The European Commission had initiated first-round discussions on China's market economy status on January 13. Due to EU member states holding different viewpoints, while facing pressures from special interest groups, the European Union (EU) would delay making a decision on China's market economy status, until the second half of the year.
The European Commission had initiated first-round discussions on China's market economy status on January 13. Due to EU member states holding different viewpoints, while facing pressures from special interest groups, the European Union (EU) would delay making a decision on China's market economy status, until the second half of the year.
The European Commission is engaged in a debate over the potential impact on the EU economy. The focus is on anti-dumping duties already imposed on China. There are 52 anti-dumping measures taken by EU on China, approximately 1.38% of China's export volume to the EU, mainly in terms of steel, machinery, chemical engineering and ceramics. Once the market status has been granted, the calculations of anti-dumping duties would change as well.
As the largest exploiters of imposing anti-dumping measures, the EU and the United States are protecting their economies. The discussion is about how the EU should adjust its global trade patterns after China acquires market economy status. As the most important trading partner to the EU, the position of the US holds a substantial impact on the EU’s final decision.
Transatlantic Trade and Investment Partnership (TTIP) negotiations have entered a key stage in 2016. The successful signing of TTIP is related to the balance and competition of the global economy in transatlantic and transpacific regions. After the Trans-Pacific Partnership (TPP) had reached an agreement, the EU could accelerate TTIP negotiations. One of the motives for the EU and US to start free trade agreement talks is to rewrite global trade rules outside the World Trade Organization (WTO), amid a rising Asia.
Washington is trying to prevent the EU from supporting China's market economy status. In terms of trade policy to China, the EU and US might strengthen coordination in the future. Nevertheless, the European Commission would likely endorse China's market economy status.
From an economic perspective, this would increase China-EU trade volume and investment. There’s been rapid growth in China-Europe trade, since China is the largest source of imports and the export market with the fastest growth rate to the EU. Since the European Debt Crisis, the Chinese market has boosted European economic growth.
From a political perspective, China-EU relations are going well. If making an unfavorable decision against Beijing, the EU places mutual trust at risk. The evolution of global financial crisis has driven the EU to re-evaluate China-EU relations, as they handle global challenges, establishing multi-lateral system, strengthening global governance and seeking mutual solutions.
To balance the differences among interest groups in the EU, the European Commission may take the option of admitting China's market economy status in exchange for urging China to enhance its protections on intellectual property, along with reducing tariffs and trade barriers.
Meanwhile, the EU members could discuss transitional measures to utilize new trade protection tools to limit Chinese products to enter the EU market, which would alleviate shock to the EU economy, especially its labor market. There are more than 80 countries admitting China's market economy status now, including developed economies, such as New Zealand and Australia.
As the largest trading partner of China, if the 28 member states of EU could admit China's market economy status at the end of the year as expected, other nations that holding are still resistant could change their stubborn positions.
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