EU Warns China on Trade
October 24, 2006
With unemployment high in many parts of Europe and the EU's trade deficit passing 100 billion euros ($125 billion) in 2005, the bloc says it will consider filing a complaint with the World Trade Organization, if China does not further open its markets.
"Both sides benefit from openness," EU Trade Commissioner Peter Mandelson said in a statement. "But China's growing trade muscle means growing expectations. China must fulfill its WTO obligations and commit to trading fairly."
The EU is unhappy about high Chinese tariffs on products like textiles and leather goods. It also complains that Beijing unfairly privileges Chinese firms when it comes to contracts for automobiles, steel, semiconductors and ships. In addition the bloc is seeking an end to rules requiring EU companies to set up joint ventures with Chinese partners and wants restrictions on European investments in certain industries lifted.
"There is a growing risk the EU-China trading relationship will not be seen as genuinely reciprocal," the policy paper said. The bloc, however, added that it preferred to resolve its differences with Beijing by negotiation.
Chance for talks in November
Mandelson, who is due to visit China next month, commissioned the paper. Additional talks in January are scheduled to focus on a new partnership pact between Brussels and Beijing, but Mandelson said he would also raise the worries expressed in the paper with his Chinese hosts during his visit.
"Too often Europe's businesses meet a Chinese wall rather than an open door," Mandelson said at a conference on EU-China Trade and Investment relations in July.
Trade between the EU and China more than doubled between 2000 and 2005. And as European workers face increasing low-wage competition, EU politicians are coming under more and more pressure to ensure a level playing field.
"China must show that it is committed to embracing globalization as a two-way street," the EU paper said.
It is unusual for the EU to threaten China in this way, but it is perhaps Brussels' only option. Attempts to protect the European market with tariffs have foundered on European consumers' desire for inexpensive Chinese goods. In September, Mandelson filed the EU's first-ever complaint, aimed at a levy on automobile parts, against China with the WTO.