Mandelson outlines tough new China policy

The EU’s new ‘China strategy’ warns Beijing that it must play by WTO rules and open up its markets to European businesses if it wants the EU to stop raising protectionist barriers.

In a paper presented on 24 October 2006, the Commission welcomes China’s global expansion, which it says has lowered prices for consumers and importers and forced European companies to become more competitive. But, it also notes that Europe’s trade deficit with the Asian giant has doubled in the past five years (to €106 billion) and blames this largely on the numerous obstacles remaining to access China’s markets. 

Counterfeiting, limits on foreign ownership in key industries such as automobiles, excessive government interference in business through subsidies and tax preferences, forced technology transfers, barriers to China’s public procurement market, and a lack of legal transparency are all problems that China must address unless it wants to be on the receiving end of more punitive and defensive measures – as is currently the case for shoes (see EURACTIV 9 October 2006) and car parts – states the paper. 

“We will only be able to maintain the case for openness in Europe if China shares reciprocal openness and readiness to play by the rules of trade. If not, we could see in Europe the growing defensiveness and protectionism that is becoming evident in some quarters in the United States,” warned Trade Commissioner Mandelson and External Affairs Commissioner Benita Ferrero-Waldner in a joint letter to the International Herald Tribune. 

The paper will serve as a basis for renegotiating the outdated 1985 partnership agreement with China as of next year. 

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