dialogue and cooperation with Beijing failed to secure concessions for Europe, the European Union's top trade official has called for more aggressive action - in line with the United States - to hit back at Beijing.
EU trade chief calls for aggressive action against China
By Stephen Castle Published: October 17, 2007
PARIS: Admitting that dialogue and cooperation with Beijing have failed to secure concessions for Europe, the European Union's top trade official has called for more aggressive action - in line with the United States - to hit back at Beijing.
In a document filled with hard-hitting criticism of what he terms the "Chinese juggernaut," Peter Mandelson, the European trade commissioner, said the EU should align policy more closely with Washington and be more ready to take cases against China to the World Trade Organization.
The comments came as EU heads of government, meeting Thursday in Lisbon, prepared to discuss calls from Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, for a more aggressive stance toward emerging Asian economies over trade.
The European Commission is also nearing decisions on a series of trade disputes over items like steel that could lead to confrontation between the European Union and China.
Coming from a committed supporter of free trade, Mandelson's internal document, dated Monday, illustrates the pressure he is under to toughen his stance as Europeans become increasingly concerned about the scale of Chinese imports and its effect on jobs.
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In the four-page letter to the European Commission president, José Manuel Barroso, Mandelson highlights the widening trade gap, arguing that "to some extent the Chinese juggernaut is out of control" and that the European Union is "sitting on a policy time bomb."
Suggesting that China has "failed to respond to a policy of cooperation and dialogue," Mandelson says it is less desirable or necessary than in the past "to distinguish European policy from American policy."
According to the European Commission, the EU trade deficit with China rose by one-fifth last year and is rising at €15 million an hour, a higher rate than that of the United States.
Beijing is now Europe's largest source of manufactured imports. But the bloc, with 27 countries and a population of around 470 million people, exports less to China than to Switzerland. Non-tariff barriers and regulatory discrimination cost European companies an estimated €20 billion a year.
With the exception of a recent deal on textiles, "there is a growing sense that our policy of cooperation is no longer delivering sufficiently credible results," Mandelson says.
Europe should be more ready "to use WTO dispute settlement to enforce the rules," the letter says, adding that "we have launched only one case since 2001."
The letter states that the United States has started six cases in this time.
"We shall also need to maintain rigorous use of anti-dumping and other means of trade defense," the letter says.
The intervention follows a series of decisions that reveal increasing impatience in Europe over state subsidies to Chinese exporters, Beijing's failure to crack down on the abuse of intellectual property rights and limited access to China's massive domestic market.
Last week, the European Union extended by a year tariffs of up to 66 percent on light bulbs made in China.
Finance ministers from the 13 countries that use the euro also made a rare criticism of Beijing's failure to allow the yuan to appreciate against Western currencies.
Trade experts say that Mandelson faces a series of tough decisions in coming months relating to trade with China, including calls for measures to protect European steel makers from cheap imports.
"We are talking about huge cases in terms of volume of trade and the companies involved," said Lourdes Catrain, a trade lawyer with Hogan & Hartson and an expert in EU-China trade.
"He will also have to consider whether to accept anti-subsidy cases, which are highly sensitive, as well as intellectual property rights disputes," Catrain said.
Such a shift of policy is likely to find favor in France and Germany, which have called for a tougher stance on international trade. In a joint letter last month, Sarkozy and Merkel made a thinly veiled reference to China, arguing that "open markets can only develop their full potential if transparent rules facilitate fair competition in a spirit of reciprocity."
The two leaders said there was a need among Europeans for "a united front, especially when it comes to devising strategies to convince third states to dismantle barriers which place European companies at a disadvantage."
Meanwhile, public perceptions of China are changing. Favorable views of China in Europe have declined by 18 percent in Spain and 18 percent in Britain during the past two years, according to the European Commission.
Nevertheless, the European Union faces acute difficulties in erecting barriers against China because of the extent to which European economies already depend on Asian imports.
That is one reason why the issue of steel has proved so difficult for EU authorities. According to the European Commission, around 250,000 European jobs depend on steel making, but seven million jobs are linked to manufacturing that uses imported steel. |
