12 January 2016 / 15 years after it joined the World Trade Organisation, China has still not complied with a number of the clear-cut obligations it made so as to be able to join, including the vital provision to allow all prices to be ‘determined by market forces.’
Speaking the day before a College of Commissioners’ ‘orientation debate’ on Market Economy Status for China, AEGIS spokesman Milan Nitzschke said: “Europe simply cannot grant Market Economy Status (MES) to a country that does not merit it. Doing so would have an immensely negative impact on European industry”.
AEGIS Europe is an industry alliance representing around 30 strategic European manufacturing sectors. AEGIS campaigns against MES for China on the grounds that the country does not meet the standard of a market economy. The WTO allows the EU to set the criteria for itself. China only meets one of them.
“The Chinese government’s aggressively export-led economic model encourage enterprises to dump on foreign markets, as well as favouring financial and currency exchange manipulation to support its economy,” said Mr Nitzschke.
A European Parliament conference was held today on the effects of Market Economy Status for China (MES) on European industry, ahead of tomorrow’s College of Commissioners’ debate. A number of MEPs voiced their concerns about Europe acting irresponsibly by granting China MES when it does not meet the criteria. MEPs emphasised that the EU should not be bullied into giving something that is not merited. It would take away China’s incentive to open its economy follow normal market rules.
The European Commission is not yet expected to make a detailed proposal, but early signals have been worryingly pro–MES.
“Granting MES to China would be equivalent to gifting a licence to dump,” stressed Mr Nitzschke, adding: “The Commission has not engaged in consultations with key EU stakeholders or carried out a thorough impact assessment, something that was promised for all significant legislative proposals”.
Were MES granted to China, dumped products would further flood the EU market, undermining EU employment and investment in manufacturing. All industries identified in China’s 5 year plans would be critically affected.
“EU industry has already lost thousands of jobs, in large part due to the knock-on effects of China’s overcapacity and the resultant dumping. European industries affected include motor vehicle parts, steel, ceramics, glass, aluminium, bicycles and many others besides,” added Mr Nitzschke.
The Economic Policy Institute (EPI) projects that if MES were to be granted, EU output could be reduced by up to €228 billion; about 2% of GDP per year. According to the EPI this would put between 1.7 and 3.5 million European jobs at risk.
“The Juncker Commission says it prioritises better regulation, greater transparency, and support for jobs and growth. Granting MES now is worse not better regulation - and these promises are merely contingent on geopolitical expediency,” Milan Nitzschke concluded.
Natalia Kurop | m: +32 (0) 488 945 579 | e: email@example.com