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China’s role in resolving the current financial and economic crisis is vital, and so therefore is the EU-China relationship. The European Parliament has a history of highly critical resolutions on China, usually focusing on Tibet and human rights and Taiwan. It rarely debates the broader aspects of the relationship. However, Parliament is an important player, both as it connects with public opinion, and because the EU-China Partnership & Cooperation Agreement (PCA); currently under negotiation, requires its approval. The European Parliament resolution of 5 February 2009 on trade and economic relations with China is worth attention: it seems to have attracted negligible media interest.

I find the resolution substantive, balanced and constructive and the rapporteur, Dutch EPP (Christian Democrat) MEP, Corien Wortmann-Kool, is to be congratulated.

Beijing is unhappy about the criticisms made and its ‘intrusion’ into what are regarded as domestic issues, but that is to be expected. Parliament is complimentary towards China in a number of areas, eg by:

  • welcoming investments of China’s sovereign wealth fund and state owned enterprises in the EU;
  • welcoming the growing number of industrial sectors in China which have been opened to foreign investors, since she joined the WTO;
  • acknowledging the steps taken by the Chinese authorities to reduce administrative burdens at national level;
  • welcoming China’s activities in the environmental sector in preparing for the Olympic Games.

It is recognised that Chinese society has changed greatly during the last 30 years and that lasting progress can take place only slowly. And is aware of the shared European responsibility for industrial pollution, given that a high share of Chinese industrial production is owned by European firms or ordered by European firms and retailers for consumption in Europe.

Parliament’s main concerns are:

  • Counterfeit and pirated goods.
  • Product safety.
  • State-led industries.
  • Non tariff barriers.
  • Environmental degradation.

Parliament supports a close EU-China relationship based on engagement and dialogue, particularly in resolving the current financial and economic crisis. It opposed protectionism. Naturally, greater market access and a level playing field for European companies is sought. Human rights are believed to be an essential and integral part of the relationship.

Policies

The policies which Parliament wishes to see are:

  • A continuation of the policy of engagement and dialogue and trade-related technical assistance.
  • Unprecedented cooperation in order to resolve the current financial and economic crisis, considering it a great opportunity for China and the EU together to show a sense of responsibility and to play their part in helping to resolve this crisis.
  • The development of a genuine, fruitful and effective political dialogue: human rights should be an essential and integral part of the relationship and the Human Rights Clause in the PCA should be strengthened. No resort to protectionism.
  • A welcome to investments of China’s sovereign wealth fund and state owned enterprises in the EU, but with transparency in China’s financial markets, and at least a code of conduct to ensure the transparency of China’s investment operations into the EU market.
  • The removal of restrictions on foreign firms in other sectors, especially on cross-border mergers and acquisitions.
  • The promotion of full market access in China for EU companies, and the elimination of protectionist practices, excessive bureaucracy, the undervaluing of the Renminbi, various subsidies, and the lack of a proper and agreed level of enforcement of intellectual property rights (IPRs).
  • China further opening its markets for goods and services and continuing with economic reforms in order to establish a stable, predictable and transparent legal framework for EU companies, especially for small and medium sized enterprises (SMEs).
  • The removal from the draft Chinese Postal Law of a provision that would hamper foreign express services.
  • The adoption of international standards for products and services in China, welcoming the increased Chinese participation in international standard-setting bodies, which should be reciprocated by EU participation in China’s own standard-setting bodies.
  • The abolition of of trade-distorting export restrictions such as Chinese export taxes on raw materials. (Parliament underlines that it will evaluate all future trade agreements with China in this respect.)
  • The ending of continued Chinese state intervention in industrial policy and explicit discriminatory restrictions, such as unlimited state funds for export financing and limitations on the level of foreign ownership in certain sectors.
  • China’s joining the Agreement on Government Procurement (GPA) as committed in 2001 and engaging constructively in negotiations on opening its public procurement markets.
  • The continuation of the rise in value of the renminbi, and the Chinese holding more exchange reserves in euros.
  • The exploitation of the opportunities of China’s emerging renewable energy sector for the European renewable energy business sector and improving market access in this field.
  • Enhanced cooperation to promote the transfer of low-carbon technology, in particular energy efficiency and renewables.
  • An effective and efficient use of trade defence instruments, which contribute to ensuring fair conditions of trade between China and the EU.
  • Working to overcome barriers to market economy status, to be granted only when China has fulfilled the criteria.
  • The implementation and enforcement of IPRs and continuing the fight against counterfeiting.
  • The need to reduce the high levels of pollution caused by China’s industry and its growing consumption of natural resources, being aware of the shared European responsibility for the situation ( given that a high share of Chinese industrial production is owned by European firms or ordered by European firms and retailers for consumption in Europe.)
  • The maximisation of efforts to eliminate child labour in China by removing the underlying causes.
  • The ratification by China of ILO Convention No 87 on Freedom of Association and Protection of the Right to Organise, and the International Covenant on Civil and Political Rights.
  • European businesses operating in China to apply the highest international standards and best practices in corporate social responsibility with regard to workers and the environment.
  • Bringing working conditions in China up to the level of the core ILO standards.
  • Cooperation on standards on cars, trucks, heavy vehicles, aviation and shipping, to lower greenhouse gas emissions and make the standards more climate-friendly.
  • Cooperation on the regulation, evaluation and authorisation of chemicals (REACH) between the EU and China.
  • Cooperation on product safety, including trilateral contacts between the Commission and the US and Chinese administrations and the establishment of a joint working party on product and import safety within the Transatlantic Economic Council.

Other issues

Parliament strongly condemned the death sentences imposed by the Chinese authorities on some of those involved in the contamination of powdered infant formula with melamine.

Parliament believes that:

  • democracy requires an effective civil society, which is in turn strengthened by trade and economic relations with the EU; and therefore
  • “change through trade” is a way to aid China’s transformation towards being an open and democratic society benefiting all sections of society; while regretting that the intensification of economic and trade relations has not gone hand in hand with substantial progress with regard to the human rights dialogue; and
  • further reforms, especially in the environmental and social areas, are needed in order to ensure overall and lasting progress.

Parliament regretted China’s postponement of the EU-China summit which was to be held on 1 December in Lyon, given the current financial and economic crisis, and stresses the utmost importance of a constructive dialogue on climate change as well as mutual understanding on the main trade issues at such a critical moment for the world economy; and hopes that such a summit will take place as soon as possible.

The resolution stresses that the new EU-China PCA should aim to establish free and fair trade based on the enforcement of clauses on human rights, environmental, sustainable development and social issues

Taiwan‘s participation as an observer in relevant international organisations where this does not require statehood (eg the ILO) is supported.

Parliament calls on the Commission to support the setting up of a China-EU Business Council, similar to the US-EU Business Council.

The resolution was adopted by 491 votes to 76, with 12 abstentions.

Beijing’s unhappiness with criticisms

China’s main criticisms concern:

  • The condemnation of China’s decision to impose the death penalty in the melamine criminal case – which is regarded as misguided.
  • The stress “that the new EU-China PCA should aim to establish free and fair trade based on the enforcement of clauses on human rights, environmental, sustainable development and social issues”. A Free Trade Agreement is not being negotiated; and even if it were, China does not accept the linkages between trade on the one hand and human rights, the environment, and social issues, on the other.

There are currently two sets of parallel ‘PCA’ negotiations, one for trade and one for non-trade issues. No accord has yet been reached as to whether there will be one integral agreement, two separate agreements or one umbrella agreement with two ‘pillars’.

Neither the European Parliament nor several Member States will approve a PCA without certain ‘standard provisions’, including human rights.

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