No talk of China market economy treatment, or an investment agreement, let alone an FTA with China in Malmström’s inaugural speech in Beijing.
It is the first time trade Commissioner Cecilia Malmström’s goes to China since she took on her role in 2014. In her speech, held ahead of the annual EU China summit in Beijing (12 &13 July) attended by the top brass of the EU Commission, has focused on China-critique. It did not mention any of the difficult ongoing files in EU-China relations: China market economy treatment in EU antidumping cases, the ongoing bilateral investment talks, and Chinese demands for a free trade agreement with the EU.
The talk was centered around China’s lack of economic and political reforms. Xi Jingiping’s flagship “free trade zones have made relatively limited progress or been completely abandoned”, Malmström deplored. “There are still real concerns about enforcement of intellectual property rights. Discrimination against EU businesses remains a fact, one that we are worried could be reinforced”, Malmström said.
Chiming in: “There are steps backward in the laws on national security reviews, and on non-governmental organisations and in some initiatives in the field of cybersecurity. And, overall, issues remain about predictability and transparency of the legal and regulatory systems – i.e. the rule of law”, Malmström said.
Malmström also called on China to take into account EU reciprocity concerns: “People look at Europe’s level of openness to imports and foreign direct investment. This is something we are proud of and that has been a source of growth and wealth. And then they look at other countries’ levels of openness – including China’s – and they see that it’s not the same”, the commissioner explained.
“They ask why can Chinese firms make high profile purchases in Europe, including airports in Germany, the Port of Piraeus in Greece and Italy’s Pirelli tyres, not to mention Volvo cars in my own home town of Gothenburg when European investors face major barriers, including equity caps, forced technology transfer or licensing restrictions in sectors like automotive, rail, construction and environmental services? Or why do European steelmakers have to lay off workers when they are competing with Chinese firms who benefit from huge subsidies?”.
There was no sign of responding to Chinese demands. These include being recognised as a market economy in EU antidumping law as of December 2016. Beijing has been hoping for this moment ever since Western promises written down in China’s WTO accession protocil fifteen years ago. Beijing is also calling for a start to free trade negotiations. The Commission is prioritising bilateral investment talks instead.
Instead the Commissioner called on China to be more constructive in the ongoing Environmental Goods Agreement negotiations in the WTO. “It’s been hugely encouraging to see China taking a leadership role, not just through its chairmanship of the G20 this year, but also at the Nairobi WTO Ministerial Conference and the Paris Climate Conference last year. China and the EU now have a chance to show leadership again”, Malmström said. “That goes for the plurilateral negotiations for an Environmental Goods Agreement, where we seek to abolish tariffs on products that are good for the environment”.
In other words: don’t expect much from the EU China summit this year.
