• It is business as usual between the two economic powerhouses (Photo: dolmansaxlil)

No trade war with China, EU presidency says

16.03.12 @ 09:18

  1. By Philip Ebels

BRUSSELS - Business between the EU and China is running as usual, despite highly-public trade differences between the two economic powerhouses, the Danish trade minister has said.

"I wouldn't say that [EU-China trade relations] are deteriorating, I think they are just more in the open now," Pia Olsen Dyhr, whose country currently holds the rotating EU chairmanship, told EUobserver in an interview on Thursday (16 March).

Her comments come two days after the EU joined the US and Japan in a fresh complaint to the World Trade Organisation (WTO) over China's restrictions on the export of so-called rare earth elements, used in the manufacture of high-tech devices.

"China has been a member of the WTO for 10 years now and some member countries are testing how it is implementing the rules," she said. "That is why we see these cases arising. In the beginning they had a transition period but that is running out."

The complaint over rare earth exports came on top of a delay last week of a multi-billion-euro Chinese order of European-made Airbus jets, seen as retaliation against a new EU tax on airlines' carbon emissions.

Continuing the tit-for-tat in trade relations, the EU is said to be readying legislation to allow member states to bar non-EU-based companies from public procurement contracts. China already has similar legislation in place.

French President Nicolas Sarkozy, campaigning for re-election, last week called for the introduction of what he called a "Buy European Act" - a law that would oblige European governments to deal with European companies only.

China is also becoming more outspoken about the EU's economic problems. The governor of China's central bank recently said that Europe is the biggest uncertainty to the future of China's economy.

"I understand why he is saying that ... Chinese companies are investing more and more in Europe and therefore are also more vulnerable if the European market is going in the wrong direction," Denmark's Olsen Dyhr noted.

She addded that the EU economy is moving in the right direction: "Why would the Chinese [otherwise] invest even further? It is really going rapidly high."

Xiang Lanxin, a professor of international history at The Graduate Institute in Geneva and a long-time scholar of China, has also downplayed the apparent hardening of rhetoric from both sides.

"There are some frictions ... Normal frictions, without any strategic or political background," he told this website.

In any case, China will not be on the agenda of Friday's meeting of EU trade ministers, Olsen Dyhr added. "It is not even on the non-agenda during lunch," she said.

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