EU, China to ink clean coal deal at summit

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Leaders from China and Europe will sign a new Science and Technology Agreement at next week’s summit in Nanjing, where progress is also likely on a major near-zero emissions coal project.

With EU-China relations back on track after a frosty period in 2008, the two sides are expected to press ahead with developing closer bilateral relations on Monday (30 November). The global financial crisis and climate change are also high on the agenda. 

There has been considerable progress in behind-the-scenes negotiations on a new Partnership and Cooperation (PAC) agreement between the EU and China, and a further push will be made in Nanjing with a view to signing off on a final document next year, officials said. 

The current agreement dates back to 1985 and is considered by both sides to be out of date. It could set the tone for closer ties on a range of trade, scientific and environmental areas. 

Despite broadly positive noises coming from Brussels and Beijing, a number of issues still divide the two, including the arms embargo, the granting of market economy status to China, human rights issues, and green technology transfer. 

Closer ties on technology 

Whatever their differences on trade and Tibet, the renewal of the EU-China Science and Technology Agreement appears to be in the bag ahead of the summit, and there are also signs of a breakthrough on a stalled near-zero emissions coal project. 

Leaders are expected to sign phases two and three of the initiative, with the ultimate aim of developing a pilot plant in China. 

The plan is part of a joint effort to develop carbon capture and storage technology (CCS). €50 million has been made available by the EU for the construction and operation phase of the project, out of a total €60 million earmarked for cooperation with emerging economies on clean coal technologies and CCS. 

Technology transfer has been a bone of contention between China and Europe, with the Asian giant seeking financial and technological support in addressing carbon emissions. The debate on easing intellectual property rights for essential green technologies has been hotting up ahead of the Copenhagen climate summit. 

With Copenhagen in mind, diplomatic sources said Europe will push China for more specifics on emissions reduction targets. An internal debate has been underway in China for some months. The pace has been too slow for some observers, although there is a sense that if Beijing sets targets, they will be adhered to. 

Ongoing tensions on trade issues

Protectionism and IPR remain key trade issues for European companies operating in China. Difficulties accessing public procurement contracts will also be raised in Nanjing. 

The row over the ‘buy Chinese’ clause in Beijing’s massive fiscal stimulus package has somewhat abated, and China says goods from foreign-backed firms can still access the stimulus package. However, the EU still has concerns about conditions on the ground for foreign companies. 

At the 11th EU-China summit in Prague (May 2009), it was agreed to establish an SME Centre in Beijing to help European businesses navigate the Chinese legal and business environment. A call for tender by the EU executive was cancelled last month but sources indicate the plan could be resurrected next year. 

China will raise the issue of the EU granting it market economy status (MES), although no major breakthrough is anticipated. The EU insists granting MES is a technical matter but China believes Europe’s hesitation is politically motivated. 

The green economy, preparation for the Doha round of world trade talks, IPR rules on green technologies and the state of the broader investment environment in China will also be on the table. 

Chinese view arms embargo as ‘laughable’ 

The embargo on EU firms selling arms to China also remains a bone of contention, with Chinese officials questioning the “real purpose” of the sanctions. 

The embargo was introduced in 1989 and is the cause of much anguish in China, more for the symbolism attached to it than any practical difficulty it presents. 

China says it can easily source or produce arms technology outside Europe and has no interest in participating in an arms race. Nonetheless, Beijing perceives the embargo as implying that it is a pariah. 

“We don’t want to spend too much on arms; we want to increase the quality of life of the Chinese people. We pursue a defence policy which is defensive,” said China’s ambassador to the EU, Song Zhe. 

Human rights pose perennial problems 

Human rights are always on the agenda at EU-China meetings, although there is a sense that both sides tend to restate their well-worn positions without any major breakthroughs. The latest round of the EU-China Dialogue on Human Rights took place in Beijing last week (20 November), thus annexing these thorny issues from political and economic matters. 

Ambassador Song said human rights and democracy can always be improved in China, just as there is room for improvement in every other country. He said 60 years ago, outsiders commented that China was ungovernable because it was so poor and disorganised. Now, the country is united and becoming more prosperous, he said. 

On the controversy surrounding European attitudes to Tibet, China views the Dalai Lama as a politician leader rather than a religious leader. Song said China continues to oppose meetings between politicians and the Dalai Lama because it promotes the separatist movement in China. 

This is a particularly sore point for China, which itself pursues a policy of non-interference in the internal affairs of other countries. “We don’t make irresponsible remarks about others and don’t like others involving themselves in China’s affairs,” said Song. 

The same logic extends to China’s involvement in neighbouring countries such as Myanmar and North Korea, where Beijing prefers to use its influence in more subtle ways than those advocated in the West. 

Chinese EU Ambassador Song Zhe said developing closer relations serves the interests of both parties as well as the wider international community. He acknowledged that there are difficulties on a number of issues but says there is no fundamental conflict between China and Europe. Song said all problems can be overcome “through mutual respect” between equal partners. 

European Commission President José Manuel Barroso and External Relations Commissioner Benita Ferrero-Waldner will lead negotiations on the European side. 

A planned trip by outgoing Trade Commissioner Catherine Ashton has been cancelled in the wake of her appointment as European High Representative for Foreign Affairs. Ashton was in China in September on a trade mission. 

BusinessEurope has written to European Commission President José Manuel Barroso urging him to work with China to "lay the ground for a successful conclusion of the WTO Doha round in 2010". The business lobby is also pressing for progress at the Copenhagen climate summit, and the removal of barriers to market access in China for EU companies. 

In a separate letter to ECB President Jean-Claude Trichet, BusinessEurope President Jurgen R. Thumann calls for China to consider allowing the renminbi to appreciate. 

The 11th EU-China summit was held in Prague on 20 May, and marked a restoration of diplomatic ties. A previous meeting scheduled for late 2008 was cancelled by the Chinese in the wake of meetings between EU leaders and the Dalai Lama. 

Several senior Chinese leaders, including Premier Wen Jiabao, have visited Europe this year, and EU leaders have also made frequent trips to Beijing as relations returned to normal. 

The 12th EU-China summit will have a much wider and more detailed agenda than the Prague meeting. European and Chinese officials have been briefing journalists ahead of the summit. 

The summit will be preceded by a high-level meeting between Economic and Monetary Affairs Commissioner Joaquín Almunia, ECB President Jean-Claude Trichet and Eurogroup President Jean-Claude Juncker – the so-called 'eurozone troika' – and their Chinese counterparts. 

This is the first time a China-EU summit will take place in a Chinese city other than Beijing. Nanjing, the ancient capital of China, is located in Jiangsu province, which is a major centre for European investment. 

There is a sense on both sides that progress can be made in Nanjing, although a host of issues still divide the two. 

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