SURPLUS FUELS EU-CHINA WAR OF WORDS By Andrew Bounds in Brussels and agencies
Wednesday, June 13, 2007
A war of words between China and the European Union heated up yesterday after “frank” talks about their lopsided trading relationship.
Peter Mandelson, the EU trade commissioner, and Bo Xilai, the Chinese commerce minister, held an annual meeting in Brussels as China's trade surplus hit record levels.
Mr Mandelson said Mr Bo had agreed that action had to be taken. The EU's trade deficit with China is expected to balloon to �70bn ($227bn, £115bn) by the end of the year, up from �28bn last year.
“I heard for the first time at such a political level a clear recognition by China, in the words of Bo Xilai, that something must be done,” Mr Mandelson told a Brussels news conference.
The British commissioner, at heart a free trader, called various aspects of China's trade policy “illogical”, “indefensible” and “unacceptable” and accused it of doing nothing to rein in rampant counterfeiting that was costing European business hundreds of millions of euros.
The EU says the trade gap is compounded by the myriad restrictions on EU companies trading in China, including strict licensing laws, discriminatory rules, and laws forcing foreign companies to create joint ventures with local partners.
Mr Mandelson also refused to bow to Chinese demands that it grant the country market economy status, a technical position but one that it sees as a matter of pride.
China's foreign ministry said yesterday: “We hope the EU can
objectively recognise that since the opening and reform of China we have made a lot of achievements in building a market economy . . . and positively consider the early recognition of China's market economic status.”
Neither the EU nor the US has accorded Beijing this status, though 56 World Trade Organisation members have. It would make it harder to bring trade disputes to the World Trade Organisation.
