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China, EU hold talks over trade compensation
(China Business Weekly)
Updated: 2004-05-09 10:22 China and the European Union (EU) will soon launch
negotiations over compensation for China's possible losses caused by the EU's
enlargement on May 1.
"We have completed the preparatory talks and the EU
has agreed to hold further talks with us,” said Ma She, deputy director with the
Department of European Affairs under the Chinese Ministry of Commerce.
Ma made his remarks at the China-EU Economic and Trade Forum 2004 hosted
by the Beijing-based University of International Business and Economics (UIBE).
The 15-member EU absorbed 10 eastern European countries -- the Czech
Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia
and Slovakia - On May 1.
Despite the greater market for Chinese goods,
the EU enlargement will certain bring short-term impacts, said Luo Hongbo, a
senior researcher with the Institute of European Studies under the Chinese
Academy of Social Sciences.
With an improved investment environment, the
EU's new members will attract greater investment, especially from Western
Europe. Some of this money might have otherwise been invested in China, Luo told
China Business Weekly.
Ma said that although the general tariff rate
will be lowered following the EU enlargement, the tariff rate on certain
products might be higher.
Luo also said that stricter technical
requirements on imports, harsher anti-dumping and anti-subsidy measures, and the
higher safety standards of the EU will threaten Chinese exports to these
countries.
Cyril Sayag, first secretary of the EU Delegation in China,
said the EU had held talks with China about compensation under the WTO
framework, but the formal negotiation will be launched only after the EU
enlargement.
According to the rules of the General Agreement of Tariffs
and Trade, the predecessor of the WTO, WTO members have the right to seek
compensation for any trade losses incurred as a result of less attractive terms
of access to the EU than they previously had with the new members.
"We
will study with our Chinese partner to find out what they (the impacted
industries) are, and how to compensate,” Sayag said.
But he also
confirmed that no compensation will be given for the export losses caused by the
EU's unified and stricter technical criteria for imports. Losses caused by more
anti-dumping cases from the enlarged EU will not be compensated.
Luo
said that any compensation China may receive will not be high, as the impact of
the change will be limited.
Chinese exports to the EU totalled US$72
billion last year, with exports to the 10 new members reaching just US$6
billion, according to Luo.
Xia Youfu, director of the China-Europe
Research Centre under UIBE, said the certainly increased foreign direct
investment (FDI) in new EU members does not mean China will have less FDI.
"Our advantage of cheap labour and large markets in attracting FDI
cannot be easily weakened by the (EU) enlargement,” Xia said.
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