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EU-China Trade Deal Is Europe's Chance to Break Free From Toxic TTIP

© AP Photo / Andy WongVisitors walk under flags of European Union and China in front of The Tiananmen Gate in Beijing (File)
Visitors walk under flags of European Union and China in front of The Tiananmen Gate in Beijing (File) - Sputnik International
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Granting China "Market Economy Status" is an opportunity for Europe to rebalance its trade away from a detrimental dependence on the US, Shi Zhiqin wrote in The Diplomat.

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China's demand to be granted Market Economy Status (MES) as a consequence of its accession to the World Trade Organization (WTO) and market reforms is an opportunity for Europe to re-orientate its trade towards the East, Shi Zhiqin of the Carnegie-Tsinghua Center for Global Policy wrote in The Diplomat on Tuesday.

While China is recognized as a market economy by more than 80 economies including Russia, Brazil, New Zealand, Switzerland and Australia, some EU countries have reservations about granting China the status, citing fears about European jobs being put at risk of China is allowed to export to Europe without import duties which push up the prices of goods.

Those fears have been stoked by the US, which is against granting China MES. In December US officials warned Brussels that the status would amount to "unilaterally disarming" Europe’s trade defenses against China, the Financial Times reported.

In September a report published by the Washington-based Economic Policy Institute warned the EU that between 1.7 million and 3.5 million EU jobs would be at risk if China was unilaterally granted MES, curbing the ability to impose tariffs on dumped goods.

EU countries are split on the issue, with the UK, The Netherlands, and Nordic countries in favor, but others such as Italy opposed; Germany is reported to be supportive in principle but wants safeguards for some industries. 

On February 10 the EU launched a ten week public consultation on whether to grant China the status.

China believes it is due MSE status because it is stated in the Protocol of its accession to the WTO in December 2001, Chinese Foreign Ministry Spokesman Lu Kang explained in December, in response to reports that US officials have expressed their concern to European counterparts.

"Article 15 of the Protocol requires members to stop using an alternative calculation method in anti-dumping investigations against China after December 11, 2016," Lu Kang said.

"Pacta sunt servanda (Latin for 'agreements must be kept') is a basic principle and obligation in international law. No signatory party can evade its obligations under international treaties by citing domestic laws as an excuse, and treat Chinese enterprises in an unfair, unjust, unreasonable and discriminative manner. As a WTO member, China has been earnestly honoring each of its legal obligations since its accession, and must be entitled to all the WTO rights," Lu Kang said.

In The Diplomat, Shi Zhiqin wrote that EU should see the MES question as more than a technical operational issue, but a "pivotal strategic affair" which offers Europe the chance to partner with Chinese industry in areas like e-commerce and the Internet economy.

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He explained that such a partnership would give Europe a counter to the all-encompassing TTIP, which is favored by Washington and built on the aspirations of transatlantic corporations.

"To the detriment of the political cohesion and economic recovery of the EU, many European interest groups have looked to the United States for salvation, failing to understand that the financialization of the US economy and the subsequent global financial crisis have been detrimental to European interests." 

"In addition, the EU has accepted the monopoly of US Internet companies and has reacted very slowly to the erosion of Internet sovereignty that US private data collection from EU Internet users has created. Very few Europeans acknowledge that China has saved the EU and the world from US Internet monopoly," Shi Zhiqin wrote.

He suggested that practical issues to MES status such as steel overcapacity in China can be solved by agreeing a  special transitory period that does not involve dumping steel in Europe and crowding out EU producers.

"Perhaps China and the EU could negotiate some sector agreements for a transition period to market status, including sectors where China clearly isn’t operating according to market signals. This would be a win-win as China would promote efficiency and the EU would save jobs during an already long crisis with record unemployment."

In general, Shi Zhiqin believes that rather than seeing the issue as a problem, the MES question is a chance for Europeans to reassess their trade priorities.

"It has become a cliché to cite the Chinese word 危机, with its dual meaning of 'crisis' and 'opportunity.' Yet a similar concept exists in the Greek-European tradition. 'Crisis' derives from Ancient Greek, where it referred to distress yet also rational judgment. Make no mistake, the most rational judgment for Sino-EU relations is to overcome the obstacle of MES with a pivot to the next level of commercial and political partnership."

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