European Union, China fail to agree on steel, trade dumping at summit

The 19th EU-China Summit ended without a joint statement due to an ongoing row about China’s status before the World Trade Organization (WTO).

China has been demanding that 15 years after it joined the WTO it should no longer be treated as a special case.

Officials in Brussels described the meeting as warm, but China and the EU could not agree on a broader final communique meant to focus on a range of other issues discussed at the talks, including a commitment to free trade and measures needed to reduce a global steel glut.

The two sides failed to reach agreement on the problem of steel overcapacity and the EU’s stance towards Chinese dumping. China, the world’s biggest producer and consumer of steel, had promised last year to reduce its capacity but European steelmakers have complained that cheap Chinese exports are still flooding the market.

China believes it should receive Market Economy Status (MES), which would allow it to enjoy the same market status as the United States and the European Union when it comes to anti-dumping investigations before the WTO.

As the world’s leading producer of steel, aluminium, cement and other industrial materials, many of China’s state-linked companies are able to export and offer products more cheaply to many of its trading partners. This has spurred allegations of dumping for several decades.

Chinese Premier Li Keqiang said the EU should accept that China’s situation in the WTO had changed. “This will send a signal to society and the market that we both abide by international rules and abide by multilateralism,” Li said.

Cut overcapacity, east restrictions

During the summit, EU officials pressed the Chinese government to tackle overcapacity in domestic industries such as steel and to ease restrictions on foreign investors.

While China is trying to define its future trade relations with the US, it’s been delivered a broadside from the European Commission. Brussels announced it had raised duties on Chinese steel imports. Li repeated a call for talks on an EU-China investment accord to be accompanied by a move toward a broader free-trade agreement.

EU Trade Commissioner Cecilia Malmstrom called for Chinese authorities to make good on a pledge by President Xi Jinping to a global audience in January to open further the market in China. She referred to a study concluding that many European companies found it harder to do business in China last year.

As a consequence, EU investment in China is at its lowest level in years, while Chinese investment in the EU reaches record levels, she said, adding that China needs to ensure “reciprocity” for European businesses in the Chinese market.

The summit had coincided with comments from the United States on President Donald Trump’s decision to withdraw from the Paris Climate Agreement, which has nations set targets to mitigate the effects of climate change.

 

Shekhar Ghosh is a communications consultant and and former journalist, who has edited and written for publications such as like Business India, Business Standard, Business Today and Outlook.

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