Monday, October 6, 2008

Official: China urges political will on MES issue

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China reiterated its disappointment on EU's reluctance of recognizing China's market economy status . Without prejudice against any foreign investors, China is quite open both on its market and on multilateral and bilateral discussions on the negotiation of government procurement agreement .

In a recent exclusive interview with People's Daily Online, Sun Yongfu, Director-General of the European Affairs Department, Ministry of Commerce and head of the Senior Official Meeting on the Chinese side, highlighted the importance that China attaches to the MES issue and called for more "political will" from the EU side to solve the long-held pending issue as early as possible.

"The MES is very crucial for China鈥�we are not satisfied with the progress", said Sun after China and EU concluded the 23rd Economic and Trade Joint Committee co-chaired by Chinese Commerce Minister Chen Deming and European Trade Commissioner Peter Mandelson on Sept. 25. It is one of the 23 points of consensus as the result of the meeting that the EU recognizes in its latest report China's "significant progress" on fulfilling the technical criteria of MES. Mr. Mandelson also agreed to accelerate the process.

Sun reiterated China's opposition to the criteria which are too difficult even for some EU members. He also urged the EU to show "political will" on this issue. "The five technical criteria are important. However, it is not possible for the issue to be solved without political will," Sun affirmed.

Seventy-seven countries have granted the MES to China. However, its top three trading partners, the EU, the US and Japan have not. That has put Chinese companies on a vulnerable place in the intensive anti-dumping cases launched by the EU and US.

According to Mr. Sun, the EU has filed 13 anti-dumping investigations into Chinese products since September 2007. "That is harmful to the bilateral trade," he said.

The European Commission has recently declared renewal of anti-dumping taxes on shoe imports from China and Viet Nam. The Ministry of Commerce has expressed its strong opposition against that decision.

The EU has insisted that China has fulfilled only one of the five criteria for a market economy, that is, the absence of government intervention in the private sector and barter trade. China has yet to meet the other four involving the application of the international accounting standards, less government intervention in the economy, the implementation of the property laws and a market-oriented financial system.

The EU, on its side, has raised its tone asking for wider market access to the Chinese market. It requires that China accelerate its process of joining the WTO government procurement agreement and complains against "unfair level playing field".

"The GPA is a complicated issue," said Sun. He explained that the issue should be discussed under the WTO first but at the same time China welcomes bilateral agreement. China has provided its first GPA offer to the WTO. Sun disclosed that the second round of talks would be open in Geneva soon and China is discussing with the US and EU on the possibility of carrying out bilateral cooperation in this regard.

The trade deficit is still a concern for the EU although both Mr. Mandelson and European companies recognize that Chinese imports help both the European economies and consumers and the imports from Asia as a whole remain stable.

"The European side is using the argument to ask for further opening of the service sector," said Sun. He believes that the Chinese market is "quite open" or even "more open" comparing with some developed economies such as Japan. "You can see different car brands, including European cars, in China." What's more, 480 out of the 500 multinational giants are already in China.

He understands that the issues of further opening and reform in the financial system are "very crucial" for the EU. But he explained that it is not easy for China to "agree on anything beyond China's WTO commitments" at a time when it is not suitable for China's economic situation.

In its new annual report the European Chamber of Commerce classes the banking sector, as well as the energy and petrochemical sectors as the areas where "the most significant positive development" have taken place.

"China will continue its opening and reform," said Sun.

By People's Daily Online

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