights; an ambitious approach from the Chinese authorities to negotiations to update the 1985 Trade and Economic Cooperation Agreement, launched in January (see EUROPE 9346); and assurances that the drive for growth would not lead to over-production and dumping, especially in key products like steel. “We are at something of a crossroads. A policy of dialogue to address the problems we have is only credible if it delivers more than the alternative means of forcing change,” Mr Mandelson said, before adding, “The policy of dialogue and engagement can be challenged. It will be if things do not improve between us”. He assured his audience that he had “openly and frankly” raised all the points causing friction between the EU and China, during the visit to Brussels of Chinese Trade Minister Bo Xilai (see EUROPE 9443, 9444 and 9445). “Europe can cope with tough competition. . But it needs to be fair competition. This means we have to ensure we are acting on a level playing field, reject anti competitive trading practices and stand ready to apply our trade defence instruments against dumping and illegal subsidies, and step up the fight against counterfeiting,” he said. (eh)