Plenary focus: Strasbourg plenary session 21-24 May 2012

China's meteoric economic rise and the barriers EU companies face when trying to enter the Chinese market have over the past decade led to a tripling of the EU trade deficit with the Asian giant. It is time for a new EU-China partnership based on the reciprocity of rules and transparency in trade relations in order to defend the interests of European industry, argues a report by French Liberal-Democrat Marielle de Sarnez, which was adopted by the European Parliament on 23 May 2012.

Widening trade deficit

"In an open world economy, China needs Europe just like Europe needs China," Ms de Sarnez told MEPs during the plenary debate on 22 May. The EU is its largest trading partner and the main destination for Chinese exports. However, the widening trade deficit, which increased from €49 billion in 2000 to €168.9 billion in 2010, makes the challenge of rebalancing trade relations more difficult.

There are several causes for the imbalance:

• trade barriers to market access, including discrimination against foreign companies in certain sectors, complex tariff structure, opaque technical standards and the use of targeted state subsidies

• complex and unclear Chinese public procurement rules

• inadequate protection of intellectual property rights in China

• Chinese exchange rate policy - the alleged undervaluation and non-convertibility of the yuan might give Chinese exporters an unfair competitive advantage

Steps to take

The report by Ms de Sarnez outlines what the EU approach towards China should be in order to rebalance trade. The EU should: 

• encourage China to open markets further and use more actively WTO dispute settlement procedures to defend against illegal practices 

• encourage China to join the WTO Agreement on Government Procurement

• promote work and cooperation with third countries against counterfeiting

• negotiate an EU-China investment agreement that creates a better environment for EU investors in China

At the same time the EU should also act internally to make sure the European industry remains competitive.  The report calls for an ambitious EU common industrial policy based on research and innovation. It also emphasises the need to speak with one voice in trade relations with China so that bilateral relations between individual countries and China do not undermine the European Union's position.