EU-China and Japan-China Trade Relations
1 February 2010, EU-Japan Centre for Industrial Cooperation, Tokyo
China represents a trade challenge: exactly how do you encourage the world’s third-largest economy to play fairly? China is now Japan’s largest and in recent years has become the European Union’s second-largest trade partner after the United States, yet foreign companies entering its markets still face obstacles. At an EU-Japan Centre for Industrial Cooperation seminar, speakers from Europe and Japan outlined their strategies for trade relations with China.
Helena König, head of Unit Trade Relations with the Far East, Directorate-General for Trade at the European Commission, explained the EU’s Partnership and Competition trade strategy towards China. “We want our companies to have the same opportunities as Chinese companies do in Europe,” she said. According to König, European companies are hampered by investment restrictions, non-tariff barriers and discriminatory practices. One example is the China Compulsory Certification, or as the speakers dubbed it, the “China-only standard.” The safety certificate burdens foreign companies with additional high costs and requirements to surrender sensitive information to Chinese authorities.
Hideto Akiba, director of the Northeast Asia Division, Trade Policy Bureau at the Ministry of Economy, Trade and Industry said he could understand China’s guarded stance. He compared it to Japan’s policies during its period of rapid growth. But understanding is not agreeing and, he argued, China’s stance is “not the correct path.” If China wants to encourage investment it will need to reduce trade restraints and tackle issues such as intellectual property rights enforcement. Similarly, China’s export restraints on commodities such as rare earth elements and metals need to be reduced.
So how do you get China to listen? According to König, the EU has engaged China on numerous fronts that “minimise confrontation”. It has adopted technical bilateral dialogues, such as the High Level Economic and Trade Dialogue and plurilateral dialogue, including the World Trade Organisation’s (WTO) Doha Development Agenda. At the same time, the EU is taking legal action through the dispute panel at the WTO. By approaching China through a legislative body, the EU hopes to avoid the kind of conflict marring recent US-China relations.
Japan, on the other hand, is engaging China in high-level bilateral and multilateral political dialogue, as well as through working groups. Indeed, with China acting as the “driving engine of the global economy,” Akiba stated that the aim is “to correct each other.” He did, however, approve of the EU’s approach and suggested that in the future Japan and the EU could be stronger by “joining hands” when dealing with China.
Only time will tell which approach has the greater impact on Asia’s growing economic giant.