China worries about EU-US trade pact plan

Reuters/Brussels

China has raised concerns about European Union plans to negotiate an ambitious free trade deal with the US, fearing it is a protectionist move, a senior EU official said yesterday.

Chinese officials queried EU foreign policy chief Catherine Ashton about the issue when she visited Beijing at the end of April for talks with Foreign Minister Wang Yi and other Chinese leaders.

The 27-nation EU and the US aim to launch negotiations on a transatlantic free trade deal by the end of June, with discussions set to last at least two years.

China worried about whether the plan was “a pulling of the wagons into a circle to ... insulate the transatlantic economy from the rest of the world or is it, as we argue, even greater opening of both economies?” the EU official said, briefing journalists on condition he was not further identified.

The EU argues that a deal would strongly benefit the US and the EU but other countries would also profit from the expansion of trade and investment across the Atlantic.

“That was the reassurance we gave to the Chinese,” the official said.

The European Union is China’s biggest trading partner.

Chinese officials raised the possibility of Beijing negotiating its own free trade agreement with the EU, a prospect that the EU official did not rule out “in the medium to longer term.”

A transatlantic trade deal could add 0.5 and 0.4% respectively to European and US gross domestic product, according to a European Commission report, although it could take a decade to deliver those effects.

Meanwhile, EU Trade Commissioner Karel De Gucht is about to propose provisional anti-dumping duties on Chinese solar panels, sources said yesterday, in a move bound to further strain trade relations between Brussels and Beijing.

De Gucht was expected to propose the move to his fellow commissioners today, after an investigation into China’s solar industry, which annually exports goods worth €21bn ($27.5bn) to the European Union.

The bloc is the main export market for China, which is the world’s largest producer of solar panels and related products.

 The investigation followed a complaint by European industry association ProSun, which argued that European producers were being illegally undercut by cheap Chinese products.

 ProSun also filed a separate complaint, on behalf of European solar panel producers, over Beijing’s subsidies for the solar industry.

 The commission made no comment yesterday, saying only that the “deadline to publish the results (of the investigation) expires on June 5,” according to a spokesman for De Gucht.

 The commission can impose duties with immediate effect, but EU member states must decide six months later whether these should apply for five years or be revoked, in which case the collected fees would be reimbursed.

 The US decided last year to impose high tariffs on Chinese solar panel imports, after a similar investigation.

 The solar panel investigation follows several other anti-dumping investigations against China.

 The EU has countermeasures in place for more than three-dozen kinds of Chinese products, ranging from leather and plywood to ceramic tiles and ironing boards. A product is considered dumped if its export price to the EU is below the market price in its country of origin. In the case of emerging markets such as China, a third country such as the US can be used for comparison.