The EU’s trade strategy towards China: lessons for an effective turn

Abstract

The European Union (EU)’s trade strategy has changed since 2015 with the re-introduction of human rights and the EU’s refusal to grant China Market Economy Status. The questions under investigation here are what were the drivers of EU-China trade before the strategic turn and what consequences could the new EU strategy bring about in the relationship. The paper will draw from 16 interviews with think tanks and policy makers carried out in Beijing and Brussels in 2015 to uncover the Chinese perceptions of the EU and its diplomats as well as the preferences that have so far pushed China to make the EU one of its first trade partners. This work concludes that in order for the EU-China trade relationship to keep functioning, the new EU strategy towards China needs to keep human rights as an issue separated from trade, needs to boost knowledge and legislation transfers on sensitive issues like food safety and environmental management and finally needs to keep the “European way” of dealing with trade frictions and disputes with China.

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Notes

  1. 1.

    Since the election of Donald Trump, the TTIP project has been buried. However, this does not take away the EU’s initial intention to turn away from the multilateral WTO organization and towards its American partner to initiate trade standards.

  2. 2.

    The EU is currently working on a China-specific calculation methodology that would allow it to recognize China’s market economy status without giving China the full benefits linked to the status.

  3. 3.

    In practice, there were five occurrences of the word “human rights” in the European Commission document “A Maturing Partnership: Shared interests and Challenges in EU-China relations” in 2003, four occurrences in “EU-China: Closer Partners, Growing Responsibilities” in 2006 against 16 occurrences of the word in the new strategy edited in 2016.

  4. 4.

    In order to make the comparison easier, the figures for the USA were translated into euros using the average dollar-euro exchange rate of the year 2013.

  5. 5.

    In 2013, the EU exported 148.1 billion of euros worth of goods to China, while the USA exported solely 91.7 billions of euros worth to the country (Morrison 2014; European Commission 2014).

  6. 6.

    In 2013, the EU exported 49.9 billion euros worth of services, while the USA only exported 28.9 billion euros worth in the same domain (European Commission 2014; Morrison 2014).

  7. 7.

    These include on the Chinese side, the Chinese Ministry of Commerce (MOFCOM), the Chinese Academy of Social Sciences, China Institute of Contemporary International Relations, Renmin University, the China Institute of International Studies; on the European side, DG Trade, DG Environment, the European External Action Service, and the EU delegation to China.

  8. 8.

    PM 2.5 particles are half the size of a micron and are therefore able to travel deep into the respiratory system. They are proven to have severe adverse effects on human health if the exposure is long term.

  9. 9.

    Chai Jing, a famous former TV presenter on CCTV released “Under the Dome”, a documentary on China’s environmental problems. It targets major state-owned companies as well as different ministries and institutions. The movie remained online 4 days before being taken off by Chinese authorities in February 2015. It has been viewed over 300 million times.

  10. 10.

    These are far from being isolated incidents. For example, for the sole year of 2011, China had to face scandals on pork meat, beef meat, recycled out-of-date food, fake beef and cat meat.

  11. 11.

    Dumping takes place when a product is sold at a price that is lower than the production costs. It is an illegal practice in international trade law (Article IV of the Uruguay Round agreement, 1994). However, the WTO does not regulate how a country or organization like the EU establishes that there has been dumping on a product or not. It is up to each entity to establish its own procedure.

  12. 12.

    As aforementioned, international trade law allow governments and organizations like the EU to put in place counter measures (under the form of quotas or duties) in case the anti-dumping investigation establishes that a product is being dumped by another party

  13. 13.

    In his three-page June 2013 speech, he repeated five times his preference for a negotiated solution with the Chinese over an application of the higher tariffs

  14. 14.

    This case was solved at the WTO on 18.12.2014 and gave reason to China. In this case against the USA, China filed a complaint against the procedure through which the USA establishes that a product is being dumped in its market.

  15. 15.

    China launched an anti-dumping inquiry on European wine sales to China on the 5th of June 2013, 1 day after De Gucht’s intervention explaining the EU’s intention to impose tariffs on Chinese solar panel exports in case the agreement was not reached by August. The trade probe was dropped by China once the two parties agreed on a deal.

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Acknowledgements

I would like to thank Professor T. Christiansen and R. Maher and the RSCAS for organizing the conference “China’s rise and the EU’s response” which led to this special issue. I am particularly grateful for the feedback and advice given by R. Maher and M. Lestra on the initial drafts of this article.

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Correspondence to Camille M. Brugier.

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Brugier, C.M. The EU’s trade strategy towards China: lessons for an effective turn. Asia Eur J 15, 199–212 (2017). https://doi.org/10.1007/s10308-017-0475-4

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Keywords

  • European Union
  • World Trade Organization
  • Solar Panel
  • Strategic Partnership
  • Trade Dispute