Thursday

16th Aug 2018

Focus

Divided EU debates China market economy status

  • Europe's solar panel industry could suffer, if China is granted market economy status by the EU (Photo: Trey Ratcliff)

The EU Commission will discuss Wednesday (13 January) the sensitive issue of granting China “market economy status”, with Beijing arguing the step is due 15 years after it joined the World Trade Organisation (WTO).

“The college will hold an orientation debate on the Chinese request, it is not a moment for a formal decision, it is for the commissioners to discuss the way they approach this file and the sequence of events that will follow,” EU Commission spokesman, Margaritis Schinas, told press on Tuesday.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • The WTO accession accords will automatically make China a market economy by the end of 2016 (Photo: Andre Skibinski)

Granting the status to China means the 28-member bloc would have a more difficult time imposing anti-dumping duties on Chinese goods.

Dumping occurs if a company is exporting a product to the EU at lower price than the normal value of the product to cut out a bigger market share and drive out competition.

But China says that the accession accords of the WTO will automatically make it a market economy by the end of 2016.

Chinese Foreign Ministry spokesperson Lu Kang recently urged the EU to adhere to these WTO rules and grant China the status.

"Pacta sunt servanda (Latin for "agreements must be kept") is a basic principle and obligation in international law. No signatory party can evade its obligations under international treaties by citing domestic laws as an excuse, and treat Chinese enterprises in an unfair, unjust, unreasonable and discriminative manner," Lu Kang said at his regular press conference last month.

"As a WTO member, China has been earnestly honouring each of its legal obligations since its accession, and must be entitled to all the WTO rights," he added.

The final decision, not expected on Wednesday, will have to be made by the European Parliament and EU member states, but will be initiated by the Commission.

The US says there is no reason to treat China’s heavily state-financed and centrally organised economy, with government-set prices, as a market economy.

European manufacturers are worried that removing the possibility of imposing duties will result in China dumping goods in Europe, leading to job losses.

Textile, steel and solar panel industries are vulnerable to Chinese imports. Supporters of the deal say it could open the way for EU investments in China and Chinese investments in European infrastructure.

Jobs, jobs, jobs

A study by the Washington-based Economic Policy Institute published last September says “an EU decision to unilaterally grant MES to China would put between 1.7 million and 3.5 million EU jobs at risk by curbing the ability to impose tariffs on dumped goods”.

The report said increased imports arising from granting the status to China would reduce EU output by between €114.1 billion and €228 billion per year, a 1 percent to 2 percent reduction in GDP.

Various European industries and the European Trade Union Confederation (ETUC) all expressed concern.

A spokesman for AEGIS Europe, an alliance of 30 manufacturing industry associations said Tuesday in a statement: “Europe simply cannot grant Market Economy Status (MES) to a country that does not merit it. Doing so would have an immensely negative impact on European industry”.

“Granting MES to China would be equivalent to gifting a licence to dump,” Milan Nitzschke, the spokespoerson added.

“The European Union has clear criteria for market economy status” ETUC General Secretary Luca Visentini said in a statement before the Commissioners’ meeting.

“China clearly does not meet them,” he said, adding: “What’s more, it would open the EU to unlimited dumping of Chinese goods on our market which would be catastrophic for European manufacturing and jobs.”

The UK, The Netherlands, and Nordic countries support China’s market economy status. Germany is, in principle, supportive, but is interested in safeguards for sensitive industries, while Italy is strongly opposed.

China is recognised as a market economy by Russia, Brazil, New Zealand, Switzerland and Australia.

The EU Commission might choose a compromise: granting the status to the world’s largest trading economy, but keeping trade defence measures for a transition period.

The European Commission has 28 anti-dumping investigations underway, 16 of them involving China.

News in Brief

  1. MEPs blast UK 'alphabetical approach' on citizens rights
  2. EU hits back over Salvini's blame for bridge collapse
  3. Poll: Sweden's social democrat-led government set to win again
  4. Genoa in state of emergency following bridge collapse
  5. EU summertime survey closes Thursday
  6. Putin to attend Austrian foreign minister's wedding
  7. Salvini questions EU 'constraints' after bridge collapse
  8. Bosnian Serbs to rewrite 1995 Srebrenica genocide report

Supported by

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. Brexit talks resume as chance of 'no deal' put at 50:50
  2. US trial sheds light on murky Cyprus-Russia links
  3. Burned cars fuel Swedish election debate
  4. EU court to hear citizens' climate case against EU
  5. How long can Bulgaria keep facing both East and West?
  6. EU commission steps up legal case against Poland
  7. Separation of powers instead of 'Spitzenkandidat' process
  8. Revealed: ExxonMobil's private dinner with Cyprus' top EU brass

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Join EUobserver

Support quality EU news

Join us