PARIS, Oct. 24 — The European Union authorities warned China today to open up a “two-way street” for global commerce or face action at the World Trade Organization and new barriers to its booming exports of goods like clothes, shoes and electronic goods.
A critical indication of looming problems between the two sides was the large and growing trade deficit, the union authorities said. Chinese exports to the European Union during 2005 were worth 158 billion euros ($198 billion), three times as much as European exports to China in the same year, the union said in a newly issued policy paper on trade relations with China.
“There is a growing risk that the E.U.-China trading relationship will not be seen as genuinely reciprocal,” the paper said. “A range of obstacles to market access and skewed conditions of competition need urgent attention.”
Chinese and union officials have already clashed over the flow of cheap clothes, leather shoes, car parts and plastic bags from China. The disputes have also sometimes divided the union’s member nations, with some favoring open trade with China and others calling for new barriers.
Broadly speaking, manufacturers and Southern Europeans worry about being crushed by China’s manufacturing might in sectors like clothing and shoes, while major retailers and Northern Europeans welcome low-cost Chinese goods as a benefit for consumers and a boon to profits.
The European Union’s trade commissioner, Peter Mandelson, has sought to reduce the friction by reminding Europe that it will be most competitive in innovative and high-quality products. China, the union said today, should be “a globalization success story, not a globalization scare story.”
At the same time, Mr. Mandelson has increased pressure on Beijing to change regulations and practices that stifle competition in its domestic market and undermine European companies’ efforts to do more business there.
The union said today that it was prepared to apply measures like higher duties and other trade sanctions against in China in certain cases. “The E.U. will use these instruments carefully but rigorously where they are justified,” the policy paper said.
When negotiations prove fruitless, the union could also pursue complaints before the World Trade Organization “to ensure that obligations are met and rules enforced,” it said.
Jacques Chirac, the president of France, is leading a delegation of business leaders on a visit to Beijing this week. One top concern among French business leaders is counterfeiting; the union’s policy paper today reiterated that China is the major source of fake or pirated goods reaching Europe.
The European Union will set up “concrete benchmarks against which to measure China’s progress” in curbing counterfeiting and piracy, the policy paper said, adding that counterfeiting remains “a ball and chain on E.U. competitiveness.”
The paper reported damage to European automobile, steel and semiconductor manufacturers and to shipbuilders caused when China favored locally made components over imports. And it warned Beijing that antitrust law must be enforced by neutral agencies that operate independently and transparently.
“New policies are emerging which appear to be based on a ‘China-first approach,’ ” which runs contrary to the principles laid down by the World Trade Organization, the paper said. “There is a growing risk that competition policy will be used against foreign operators.”
China should move rapidly to start negotiations with the trade organization to open up its market for government procurement to foreign competition, the union’s policy paper said. It also called on China to keep its promise to the trade group to scrap some subsidies and to lower its high tariffs on some European exports, including fur, ceramics, steel and vehicles.
