Granting China MES very unlikely under current circumstances

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Granting MES to China is not just an economic decision, other factors such as the environment come into play. [Will Clayton/Flickr]

The issue of granting Market Economy Status to China has started belatedly and has not taken into account the wide-ranging needs of the EU. However, there is scope to rectify this and the European Parliament is playing an active role in the decision-making process, writes Alessia Maria Mosca.

Alessia Maria Mosca is an MEP with the S&D group and represents the Partito Democratico domestically.

On one hand, the different interests at stake in the European Council create a situation of uncertainty; on the other hand, given the complexity of the more general EU-China relations, the position of the Commission itself does not seem clear.

The recently launched Impact Assessment, which followed the EC Better Regulation Guidelines and which is in parallel with a public consultation, is certainly a step in the right direction and should be the base of any EU decision on the MES to China. Nevertheless, we have to take note of the fact that the deadline of 11 December 2016 is approaching and that it is now time to openly discuss the issue in order to come up with a well informed decision on the matter.

Since the beginning of this European Parliament term, the S&D group has been at the forefront of the debate and the recently published position paper on the trade relations between the EU and China perfectly clarifies its position. Under current circumstances, it would be difficult- if not impossible- to grant MES, and this is due to the fact that price distortions do continue and that China did not comply with the political agreement which was an implicit and unavoidable step in order to be treated as a Market Economy.

China is fulfilling just one of the five criteria set by the EU in order to define a market economy, and an eventual grant would have serious consequences for a number of key European sectors. The EU should be ready to cooperate with the other partners in a similar situation and to come up with a common solution that should be consistent with its WTO obligation.

Granting Market Economy Status cannot be seen as a purely economic decision, since it has broader implications not yet clearly assessed.

There is a bigger picture of EU-China relations which is not negligible: cooperation on environment, on infrastructures, on investment, with the ongoing negotiations for an Investment Agreement. This cooperation is crucial for both sides, not only for the EU: for this reason it will not be possible to accept any pressure to lower our standards.

For this reason, the debate on MES should be seen as a challenge by the European legislators in order to better guarantee the global role that has to be played by our industries. Globalisation has brought positive effects around the world when it has been well regulated and when efforts have been put on redistribution. Therefore, it is necessary to better regulate both bilaterally and multilaterally and to be able to create a global playing field in which, regardless of formal label, no systems should profit on advantageous positions.

The European Commission should cooperate better with the other European institutions and be creative in finding a solution that will have to take into account the fact that treating China as a Market Economy will have disruptive consequences for the European productions and therefore this will not be acceptable, nor accepted.

The never-ending discussion concerning the TDI modernisation has clearly shown that, especially on defensive interest in the commercial sphere, the EU needs to find a direction and to better define its priorities.

The debate on Market Economy Status to China has started late and has been driven by particular interests rather than collective ones. It is now time to change both the pace and the quality of the discussion and to work together as a proper Union in order to be as strong as our partners and to guarantee that our industries are not less protected than other countries’ ones.

The European Parliament is perfectly aware of the complexity of the situation and for this exact reason it will do its utmost in order to be constructive. China has all the potential to become more an opportunity than a threat for the European production, but of prime importance is the maintenance of a mutual understanding of the commercial dynamics that cannot in any way be detrimental to European’s interests and productions.

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