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China and the EU

26 August 2006
by eub2 -- last modified 26 August 2006

China and the EU, two of the biggest markets in the world, have everything to gain by deepening their commercial ties. Since 1978, EU-China trade has increased more than 60-fold and reached around EUR 210 billion in 2005 (Eurostat).


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1. BILATERAL TRADE RELATIONS

In 2005 China remained the EU 2nd biggest trading partner (after the US) and, according to China's statistics, the EU is China’s first trading partner (ahead of the US and Japan).

Whereas the EU enjoyed a trade surplus with China at the beginning of the 1980s, the EU-China trade relations are now marked by a sizeable and widening EU deficit with China (around €106 billion in 2005); this is the EU's biggest bilateral trade deficit.

GSP

China is the second largest beneficiary out of 180 of the EU's Generalised System of Preferences (GSP) scheme, under which the EU grants autonomous trade preferences to imports from developing countries.It has a share of more than 11% of all effective preferential imports under GSP.

2. CHINA'S ACCESSION TO THE WORLD TRADE ORGANISATION

The EU was a strong supporter of China's accession to the WTO, taking the view that a WTO without China was not truly universal. For China, formal accession to the WTO in December 2001 symbolised the crowning point of its integration into the global economic order (see overview of China 's economic reforms and WTO negotiations).

The bilateral EU-China agreement on WTO signed in Beijing on 19 May 2000, together with the US-China agreement signed in November 1999, were essential milestones in China's accession process.

The commitments made by China in the context of accession to the WTO will secure vastly improved access for EU firms to China's market. Import tariffs and other non-tariff barriers will be sharply and permanently reduced. Investments by EU companies in China will take place in a more attractive and predictable business environment. WTO membership will accelerate China 's own efforts to promote transparency, fairness and openness in its trade regime across the board. Finally, it will open to foreign companies whole key services sectors such as insurance and telecommunications, which have so far been very restricted, if not completely closed. As for China, WTO membership will support and accelerate China's own process of economic reform and development.

Finally, practical experience of applying and enforcing WTO disciplines will make a positive contribution to strengthening the rule of law in China in areas above and beyond the specific field of trade and investment.

The commitments made by China in the context of WTO accession are detailed in the WTO accession documents (Working Party Report and Protocol of accession). The commitments regarding the reduction of tariffs are contained in the tariffs schedule.

Ensuring full and timely implementation of WTO commitments is one of the European Commission's key priorities in its bilateral trade and economic relationship with China. The main issues identified so far by the EU side include inadequate enforcement of intellectual property rights, the definition of multi-faceted industrial policies which might discriminate against foreign companies (e.g. in the automobile sector), the barriers to market access in a number of services sectors (e.g. construction, banking, telecommunications, express courier). Access to raw materials has recently been identified as a major trade issue.

During the last EU-China summit in September 2004 the two parties agreed to move towards early negotiations on a new EU-China Framework Agreement.

3. SUPPORTING CHINA'S ECONOMIC AND TRADE REFORMS THROUGH TECHNICAL ASSISTANCE

Since the mid 1990s, EU Technical Assistance to China has supported economic reforms with a particular focus on training and institutional capacity-building. After China's accession to the WTO, smooth, timely and accurate changes to the trade regime have become even more important. To this end, the EU is committed to working in partnership with China and will share its experience in the WTO.

A major EU-China Cooperation Programme to support China's integration into the world trading system was launched on 1 February 2004, further to a pilot programme that ended in December 2003. With funding of 15 million Euro from the EU side and 5 million Euro from the Chinese side, this new five-year WTO programme is the biggest of its type in China.

The main objective is to support China's further integration into the world economy and to assist the Chinese government in implementing its obligations and commitments in the WTO. The target groups for the assistance are the relevant bodies of the Chinese government system, the higher education and research institutes, manufacturing industry and the service sector (public and private) and civil society in general.

Among the deliverables the programme is expected to yield are expert opinions or analysis, impact studies, development of possible solutions to specific questions or problems, dialogue facilitations, training sessions, seminars, workshops, policy advice and research, the whole leading to trade-related capacity building as a broader integrated concept, well ahead of market access improvements.

The new WTO Integration Program will focus on core elements of China's integration into the world trading system. It will consist of six components: Customs and import/export regulatory system; Agriculture and Agro-food; Technical barriers to trade/Sanitary and Phytosanitary Measures; Services; Legislative and legal aspects of domestic implementation, IPR enforcement; and Policy development, co-operation and transparency.

A Project Management Unit has been set up in Beijing where the main direct beneficiaries are located. However, activities will be implemented all over China, and will include study tours in Europe.

EU External Trade with Asia web links


The European Union in the World
EU Trade with China
EU Trade with India
EU Trade with Japan
EU Trade with Korea
EU Trade with Cambodia: statistics
EU Trade with Indonesia: statistics
EU Trade with Singapore: statistics
Commission ASEM External Relations site
EU Trade with ASEM: statistics
Further information on EU External Trade Policy on Europa


Source: European Commission

Understanding China

Understanding China

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