Fabian Demicoli

EU, China move to mend fences and open markets


Trade ministers
from the European Union's member states will next Friday (18 October) formally
give the European Commission a mandate to negotiate an investment agreement
with China.

The
mandate, which passed through the member states' working group on trade without
comment on 2 October, would help to put the EU's trade relationship with China
on a positive footing after months of disputes over Chinese producers' pricing
of solar panels and telecommunications equipment.

Last
month, Karel De Gucht, the European commissioner for trade, suggested that an
investment agreement would open the way to far deeper liberalisation. "Over
time, there will be a free-trade agreement between China and Europe. I am sure
about that," De Gucht said.

Accessing
more areas

The
negotiations would seek to open the many sectors of the Chinese economy that
European companies say are closed off to them, or to which access is possible
only with many conditions attached. The other track would look at the
protection of investments.

At
present, investment in both directions is relatively small, though growing.
Just 2.1% of the EU's foreign direct investment is in China, De Gucht told the
European Parliament on Tuesday (8 October).

An
investment agreement is seen as valuable for China principally as an assurance
that the EU's market will remain open in the long term.

Points
of concern

De Gucht
told Parliament that sustainable development and "a reference in support of
internationally recognised standards of corporate social responsibility" would
be among the points of particular concern for the EU.

The
Commission has not indicated when it would hope to complete talks on what would
be the first stand-alone investment agreement negotiated by the EU. It says
that an estimate is difficult, because it is aiming for ambitious results. The
Commission's usual ambition is to complete free-trade agreements, which now
include investment agreements, within two years.

Talks
could receive the blessing of China's leaders at the EU-China summit. De Gucht
said that the summit will be held on 21 November, though the date has not yet
been confirmed by China.

The EU
and China will hold their first high-level trade and economic dialogue in more
than two years on 24 October, a sign that both sides want to move beyond the
rancour that characterised the dispute over the dumping of Chinese solar
panels. The case was effectively settled in August, when Chinese producers
agreed to a minimum sales price.

The EU's
member states gave the Commission the power to negotiate terms for investment
protection in 2009, when they ratified the Lisbon treaty. Investment issues
will now be normal elements of the EU's free-trade talks.

Around
100 of the Commission's trade officials had expected to spend the week in talks
with US counterparts on a transatlantic free-trade deal. However, the week-long
second round of negotiations was called off late last Friday (4 October)
because of the shutdown of large parts of the US government caused by a dispute
over the US budget. Once the shutdown is over, the talks will resume as a
matter of priority, officials say.

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