EU, China trade talks on

Beijing, November 5:

European Union (EU) trade chief Peter Mandelson heads to China this week to explain in greater detail a no-nonsense approach to commerce laid out in a recent hard-hitting policy paper, officials said.

The paper, which raised eyebrows with its promise to drag China to the World Trade Organisation (WTO) in future disputes, is likely to top the agenda when Mandelson meets his Chinese counterpart, commerce minister Bo Xilai. “The essential rationale for the trip as far as we’re concerned is to present the Chinese with the China strategy review,” said a Brussels-based EU official. “This is his chance to sit down and talk through with Bo Xilai the message in that communication.” No one questions the crucial nature of the relationship. China is the EU’s second-largest trading partner, after the US, while the EU is China’s top trading partner.

Over the past generation, bilateral trade has risen more than 60-fold, and as the stakes have risen, disagr-eements have been brought into starker relief. The policy paper, issued last month by the EU’s executive arm, the European Commission, reflects this development, tell-ing China it will be hauled before WTO litigators if disputes are not resolved.

And it comes amid warnings from the commission that China faces a political backlash in Europe if it does not play by the rules of international commerce. “China has reached a stage in its development when the rest of the world is entitled to ask for more from China,” Mandelson said.

Laying out Europe’s demands, the British commissioner said the EU wanted China “to fulfill its WTO obligations and continue to open its markets and liberalise trade in services and investment”.

China’s response to the paper has so far been low-key, with foreign ministry spoke-sman Liu Jianchao saying merely that it was being studied carefully. “We hold that under the current international situation it serves the interests of both sides to constantly develop and enrich the China-EU strategic partnership,” Liu said.

Mei Xinyu, a Beijing-based economist with the Chinese Academy of International Tr-ade and Economic Cooperation, said disputes were not necessarily an unhealthy sign. “Of course, there are rowa in bilateral trade talks, but the overall premise is that commerce is in the

interest of both sides,” she said. “In fact, talks and disputes help deepen the trade relationship.”

In the latest flaring of tensions, the EU applied anti-dumping duties on Chinese shoes last month just after it sought, along with the US and Canada, a WTO ruling against China in a car parts dispute. “We want to work cooperatively with the Chinese to address the kind of state intervention in the shoe investigation. But it’s not something that we would negotiate, the duties are there,” said the Brussels-based EU official. Trade in a narrow sense is not the only agenda item for Mandelson, who last visited China in June.