Recent developments in bilateral trade relations with China (debate) 
President
The next item is the debate on the oral question to the Commission on bilateral trade relations between the EU and China by Helmuth Markov, on behalf of the Committee on International Trade - B6-0129/2007).
Helmuth Markov 
author. - (DE) Mr President, Commissioner, ladies and gentlemen, I am pleased to be able to introduce this subject on behalf of the Committee on International Trade. I would like to begin by thanking Commissioner Mandelson and his services, who have dramatically improved the flow of information sent to our committee regarding the various bilateral and interregional trade negotiations. The committee hopes that this style of cooperation will continue for international negotiations on partnership and cooperation agreements in which, as in the case of China, trade is a significant factor.
Our trade relations with the People's Republic of China are of great importance for both sides. Last year, China took over from the USA as the largest exporter to the European Union. At the same time, the European Union's trade deficit with China rose to EUR 128 billion. The Committee on International Trade has been monitoring China's growing importance in international trade for some time now. As early as 2005, our committee chose to produce an own-initiative report on the subject: the first report ever produced on an individual trading partner. A second report looked at the consequences of the expiry of the quota system for the Chinese textiles and clothing industry. We should congratulate the rapporteurs - Caroline Lucas and Tokia Saïfi - for their foresight two years ago.
In the European Union and developing countries, concerns about the textiles and clothing industry and the impact of opening the market to China have still not been allayed.
This uncertainty has been increasing as the 2005 Memorandum of Understanding is now due to expire. We need a clear statement about China's market economy status in order to investigate allegations of dumping in this area.
The Lucas report looked at the issue of Europe's strategy in terms of optimising the value creation chain and increasing production of high-tech goods. The belief that the European Union can continue to offer cannier solutions in the long term and set the pace for scientific and technical progress has to be called into question in view of the incredibly high numbers of well-qualified Chinese school leavers. We do, of course, recognise and welcome the reduction in poverty that China's meteoric rise has brought about in the past 20 years. At the same time, it is reasonable to expect China to comply with the WTO rules that it accepted when it became a member. This includes provisions on intellectual property and the principle of non-discrimination for imported goods. Nor can we afford to ignore the ecological and social consequences of China's growth. We should be prepared to support those who are addressing the problems on the ground.
Commissioner Mandelson, I believe I read that last month at a trade union conference in the United Kingdom you said that in international and bilateral trade talks, we seek to set fair environmental and social standards. I only hope that this applies to our major trading partners, not just the small ones. So we expect the Partnership and Cooperation Agreement that you are currently negotiating with China to incorporate all these elements, and that the interests of all affected parties will be considered, instead of focussing solely on market access. Commissioner, perhaps you could tell us to what extent this message is being conveyed through the EU's stance in the negotiations on the Partnership and Cooperation Agreement with China, and also how China has responded to our position.
Another, more general, question is that of the relationship between international and bilateral negotiations. The European Union's trade strategy sees national bilateral and interregional trade relations as complementing the multilateral efforts made within the WTO. The WTO negotiations seem to have stalled. Could you, Commissioner, explain what is the basis for conducting bilateral discussions, given that it is currently unclear what shape the global framework for future negotiations will take, and therefore what the agreements will need to look like.
Lastly, I would like to ask you whether it is really necessary, before we reach an agreement in a multilateral framework, to negotiate individual WTO-plus agreements containing provisions that we know many developing countries are not happy with. Would this type of conduct not make concluding a multilateral agreement - which is the solution that our committee favours - even more complicated than it is at present?
Peter Mandelson
Member of the Commission. Mr President, let me say straight away in response to Mr Markov that I am grateful to him for acknowledging the increased flow of information that comes from the Commission to his committee and the stronger cooperation that he has seen. As far as China is concerned, the EU side has as its objective in the prospective Partnership and Cooperation Agreement to lay the foundation for enhanced cooperation, including enforcement and, where possible, the upgrading of environmental - including climate change mitigation - social, labour and safety standards, so we are on the same wavelength on that.
I welcome this opportunity to give this House some feedback on recent developments in bilateral trade relations with China. China has been a top priority since I took office. We have a lot to gain, but also some things to lose, depending on how we conduct this important relationship.
I chose the European Parliament last October to present, together with Commissioner Ferrero-Waldner, the Commission's China strategy paper - 'Closer Partners, Growing Responsibilities' - and, more specifically on trade and investment, the policy paper entitled 'Competition and Partnership'. I argued in that policy paper that Europe benefits from an open and balanced economic relationship with China based on fair reciprocity.
That fundamental argument still holds good today. Our economies are complementary: China has strong competitive advantages in many areas; we have an enduring competitive advantage in high value-added services and goods, especially ones that require strong intellectual property right (IPR) protection.
However, we have not yet achieved the balance in our relationship that will guarantee that it can be sustained to our mutual benefit. Europe's trade deficit with China is indeed growing. I accept that part of this deficit may be the natural result of market forces, but we also know that our export potential is being hampered by barriers in the Chinese market and that an important part of the current trade balance is consequently artificial. It is a product of politics, not economics; it can be addressed by politics. A recent study has even put a number on the cost of China's barriers to our trade at about EUR 20 billion annually in lost exports, that is 30% of our exports to China. China must take practical steps to address the problem.
So what is the EU looking for? Well, we want improved access to China's goods and services markets and, for EU investors, a sea change in protection of intellectual property rights and copyrights, especially by cleaning up the huge street markets that sell counterfeit products and by ensuring Chinese companies pay royalties due to EU companies when using their technology.
We want an ambitious approach to negotiations to update the 1985 Trade and Economic Cooperation Agreement between the EU and China. This has to be a genuinely high-standard agreement that addresses long-term concerns, and we want assurances that the drive for growth and the lack of domestic market signals in China will not lead to over-production and dumping, especially in key products like steel.
The fundamental case for a positive trade relationship with China remains correct, but we are at something of a crossroads in our trade relations with China. A policy of dialogue to address the problems we have is credible only if it delivers more than the alternative means of trying to force change.
The policy of dialogue and engagement can be challenged. It will be challenged if things do not improve between us and if people cannot see tangible, deliverable, practical improvements and benefits as a result of that policy of dialogue and engagement.
So let me repeat: openness to China is in Europe's interests, but it is sustainable only if we can show that EU products and services are just as welcome in China as Chinese goods are in Europe. That is why China needs to reciprocate by strengthening its commitment to economic openness and market reform behind its own borders.
I have made this case openly and frankly to the Chinese authorities, most recently with Commerce Minister Bo Xilai in our recent EU-China Joint Committee meeting in Brussels on 12 June. At that meeting, the Chinese leadership recognised for the first time that the current trend of the trade imbalance between China and the EU is simply not sustainable. I was able to agree with Bo Xilai to set up a high-level group that will explore ways to address this issue. I am looking forward to the initial report of this group at the next EU-China summit in November, and I expect it to identify some first tangible and practical steps to address this shared challenge, notably in ensuring higher Chinese imports from the EU.
I agreed with Minister Bo Xilai on 12 specific points that address EU companies' concerns regarding their access to the Chinese market. One of these was the agreement on terms of reference for the upgrading of our 1985 trade pact. This was an important step forward, as I had withheld our commitment until I felt the terms of reference were right from our point of view.
It is important to stress that the Partnership and Cooperation Agreement of which our trade discussions are forming part will encompass the full scope of the EU-China bilateral relationship, including enhanced cooperation in political matters. The PCA will contain a standard clause on human rights. The clause will cover all issues related to democratic principles and fundamental human rights. As I have already said, one of our objectives in the PCA is to lay the foundation for enhanced cooperation on matters to do with environment, social, labour and safety standards.
On the trade side, the agreement will cover important issues for both sides such as IPR, investment, non-tariff trade barriers, capital movements, sustainable trade, and natural resources and competition. These negotiations are an important tool to try to rebalance our trade relations and create opportunities for EU business operators. However, this is not a preferential agreement, and tariffs will, therefore, not be discussed.
In parallel, the European Commission will continue to monitor closely China's implementation of its WTO accession obligations. This will remain a central priority for the Commission in the years to come. China's non-accession to the WTO Government Procurement Agreement leaves important Chinese markets closed, and China needs to honour its commitment to open negotiations on accession to this agreement in 2008.
The Commission will also launch a comprehensive review of market openness in China and China's implementation of its WTO commitments later this year. IPR was another focus of my talks last month with Minister Bo Xilai. Cooperation and dialogue on IPR issues are not an end in themselves. They have to produce real change. Talk is not enough. That is why the Commission has made it clear to China that the cooperative approach we are presently favouring must produce tangible results.
The next meeting of the EU-China IP working group should be held in the coming month. If significant progress is not made in the short-term on key issues for the EU, such as fake markets and payment of royalties, we will have to reconsider our approach with China in the IPR area. The Commission does not exclude using the dispute settlement mechanism of the WTO. In addition, the Commission is working actively to stop Chinese exports of fakes from entering the Community, most notably through strengthened customs actions at EU borders. I believe this must become a higher priority for the EU as a whole.
Europe can cope with tough competition, but it needs to be fair competition. This means that we have to ensure that we are acting on a level playing field, rejecting anti-competitive trading practices and standing ready to apply our trade defence instruments against dumping and illegal subsidies, as well as stepping up the fight against counterfeiting.
I should also like to share with you key elements of our updated assessment of China's request for market economy status. This issue is important in the context of the EU's application of its trade defence instruments when faced with allegations of unfair dumping in Europe by Chinese exports. The updated assessment reflects the significant and welcome steps of China towards becoming a market economy. Progress was recorded across the board and brought China closer to fulfilling the four outstanding market economy status (MES) criteria. In particular, we think that the adoption of a number of important laws deserves recognition - the bankruptcy law, the new property rights law and the new accounting standards. However, the updated assessment also makes clear that still further progress is needed. None of the four outstanding criteria has been fully met. In particular, proper implementation of the new pieces of legislation will be crucial. It is not enough to pass new laws. They, as I believe China's state authorities understand, must also be used and respected. We will review the situation again in 12 months and continue technical talks in the meanwhile.
I value the views of this House very highly and I am committed to providing early and clear information to you. Where possible and appropriate, this has been done in writing, for instance the MES assessment has been transmitted to the Committee on International Trade. On other occasions, it may be more appropriate to provide information orally because of its sensitivity. This is fully in line with Article 19 of the Framework Agreement. What matters is that I will continue to keep Parliament fully informed.
To summarise my approach, I believe in a balanced partnership between the European Union and China based on fair reciprocity, a partnership whose core task is to open markets to fair trade for the benefit of Europe, China and the wider world. I believe the EU has been playing its part in delivering that partnership. It is right that we insist that China should play its full part as well.
Georgios Papastamkos
Mr President, Commissioner Mandelson is not only an inspired orator, he is also a tireless negotiator.
Six years after the accession of China to the WTO, we are still waiting for a balance in bilateral trade between the European Union and China. China enjoys fully the benefits of the open markets, without itself complying fully with its obligations under multilateral rules and disciplines.
The Chinese markets are still to a large extent closed and non-transparent. There are high import barriers, which result - according to estimates - in lost profits of EUR 20 billion a year to European businesses.
Protection of intellectual property is inadequate. I need only mention that, in 2006, 80% of imitation goods seized on the borders of Europe were of Chinese origin. The Commission preferred to continue bilateral dialogue with China on intellectual property issues rather than coordinated action between the ΕU and the USA, which activated the WTO dispute settlement mechanism against China.
Dialogue would appear to be the way forward. However, we are awaiting concrete results from this specific dialogue. In any event, dialogue does not preclude the use of other legal means.
In the textile and clothing sector, all means should be used to safeguard the smooth development of European flows when the Shanghai Agreement expires in 2008. As far as footwear of Chinese origin is concerned, the Commission is called on to monitor imports closely, in order to prevent the risk of China's circumventing the already inadequate trade defence measures adopted by the Union.
China, as a trading policy power constitutes both a threat and an opportunity. What we need to fight against are China's competitive advantages that derive from prohibitive import barriers, from unfair competition and from economic, ecological and social dumping practices.
The liberalisation of trade, which we enthusiastically support, should be based on reciprocity and accompanied by equivalent institutional counterbalances.
Francisco Assis
on behalf of the PSE Group. - (PT) Mr President, based on the fundamental premise that relations between the European Union and China are of vital strategic importance in political terms, we have to ensure that our trade relations are governed by two principles, which have been very well expressed by the Commissioner: on the one hand we must invest in cooperation and, on the other, we must always keep up a very demanding attitude in our relations with China.
Our trade relations with China are extremely asymmetrical. It is not just our more direct interests that are at stake, but also our essential values in terms of environmental protection, respect for employment rights and guaranteed protection for certain fundamental social issues.
In that context, we must establish a permanent debate on our cooperation efforts with this emerging great power, which is absolutely essential for keeping the international system in balance. That is why we cannot close ourselves off from China. Indeed, we cannot close ourselves off from a growing market that is opening up new opportunities for us, which, of course, we have to seize. Here, too, we have to be demanding about the opening-up of those markets and about respect for intellectual property rights, for example. At the same time, the European Union must adopt this highly demanding attitude in relation to fundamental issues concerning certain core principles of our model of economic, social and political organisation.
That, in fact, forces us to adopt the balanced position that I have mentioned (and I believe that the European Commission has been making efforts to do so by adopting the trade protection instruments that are available to us whenever we find that there is a real danger of Chinese exports threatening certain European industries, particularly footwear, clothing and textiles) and to be extremely demanding in the relations that we have to maintain with China in this area.
That, I believe, is the path we need to take, which must be based precisely on the fundamental idea that we cannot forgo having ever closer relations with China. At the same time, we have to try to promote some of our values.
To conclude, I feel that we Europeans are in a very special position in the international context, in that our interests are to a great extent identified with our values. Protecting our interests depends on promoting many of our values and, if we do manage to promote them, we shall certainly be defending our interests.
Jorgo Chatzimarkakis
on behalf of the ALDE Group. - (DE) Mr President, I feel it is appropriate to begin by expressing Europe's support for the flood victims in China.
Our fellow Member, Mr Markov, has raised an extremely important question, for which I would like to thank him on behalf of the Committee on International Trade. The EU and China are two of the oldest cultures in the world. On the one hand we have the largest trading bloc and on the other the fastest growing economy in humanity's history. So this is definitely an issue that needs to be addressed outside the WTO: an issue that requires a bilateral approach and a bilateral agreement.
Both sides have a great deal at stake. We should not allow ourselves to be pressurised by the USA. So I would like to thank Commissioner Mandelson for refusing to adopt a common WTO strategy for dealing with China on the subject of pirate goods. Both sides - China and the EU - have both interests and instruments to protect against and to allow abuses of intellectual property rights: anti-dumping and anti-subsidy measures. What matters is how we deal with one another - how we use those instruments. The Commissioner has said that reciprocity is vital, and I would agree.
We Europeans benefit from the fact that China has adopted our continent-wide European patent laws wholesale. That is a good thing. But having the laws is not enough: the rights must be enforceable and they have to be enforced. It is also in China's own interest to do so, though - you know that the Chinese company Heier will soon have an interest in protecting its own patents. Which proves that China does need this strategy.
What should we do in the meantime, though? We are threatened with a very hostile scenario, whereby the Chinese apply for patents that are similar to ours, then close their market. They have already proved that it can be done. Thanks to the former President of the European Patent Office, Mr Pompidou, in around four years' time, China will actually have overtaken us in terms of the number of patents.
I think we should link the patent issue to the EU's climate protection targets. That is right, with our climate protection targets! Let me explain why: China is a win-win culture, a culture that strives to achieve harmony. So I think that if we have something to offer, we may succeed. China is currently experiencing massive environmental problems. Social stability is threatened; the government is under great pressure because of huge environmental problems. At both the IPPC Conference and the G8 summit, China indicated that it wants to work towards the climate protection targets. Yet in many areas China lacks the technology. So our offer could be that we will support a CO2-free coal-fired power plant with our technologies, as a gesture, but in return we can demand that our patent rights be respected.
Commissioner, you are on the right track. Thank you very much for the information that you have provided today.
Cristiana Muscardini
on behalf of the UEN Group. - (IT) Mr President, ladies and gentlemen, at a time when the European Commission has begun talks with China with a view to a new partnership and cooperation agreement, Parliament's Committee on International Trade feels a duty to draw the attention of the Community executive to some well-known issues, which characterise relations with the Asian giant.
China has a right to economic growth and development, which equates to well-being for its citizens, which also constitutes an opportunity for the world economy. This should not take place, however, at the expense of compliance with the rules of international trade, of what has been agreed within legitimate forums and of what China accepted when it entered the WTO, otherwise the consequences for its economic partners, starting with Europe, could be disastrous, as they could for Chinese citizens themselves.
The talks with China are the most appropriate opportunity for tackling these issues bilaterally. We need to find a way to tackle the issue of insufficient protection of human rights and inadequate environmental, social and safety standards. Nobody is expecting China to achieve our levels, but to gradually achieve more acceptable standards. We need to act as 'exporting fathers' to improve access to the European Union market by means of the gradual removal of non-tariff barriers and, more generally, of administrative obstacles of various kinds that very often discourage businesses, especially small ones, from investing in China, and we need to take a firmer position on combating counterfeiting.
The Chinese Government must do its part and show political will and take effective action to combat a phenomenon that concerns a large number of businesses, and especially consumers, worldwide. Above all, food-related counterfeiting, which has recently been an increasing problem, deserves the greatest attention because it affects the health of ignorant and defenceless citizens who trust in the appearance of labels. This battle against counterfeiting and forgery must involve both the European authorities and the Chinese Government.
On these three aspects we expect the Commission, in the course of the talks that Parliament will follow with the utmost attention, to adopt a firm approach that will lead to clear and unequivocal results for our entrepreneurs, our consumers and also for Chinese citizens, because by 'well-being' we mean not only European well-being but also the well-being of Chinese citizens.
Bastiaan Belder
on behalf of the IND/DEM Group. - (NL) Commissioner, the status of market economy is not yet within China's reach. There are still too many irregularities in the bilateral trade relations for this. The frequent violations of intellectual property, for example, spring to mind.
Commissioner, I have gleaned from your excellent intervention that following your meeting with Chinese Minister Bo Xilai on 12 June, the dialogue on intellectual property rights has been resumed. This news has brought me great joy. Moreover, I take the view - unlike my Liberal counterpart - that in matters such as these within a WTO context, the EU would do well to tag along with the United States straight away. After all, the United States remains our most important strategic ally.
Commissioner, I should actually, above all, like to draw your attention to another important aspect of our trade relations with China, namely the European export of secondary raw materials, such as used paper. This is a huge issue at the moment. Last weekend, the Dutch prominent press dedicated a large article to this very subject. As you know, the new European rules for the export of these raw materials will enter into force in two days' time. It is through the Commission's fault that no agreements have as yet been concluded with important countries such as China and India. This means that, as from 12 July, used paper and other recyclable materials will become the most dangerous form of waste. You will appreciate that this has major implications for the export of these products.
I would urge Commissioner Mandelson to promise this House a transitional provision that runs until 1 January 2008. During this time, you will be able to conclude agreements with those countries with which there is nothing in place as yet. With this, you will be able to prevent exports from grinding to a halt and these products from accruing in European ports, such as that of Rotterdam. I hope, Commissioner, that you will really take action, because this is a matter that comes across to the Dutch public as very negative in terms of Europe.
Georg Jarzembowski
(DE) Mr President, Commissioner, we would agree that precisely because of the scale of EU's trade deficit with China, the European Union needs to be given much better market access opportunities, that the distortions created by Chinese State aids have to be reduced, and the Chinese Government needs to enforce WTO-standard intellectual property rights in the provinces as well.
We also need to work together to convince China that we are not just presenting a list of demands, but rather that it is in China's interest to allow fair market access. We have to make China understand that if they want to lick their environment into shape, if they want to create an efficient energy supply - after all, China has plenty of money, there is no problem on that front - then we need to be given access to their public procurement market. Then we will be able to sell our products in China in a sensible trade in goods, and China will be able to purchase modern coal-fired power stations and sewage plants and suchlike and make use of our technologies.
China does not need handouts, it has plenty of capital: it has the largest foreign currency reserves in the world. China is currently setting up a fund to invest its money worldwide. Our message to the Chinese Government should be: invest your money in your own country! Do something for environmental protection and energy security, improve safety in the coalmines. If we are successful, we will also be able to improve trade relations in the long term.
Of course, as you indicated, these agreements also contain a human rights clause because we have been discussing human rights with China for years; we must stand firm on that point. As a previous speaker said, no one expects China to respect all human rights overnight, but we do need to see significant progress. The People's Republic of China signed the International Covenant on Civil and Political Rights several years ago, but has not ratified it and does not apply it. So we need to turn around and say: you chose to sign it, you said you wanted to uphold human rights, now do it!
Joan Calabuig Rull
(ES) Commissioner, I would like to thank you for the information that you have given us and also for your work in favour of balanced relations that are beneficial to both parties.
I agree that China must not be seen just as a threat to certain sectors, but also as a great opportunity. We also agree, however, that it must continue to make efforts to apply the agreements, to open up its markets and to create an open climate for investments.
As you have pointed out, European industry is still complaining that there are an excessive number of barriers and obstacles that put it at a competitive disadvantage. In this regard, we are still talking about tariff barriers and non-tariff barriers, such as piracy, counterfeiting, discrimination between national and imported products and so on.
We therefore believe that opening up negotiations on a new partnership and cooperation agreement with China is a good initiative that must enable the European Union to strengthen its bilateral trade policy on the basis of the principle of reciprocity, which you yourself have mentioned.
We are delighted to agree that the issue of human rights should be one of the issues tackled within the negotiations on the agreement, of course. Specifically, we must point out that the Chinese Government is making progress in this area and the rights recognised by the International Labour Organisation should also be taken into account, since they are a crucial aspect of human rights.
The agreement must also serve to continue promoting a commitment on the part of the Chinese authorities to effectively - not just theoretically - protect intellectual property rights through the adoption of relevant measures in the administrative, legal and border-control fields.
I would like to refer to the 'memorandum of understanding' between the European Union and China on trade for the textile and clothing sector, which expires this year. There is concern in the textile industry about its expiry and about the fact that the conditions of the agreement between the United States and China are being extended until the end of 2008. In view of this disparity, therefore, I would also like to ask you what measures can be taken to prevent situations of tension such as those which took place in 2005.
Marek Aleksander Czarnecki
(PL) - Mr President, once again this forum is discussing trade relations with China, which has over the past decade emerged as a world economic and political power.
In October last year, the European Commission approved a programme for EU-China relations, which entailed an increase in mutual undertakings. In this situation, it would be sensible to support changes for greater openness and pluralism in China, as well as cooperation on energy and climate change because we know that China is one of the world's major producers of greenhouse gases. On the other hand, we must not forget about the alarm that was caused when thousands of tubes of counterfeit toothpaste, some of them manufactured in China, were discovered in Spain, and containing doses of toxic diethylene glycol far in excess of European standards.
China means cheaper goods in European shops and greater competition, but is it always healthy? I am in favour of making the best of the opportunities offered by the dynamic development of relations with China, especially following my visit there, when I was able to see first hand this fast-developing world power.
The Commission says that a strong Chinese economy is in the economic interests of Europe, and rightly so. However, we should not forget to look after the interests of the members of the Community above all, and to assess the opportunities but also the threats that cooperation with this Asian tiger poses through the prism of these interests.
Christofer Fjellner
(SV) I am convinced that fear of China's economic growth really is exaggerated. I believe that those who have a sufficiently long historical perspective on trade policy recognise a good deal of the disquiet and a good many of the arguments from the debate about the incorporation into the world economy of Japan and of other Asiatic tigers (such as Korea and Taiwan). Certainly, it is easy to allow oneself to be frightened by the relative size of the countries concerned. As the Commissioner pointed out, however, their economies supplement Europe's economy, and their size is, rather, a great opportunity for Europe. I am convinced that the strong and sustained growth and the boom being experienced in the world right now is due in large part to the fact that China, India and other large countries in the world are in the process of being incorporated into the world economy.
That does not, however, mean that there are no problems in trade relations. I believe that we have many important problems to get to grips with, for example infringements of copyright and issues concerning intellectual property rights, as well as Chinese markets closed to everything from financial services to car parts.
I am almost more concerned, however, about the protectionist tendencies to which China's growth is giving rise in Europe. Not that I believe the Commissioner to be in favour of such tendencies, but there are many voices that are now demanding more trade barriers in order to stop imports from China. Talk of stopping, for example, Chinese textile exports has been heard in this House in the course of this evening. I am convinced that the European trade barriers against China cost European consumers and European companies more money than do imports of Chinese goods. We should, therefore, continue to combat European trade barriers rather than Chinese exports.
The fact is that China's growing prosperity, together with trade with China, not only give thousands or millions or, indeed, hundreds of millions of Chinese people richer and more dignified lives; they also make Europe richer. We must not forget that trade is never a zero sum game. We are both winners.
Carlos Carnero González
(ES) Mr President, allow me to begin by saying something that is said so often at these night sittings, which is that we are discussing such an important issue amongst such a select band that I have the impression that we do not even have a representative from the Chinese Embassy present at this sitting.
I am entirely confident that the verbatim reports of debates that Parliament's services produce so efficiently will enable them to read what we are saying.
If I am to follow on from the previous speech, I must draw a conclusion: the globalisation that we are currently seeing would be unimaginable without the explosion of China. China's presence on the world market has simply been a decisive and unquestionable reality, but a very recent one let us not forget.
The explosion of China, which has been direct and immense in the case of production, will be even more so in the case of consumption and also in distribution at world level, becoming one of the main determining factors of both elements.
But neither must we forget that the quantity and characteristics of Chinese goods, largely defined by the profile of its workforce, its internal market, limited in income terms but incomparable in absolute quantity terms, and, more recently, its investment capacity, make China a great supply and demand power.
However, as a wonderful article today by our fellow Member Mr Martin points out, China is a key factor in the success or failure of many international negotiations, including that of the recent G4 meeting.
Can our approach to relations with China be simply to say that everything is a free-for-all, that is to say, all doors are open to what we send and what we may receive? I believe not. We must do it in a regulated manner and, furthermore, we must demand clear reciprocity, the removal of barriers to access for European products, adequate protection of intellectual property rights and patents, full respect for the standards required in social terms - which I believe to be crucial - and equal respect for environmental and safety criteria for goods produced in China.
And of course we must not forget human rights. We are not just talking about values in metaphysical terms. We are talking about rights applicable to people, to citizens like ourselves. We are talking about values that are quite simply beyond dispute and which cannot be treated in relative terms. Just today more people have been executed in China, and that is the most serious violation of human rights imaginable.
Tunne Kelam
Mr President, I should like to thank the Commissioner for a very clear and convincing message and I see that we share the same concerns.
Ten months ago this Parliament decided that trade relations with China require reciprocal market access, which has to be founded on the WTO rules, fair competition and a reasonable balance of interests. The 'round' situation, sadly, does not match those expectations today. We are worried about the increasing trade deficit with China. We are worried about the fact that 70% of all counterfeit products on the European markets originate from China and that EU industries are suffering extensive damage as a result of unfair competition and social dumping. At the same time, many EU exporters are handicapped when trying to enter Chinese markets. Therefore, the EU representatives should insist first of all on providing legal security for foreign companies in China.
I agree with the Commissioner that imbalance in the relationship is mainly a product of politics and not economics. The widespread use of slave labour, including children, is an extremely alarming problem that should be addressed at the highest possible level. The recent cases exposed are only the tip of an iceberg.
China has now been a member of the WTO for six years but it has not implemented significant WTO commitments, including protection of intellectual property, national treatment and transparency. I still see leverage to create a fair and reciprocal balance of relations in linking firmly China's request for market economy status with Peking fully meeting its WTO commitments.
Lastly, China is to be seen as a sobering example, bearing in mind Russia's impending WTO membership. As far as we would be hesitant about insisting on reciprocity and meeting commitments, it would be unrealistic to hope that EU support for Russia's membership will make Mr Putin's state behave according to the WTO rules.
Csaba Sándor Tabajdi
(HU) Two weeks ago, 20 Members of the European Parliament went to China, and their trip there confirmed that the picture is much more complex and nuanced than what we have available to us here. I agree fully with Mr Fjellner that the 21st century could be China's century, and that for the European Union this represents an enormous challenge and an enormous opportunity.
There is very great asymmetry not only in trade, but also in the fact that the Chinese are much more familiar with the European Union than we in the European Union are with China. The picture is much more nuanced, be that in terms of human rights or on other questions. This is an enormous competitive disadvantage for us. The problem is not only that we do not know the Mandarin Chinese language, but that they know the English and European languages much better - this is an enormous asymmetry. We need to overcome this, for if we do not make changes to this situation, we will not progress in excellence.
Peter Mandelson
Member of the Commission. Mr President, bearing in mind your probable desire for this House to rise before midnight, I would just like to say that overwhelmingly the contributions to this debate have been very balanced and very realistic. I think that Mr Calabuig Rull and Mr Carnero González, for example, made appropriate observations in stressing the fact that China is an opportunity for Europe, as well as a threat. Another appropriate observation was that of Mr Fjellner that we need to take the longer-term political view in our relations with China, but he also referred to the growth of protectionism, of a sort of Chinese nationalism which is becoming more prominent in China's trade practices. My view is that China's nationalism does not sit comfortably with the enormous benefits that it is deriving from the internationalist trading system that is based on reciprocity. Without reciprocity China will not be able to expect in the future the continued goodwill and balanced approach that it has been receiving from Europe.
The fact is that China is falling below our expectations. It is not that it is failing to comply with or implement all its WTO obligations and commitments, because in many respects it is. But in certain other key areas of economic activity in China, in financial and other services, it is failing to implement fully the commitments that it made upon its accession to the WTO.
One or two concerns have been expressed about textiles. This House will recall that in 2005 I negotiated a voluntary agreement with China that gave European industry an extra period of two-and-a-half years to restructure and to adapt to the new global situation in the textile sector. It was a once-and-for-all, bilaterally concluded agreement and the Commission therefore has no means simply to seek an extension of the agreed levels that have been operating beyond the beginning of 2008. However, I will be putting in place means to monitor and to keep under surveillance any sudden and large-scale changes in imports of Chinese textiles that threaten to disrupt our market in Europe, and I will consider what, if any, action I can take in the light of disturbances to our market.
This is quite distinct from the use of trade defence instruments. The textiles agreement was based on fair trade. It was not unfair trade. It was just a disturbance that we were unable to take on on such a scale at this time. In other respects, the use of TDI is not against China's natural competitive advantage but against unfair competition, and we will retain the right and the full use of our trade defence instruments and employ them as and when necessary.
In conclusion, others have referred to the need for China to consciously build up the standards it operates in relation to social, labour and environmental standards. That will always be a feature of the discussions that I undertake with Chinese officials.
I am personally very committed to growing technology transfer with China on climate change projects. This is a key way to ensure Chinese interest in tackling climate change. It is a win-win situation. The EU can export energy-efficient, clean technology and China can make a contribution to tackling its environmental problems. This is at the heart of our dialogue with China on climate change and it is something in the trade realm that I intend to build up in the future.
That concludes my remarks in response to this debate, which I greatly welcome. As I say, it has been very balanced, and I will certainly ensure that I and my services take into account fully the remarks and observations that have been made by Members of this House this evening.
Bastiaan Belder
Mr President, I asked the Commissioner a very clear question: at the moment there is unrest in my country, a big news report on a mission of the Commission agreeing to the export of so-called secondary resources such as old paper, recycling material, etc.
What are you going to do, Commissioner? I ask you to conclude agreements with countries such as China and India and pause until 1 January 2008, because otherwise there is a standstill in exports in harbours like Rotterdam. I asked you what you were going to do. I did not get an answer. I hope you forgot it.
Peter Mandelson
Member of the Commission. I think in the circumstances and in view of the time, it might be better if I gave the Member a written response to his question.
President
The debate is closed.
Written statements (Rule 142)
Sebastiano 
in writing. - (IT) Mr President, ladies and gentlemen, the last serious and very recent case of widely-consumed counterfeited goods - a toothpaste containing antifreeze, sold on the European market and produced in China - brings back into the limelight the problem of combating 'multinational forgery'.
It is in this large Asian country, where de facto slavery is permitted for workers deprived of any sort of protection, that most of the products of the counterfeiting industry are concentrated - medicines, cosmetics and food products, as well as toys and items of clothing containing carcinogenic chemical substances that are strictly prohibited in the European Union.
Unfortunately, this is a phenomenon that, while until a few years ago was restricted to high-end products (luxury lotions, perfumes, watches and bags), is now expanding to include products within the reach of an ever-growing number of users, leading to a high risk for consumer health.
Today, more than ever, it is necessary for the political and industrial West to adopt a strong position towards powerful, wealthy China. On the one hand, we need to step up coordination between the Member States in inspections of imported products and, on the other hand, we need to persuade the Chinese Government to apply wide-scale, very strict on-the-ground, checks in order to protect European industry from unfair competition resulting partly from counterfeiting and piracy.
Tokia Saïfi 
in writing. - (FR) China represents a major political and commercial challenge. It is in fact essential to rethink economic and commercial relations between the EU and China, based on respect for the rules of fair and honest competition as well as on the application of World Trade Organisation (WTO) rules. China must commit itself in practice to global responsibility and in favour of the establishment of commercial relationships based on reciprocity. Our European markets are open to those who open theirs, but they are closed to those who close them.
We must not resign ourselves to unfair competition and monetary, social and ecological dumping practices. On the question of environmental standards, the EU must, in the framework of the new agreement, denounce the importing of products into the Community market that do not respect the environmental and phytosanitary rules (which the EU itself imposes on Community producers). China is a major stakeholder and must cooperate on the matter of climate change and energy in order to strengthen international environmental governance. The achievement of parallel progress on the political and commercial fronts is, one can understand, a more than decisive factor for an EU - China agreement.
