EU calls on China to open up markets

THE EUROPEAN Union Chamber of Commerce launched a hefty 650-page position paper on China yesterday calling for equal access to China’s markets and expressing concern that Beijing is backsliding on regulatory reform.

China is now the EU’s second trading partner behind the US and the biggest source of imports, but chamber president Jacques de Boisseson expressed his group’s “frustration” with China’s stalled effort to open up market access and make laws and regulations more predictable.

“We are asking for a level playing field, which is fair, transparent, provides the right information, and is predictable, because we need visibility and certainty towards the future,” Mr de Boisseson told a news conference in Beijing.

There are 115 Irish companies with a stake in China, many of them in the education sector, and China is Ireland’s seventh most important trading partner. Trade with China is worth about €4 billion annually.

Mr de Boisseson said China remained one of the most heavily controlled countries in the world, and illustrated this using an OECD chart which put China in a worse position than the other “BRIC” nations – Brazil, Russia and India.

“Apart from not being open enough, there is a growing feeling that openness is declining,” he said. Almost 40 per cent of the group’s 1,400 member companies believe government policies will negatively effect the business environment for foreign firms over the next two years.

“European investors continue to be heavily restrained in areas ranging from telecom services, to insurance, construction and the automotive industry,” he said.

The EU chamber launched its broadside on the same day as an Airbus A-380 operated by Lufthansa made its maiden flight to Beijing, an emblem of how important China is for some EU countries, especially Germany, where China’s market is helping its carmakers and engineers.

However, less than 3 per cent of EU outbound foreign direct investment in 2008 went to China because of the obstacles or risks for European companies of doing business there.

Foreign firms faced discrimination in enforcing environmental and labour laws, on compulsory certification requirements that unduly restrict market access for them, and preferential treatment for products containing indigenous intellectual property. Public procurement was another area where foreign firms always came off second-best.

Mr de Boisseson said the chamber was encouraged by repeated assurances by Chinese leaders that overseas firms would be treated the same as their local competitors.

“China should listen to us because it is to their advantage. We can contribute to China’s objectives to transition towards a balanced growth economic model,” he said.

There has been no evidence that chamber member firms were delocalising to any great extent because of the negative environment, but plenty were thinking of moving elsewhere in Asia.

The complaints from the EU chamber are in line with similar complaints by the US chamber. In April, Premier Wen Jiabao, China’s top economic official, promised “a level playing field” but there is no sign of movement yet.

Beijing has failed to keep pledges made when it joined the World Trade Organisation (WTO) 10 years ago to open its oil and phone markets, although the chamber would not be taking China to the WTO over these issues, as such a move was only a last resort.