Creating Business and Dialogue

EUOBSERVER / BRUSSELS - European Commission President Jose Manuel Barroso and a number other commissioners are set to visit China next month, although the exact timing is still undecided.

EU officials confirmed the scheduled visit on Wednesday (10 March), with economy, trade, energy and climate issues among the topics up for discussion.

Mr Barroso is set to meet with Chinese Premier Wen Jiabao, while other commissioners will meet with their respective counterparts.

EU trade chief Karel De Gucht is among those almost certain to be part the European team, with the Belgian politician scheduled to chair the annual session of the High Level Economic and Trade Dialogue (HED) while in China.

Chinese and EU officials agreed to set up the dialogue at a November 2007 summit, providing the two sides with a regular forum for discussion of economic issues, including market access concerns and the imbalance in trade flows.

Climate commissioner Connie Hedegaard is also among the names expected to participate in the visit, the first of its kind since the formation of the new commission. The EU is keen to restart climate negotiations after last December's acrimonious UN negotiations in Copenhagen.

It is unclear whether the EU's high representative for foreign affairs Catherine Ashton will accompany the delegation.

The visit will follow a tradition set in 2008, when Mr Barroso visited Beijing with nine commissioners in a bid to strengthen bilateral ties.

The following year Mr Wen travelled to Brussels with a large number of Chinese officials.

EUOBSERVER / BRUSSELS - The European Union has yet to react to comments made by China over the weekend that it is considering an end to the renminbi's unofficial peg with the dollar, in place since mid-2008.

European Central Bank officials declined to comment on the issue on Wednesday (10 March), a similar stance to that taken by the bank's president Jean-Claude Trichet earlier this week.

Mr Trichet said the Chinese currency issue was not discussed during a meeting of central bankers from industrialised and major emerging countries at the Bank for International Settlements in Basel on Monday.

"No, there was absolutely nothing on that. It was not discussed, but the position of a number of central banks and of a number of economies is very well known so there was not necessarily the need to discuss that," he told journalists after the meeting.

European finance chiefs including Mr Trichet and Luxembourg Prime Minister Jean-Claude Juncker, who chairs the monthly meetings of euro area finance ministers, have been vocal opponents of China's non-conventional monetary policy in the past, arguing that it undervalues the country's currency to the detriment of European exporters.

But various European initiatives, including a visit to China late last year by Mr Trichet and Mr Juncker ahead of an EU-China summit, have failed to produce the desired results, with Chinese officials restating the country's commitment to a stable currency policy.

The governor of the People's Bank of China, Zhou Xiaochuan, struck a more conciliatory tone on Saturday however, suggesting the renminbi's unofficial peg with the dollar was a "temporary" measure designed to combat the financial crisis.

"This is part of our package of policies for dealing with the global financial crisis," he said. "Sooner or later, we will exit the policies."

Mr Zhou was cautious about indicating when the bank could allow the renminbi to appreciate, however.

"If we say we withdraw from non-conventional policy and return to conventional economic policy, we must be very cautious and discreet in choosing the timing. This includes the renminbi exchange rate policy," he said.

EUOBSERVER / BRUSSELS - An EU court has backed the bloc's decision to impose tariffs on shoes from China and Vietnam following a series of complaints from Chinese shoe producers.

The EU General Court, formerly known as the Court of First Instance, ruled against the producers on Thursday (4 March) after they requested an annulment of the 2006 tariff regulation.

The challenges were made on the grounds that European Commission analysis of the costs of Chinese and Vietnamese imports for EU manufacturers was inaccurate.

The European duties add between 9.7 percent and 16.5 percent to the import price of Chinese shoes and 10 percent to Vietnamese shoes.

On 22 December, EU countries voted to extend the 2006 anti-dumping duties on the leather footwear imports for a further 15 months as of January 2010, evoking strong criticism from China.

Beijing filed a complaint with the World Trade Organisation last month, accusing the EU duties of being illegal, giving the two sides 60 days to reach an agreement before the WTO complaints body will rule on the case.

Speaking from Hanoi earlier this week, European Trade Commissioner Karel De Gucht said the commission had a "very solid case" in its imposition of anti-dumping measures. Mr De Gucht was in Vietnam to launch talks for a free trade agreement between the EU and the Asian country.

The companies that challenged the shoe duties were Brosmann Footwear, Zhejiang Aokang Shoes, Wenzhou Taima Shoes, Sun Sang Kong Yuen Shoes Factory and Foshan City Nanhai Golden Step Industrial.

Ruling against the companies, the court's statement said: "The anti-dumping measure ...thus remains in force."

The complainants were ordered to pay their own costs and those of the EU in defending the cases.

EUOBSERVER / BRUSSELS - World Trade Organisation director-general Pascal Lamy has said international trade fell by 12 percent in 2009, a marked deterioration on previous estimates which put the drop closer to 10 percent.

Completion of the stalled Doha round of multilateral trade talks is therefore more necessary than ever, said Mr Lamy at an event organised by the European Policy Centre in Brussels on Wednesday (24 February).

"If there was a geopolitical consensus in launching the Doha development round in 2001 ...it is today economically imperative to complete it," he said.

Originally designed to reduce barriers to trade for the world's poorer nations, the talks have become bogged down over the issue of US and EU farm subsidies and access to developing markets such as China and India.

The round's slow progress, coupled with a breakdown in UN climate talks in Copenhagen last December, have led some analysts and policy-makers to question the future of multilateral negotiations.

Questioned on his expectations for this year, Mr Lamy said he expected there would be "pick-up" in trade levels. "Whether is short-term due to restocking, or long-term due to sustained demand ...it is too soon to say," he cautioned.

Addressing EU concerns over a rise in non-tariff barriers in countries such as China, the former EU trade commissioner said this was an "inevitable" result of development in these countries, citing increased demand in product labeling by Chinese consumers as an example.

But he added that regional requirements must be justified and based on real science, and not an excuse to introduce protectionism by the backdoor.

Certain European businesses have increasingly complained that they are being shut out from the Chinese market by an ever growing list of certification requirements, with technology companies in particular feeling the squeeze.

Attention was drawn to the sector last month after Google said the cost of doing business in China may have become too high, leading the US giant to speculate on a possible pullout.

EUOBSERVER / BRUSSELS - The EU has launched an investigation into imports of glossy paper from China following a complaint from European producers over product dumping.

The probe, announced on Thursday (18 February) in the EU's Official Journal, is the latest in a string of trade disputes creating tension between the two sides.

Cepifine, an association of European fine paper manufacturers, contacted the European Commission in January with allegations that fine coated paper, used for glossy books and magazines, was being imported at artificially low prices from China.

As a result, European businesses have suffered "substantial adverse effects", said the association, which represents roughly 25 percent of EU manufacturers producing coated fine paper.

The commission now has 15 months to establish whether Chinese paper imports are being offered at artificially low prices, potentially leading to anti-dumping taxes if it decides in the affirmative.

"Prima facie evidence provided by the complainant shows that the volume and the prices of the imported product under investigation have, among other consequences, had a negative impact on the quantities sold and market share held by the Union industry," said the Official Journal.

The EU has already imposed anti-dumping taxes on a range of imports from China including leather shoes, steel products and candles.

The commission defended it tariffs on Chinese leather shoe imports earlier this month, saying it was "the right thing to do", after Beijing hauled the EU to the World Trade Organisation to dispute the punitive duties.

The US, which has also seen a deterioration in trade relations with China in recent months, decided three years ago to impose anti-dumping penalties on Chinese paper imports.

EUOBSERVER / BRUSSELS - Official data released from Germany on Tuesday (9 February) confirmed that China has stripped Europe's largest economy of its top exporter title.

Data released by the German Federal Statistics Office showed the country's exports fell by 18.4 percent in 2009 when compared to the previous year, hitting a dollar equivalent of $1.121 trillion. China's exports for 2009 totaled $1.202 trillion.

Despite the drop, which represents the greatest year-on-year decline for Germany since 1950, the news of China's takeover was not greeted with great alarm by German economists.

"This is something that was expected. Everyone agrees that China's currency is undervalued, but still it was only a matter of time," Gernot Nerb, head of the industry department with the Ifo Institute for Economic Research, Munich, told this website.

The official figures also showed a strong export recovery in the fourth quarter of the year, helping to pull Germany out of its recession and providing a silver lining to the more gloomy annual data.

With more than 60 percent of Germany's exports going to other EU countries, concerns have been raised that the bloc's forecast low rates of growth in the coming years could prose a problem for Germany's export model.

"There is some concern but we are mainly exporting investment goods, and you can not postpone investment for ever," said Mr Nerb, conceding that investment levels will probably not pick up before 2011-12 however.

A breakdown of the German figures shows exports to the EU were down 19.1 percent year-on-year, with sales to faster-growing regions of Asia and South America faring little better and falling 17.1 percent.

German imports also declined rapidly in 2009 as result of the financial crisis, dropping fell by 17.2 percent.

EUOBSERVER / BRUSSELS - EU-China relations have been placed under increased strain following news that a European firm is to sell a number of helicopters to Taiwan, the disputed island over which China claims sovereignty.

The revelation comes just a day after China hauled the EU to the World Trade Organisation over a long-running shoe tariff dispute.

Reports on Friday (5 February) said Taiwan's military is set to buy three helicopters from German manufacturer Eurocopter, a subsidiary of EADS, with an option to buy up to 17 more.

Taiwan's defence ministry spokesman Martin Yu said the contract for the EC-225 search-and-rescue helicopters was valued at $111 million.

The European deal comes hot on the heels of last week's news that Taiwan will buy roughly $6.4 billion-worth of arms from US companies, prompting Chinese condemnation and threats of sanctions.

Whether Europe will now come in for the same response is yet to be seen.

Some analysts suggest Beijing's response may be more muted due to an unwillingness to fight on two diplomatic fronts as the same time.

Recent murmurings within the EU over a possible lifting of the bloc's arms embargo with China could also result in a softer response from the Asian powerhouse.

EUOBSERVER / BRUSSELS - EU-China trade tensions were further strained on Thursday (4 February), after China filed a formal complaint with the World Trade Organisation over European shoes tariffs.

The Chinese government said European tariffs "violated various obligations under the WTO and consequently caused damage to the legitimate rights and interests of Chinese exporters."

Brussels immediately hit back, saying the tariffs had been imposed in response to the "unfair trade practices" pursued by the Asian powerhouse.

"Anti-dumping measures are not about protectionism; they are about fighting unfair trade," said the European Commission's acting trade spokesperson, John Clancy.

"The decision to impose measures was taken on the basis of clear evidence that dumping of Chinese products has taken place and that this is harming the otherwise competitive EU industry," he added.

The quarrel comes on the same day that US President Barack Obama vowed to take a "much tougher" stance on China, in a bid to make sure it opens its markets to US exporters.

Sino-American relations are already frayed following last Friday's announcement that US companies are set to sell $6.4 billion worth of arms to Taiwan.

China joined the WTO in 2001, but waited until July of last year to file its one and only unfair trade case against the EU. Thursday's decision to haul the EU to the international trade body is been seen as a sign of greater trade assertiveness by some analysts.

Controversial tariffs

Europe itself has been divided over the shoe tariff issue, with producer nations such as Italy strongly in favour, while several net exporting states have expressed their opposition to the duties.

On 22 December, EU countries voted to extend anti-dumping duties on Chinese and Vietnamese leather footwear imports for a further 15 months as of January 2010.

In total, 13 member states voted against the commission's proposal to extend the duties, nine voted in favour and five abstained. Under EU anti-dumping rules, abstentions count in favour of a commission proposal.

The European duties add between 9.7 percent and 16.5 percent to the import price of Chinese shoes and 10 percent to Vietnamese shoes.

In an eight-page legal complaint, the Chinese government requested consultations on both the original 2006 decision to impose the shoe duties and last year's move to extend them.

The European Footwear Alliance (EFA), which represents several big manufacturers such as Adidas and Timberland, welcomed China's move.

"The EFA shares China's view that the EU's decision to extend the duties for a further 15 months in December 2009 was based on a very questionable investigation and a flawed analysis of the economic facts," said the group in a statement.

"Ironically, the measure hurts European business and consumers the most," it added.

EUOBSERVER / BRUSSELS - The Spanish EU presidency has indicated it is willing to reconsider the bloc's arms embargo with China, implemented over 20 years ago following the 1989 Tiananmen Square crackdown on Chinese pro-democracy protesters.

Following a meeting of EU foreign ministers in Brussels on Tuesday (26 January), Spanish foreign minister Miguel Angel Moratinos said his country was "weighing the pros and cons" of lifting the ban.

"We are all aware of the new role which China is assuming in the world," he added.

China considers an end to the ban to be long overdue. "The embargo is outdated, it does not go along with the partnership between China and the EU," Wang Xining, spokesman for the Chinese mission to the EU, told EUobserver.

"Its a political principle on the definition of the relationship," he added, indicating that China was not necessarily going to place a large military order should the embargo be lifted.

France has been a vocal supporter of ending the ban, a line Moratinos said Spain would now follow, but other member states have traditionally indicated China's human rights record did not merit an end to the EU restriction.

Last October saw the EU lift an arms embargo against Uzbekistan however, despite continuing concerns about human rights in the central Asian nation, suggesting a reluctance to allow full Chinese access to EU military capabilities is also a factor.

European diplomats also queried whether the Spanish decision to visit the perennial issue would win the backing of all 27 member states this time round, with any decision requiring unanimity for a change of position.

The United States, which also maintains an arms embargo on China, is a further complicating factor, with the country likely to be reticent towards a unilateral European move.

The European Parliament has shown its support for the ban, voting in 2008 to maintain it as long as Beijing supports armed forces and groups involved in African conflicts in general.

News that Spain would revisit the thorny issue first hit the headlines last week following a China Daily interview with Spain's ambassador in Beijing.

The issue has subsequently attracted considerable media attention in the Asian powerhouse.