Wait-and-see approach to China’s EU market economy status: German envoy

(From Caixin Online)

Germany will let process of deciding whether China gets EU’s market economy status run its course, ambassador says

Many people around the world are wondering whether the European Union will grant China market economy status (MES), as a provision of China’s WTO agreement that allowed anti-dumping duties is set to expire at the end of the year.

So far, European leaders are split over the issue, with a highly anticipated European Commission’s meeting in Brussels on January 13 unable to reach a conclusion on the matter.

German ambassador to China, Michael Clauss

German ambassador to China, Michael Clauss

In an interview with Caixin, the German ambassador to China, Michael Clauss, said that “Germany has not yet taken a position.”

With the largest economy in Europe, Germany has the largest voting share in the council of the EU, the main decision-making body of the bloc, along with the European Parliament.

While Beijing interprets the WTO agreement as granting China MES status automatically at the end of 2016, critics wonder just how much of a “market economy” China really has, pointing to statist measures such as the heavy-handed stock market intervention last summer.

One of the primary opponents of MES have been Europe’s heavy industries, such as steel, textile and solar panel producers, who say unfairly priced Chinese goods force them to cut jobs.

When German Chancellor Angela Merkel met Premier Li Keqiang during her visit to China in October, she was reported as saying she was “in principle positive” towards granting China MES.

Clauss, however, said: “We will wait for the commission’s proposal … we feel that China has to do more” to gain the status.

Asked about the possible consequences for Germany, Clauss said the issue is not about volume of trade but the competitiveness of firms. “German companies are undoubtedly among the most competitive in the world market,” he said.

The following are excerpts of Caixin’s interview with the ambassador.

Caixin: There’s a lot of discussion over whether China should be granted market economy status (MES). What’s Germany’s perspective?

Michael Clauss: The issue of granting China MES is a competence of the European Union. Where does Germany come in? The decision-making process has three steps: The European Commission will present a proposal on whether to grant the status. Then the (European) Council, consisting of the 28 member states, would have to take the decision. The commission proposal requires a so-called qualified majority in the council, meaning at least 16 member states representing at least 65 percent of the EU’s population. Finally, the decision needs to be endorsed by a majority of the European Parliament, which has a track record of very lively and contentious debates, including on free trade issues.

Germany has not yet taken a position. When Chancellor Merkel was in Beijing last October, the issue was raised in her meetings with the Chinese leadership. Her message was two-fold: First, we will wait for the commission’s proposal because we do not want to prejudice it. Second, we feel that China has to do more concerning accession to the WTO’s General Procurement Agreement. She did not say less, and she did not say more than that.

Do you think there will be a lot of disagreement among EU members?

There are already difficult discussions in some member states, especially those with less competitive industries. Traditional industries, such as steel, solar and chemical products, are lobbying against granting China MES. There also seems to be opposition in trade union circles.

Obviously, Germany’s position will be quite important in this matter. Votes in the council are weighted according to the size of the member state, so Germany – which is also the largest European economy – has the biggest voting share. Read more


Categories: Asia Unhedged, China

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