An EU study shows that China’s protectionism violates WTO rules and is responsible for billions of lost business to European firms. EU is likely to ask WTO to force Beijing to respect rules.

Beijing (AsiaNews/Agencies) – European Union firms are denied business opportunities in China worth more than €21 billion (US billion) a year because China fails to respect the rules of international trade, a new study published by the European Commission said.

The study said China offered huge opportunities for European business, especially in services and environmentally friendly technology, but also noted China was not living up to its World Trade Organisation commitments in many areas—notably in the implementation of WTO rules by provincial authorities (who unfairly favour local firms), and in intellectual property rights—and European industry was suffering as a result.

The study said growth in the services sector, where the EU had the most significant advantage over China, was outpacing other sectors, but it was also one of the areas with some of the largest obstacles to trade and investment.

China's need for green technologies and services offered a huge opportunity to EU exporters—a market estimated to be worth € 98 billion (US$ 127 billion) by 2010, the study said. And European companies were increasingly establishing production in China, not to export more cheaply produced goods, but to compete in China.

But according to the study, machinery, construction, finance and telecommunications are areas of unequal treatment with the central government procurement practices being often “opaque and discriminatory.”

EU Trade Commissioner Peter Mandelson said the “study shows that Chinese non-tariff barriers cost EU operators no less than € 21.4 billion a year in lost business opportunities.” 

If china fails to respect WTO rules, the EU might turn to its commission in Geneva. In fact, the EU, joined by the US, filed its first WTO complaint against China last year over the treatment of firms in the car parts sector. But Beijing does seem too fazed by the complaints.

Early this month, the US also filed another complaint (the fourth in a few months) against China for indirectly subsidising its firms thus distorting the rules of competition.

• china
• european
• union
• trade
• practices
• discrimination
• business
• losses
• peter
• mandelson