The EU-China trade relationship going forward—building confidence

Catherine Ashton

University of International Business and Economics, Beijing

9 September 2009

Introduction

It is a great pleasure to be here today at one of China’s leading business and economic universities and have the chance to meet with you.

The University of International Business and Economics holds a special importance for the European Union – China’s largest trading partner – because it hosts the EU-China Managers Exchange Training Program, which is designed to promote closer links between business managers on both sides.

I welcome this program because it highlights a very important aspect of the EU-China relationship– confidence in one another. Building that confidence will be key if we are to continue to develop a deep and lasting EU-China trade partnership.

And confidence is vital because I firmly believe that the future of international trade lies in relationships rather than in the mathematical formulae used to crunch tariffs in the past.

Building those relationships today is vital if we are to promote the mutual understanding we will need if we are to keep tomorrow’s trade flowing and generating the wealth our economies need.

Enhancing the EU-China link

Relations between the EU and China have come a long way since bilateral ties were established over thirty years ago. Our trade relationship in particular has expanded from virtually nothing to one of the most important in the world.

Inevitably, a relationship such as ours needs constant attention if we are to maintain and build confidence. We need to communicate– to speak frankly – to exchange ideas and to recognize there have been and will be some difficult moments as our relationship matures.

So, I came to Beijing this week, to continue to build the unique relationship that exists between the EU and China – a partner that is more important than ever in the current economic turmoil, as the last few months have demonstrated.

The High-level Economic Dialogue that I chair with Vice-Premier Wang Qishan has proven itself invaluable in allowing us to think more strategically about our relationship and our common goals, and allowing us to coordinate our policies more closely in response to the current global economic and trade challenges.

A partnership of equals

It has often been said that the 21st Century will be Asia’s century. That may be true but I believe that, above all, it will be the global Century. The world is now more economically interdependent and the threats and challenges we face do not respect borders or even continental boundaries.

Nowhere is the interdependence more visible than in the field of trade and investment. At the moment Asia is recovering faster from the economic downturn than other regions, in part thanks to China’s gravitational pull.

Recent data suggests that China’s economy is edging closer toward 8% growth again. Hong Kong, Singapore and South Korea, whose economies are closely entwined with China’s, have also surged towards recovery.

But sustained recovery depends on recovery of consumer demand elsewhere in the world. Our shared future prosperity is inextricably linked.

Strengthening the bilateral relationship

The EU-China trade and investment relationship must continue to be a motor for sustainable growth. Trade between the EU and China reached EUR 326 billion in 2008, making the EU-China trade relationship one of the most valuable in the world.

Given its importance we need to coordinate closely our policies, especially during a time of crisis, I mentioned the High Level Economic and Trade Dialogue between the EU and China, which has quickly become one of the major avenues to deepen our partnership and build mutual confidence.

The HED was initiated by Premier Wen Jiabal at the 2007 EU-China Summit, because trade imbalances between China and Europe were not sustainable and needed to be addressed in a more strategic fashion.

Last May in Brussels Vice-Premier Wang and I chaired its 2nd session, with the participation of 12 Chinese Ministers and 13 Commissioners and senior officials.

The HED also ensures that the many bilateral dialogues that exist between the EU and China operate coherently and when needed receive greater political impetus. But more than this, it provides an opportunity for me–as EU Trade Commissioner- to get to know my Chinese counterpart to build a relationship based on mutual respect and shared understanding.

And linking back to what I said earlier, this relationship is essential because the obstacles to EU-China trade are increasingly intangible- they are non tariff barriers arising from different traditions and standards. There are harder to identify and solving them requires mutual trust, cooperation and understanding.

The HED provides a platform to tackle the regulatory issues that risk obstructing trade and investment flows. This includes cooperation on trade in food and consumer products, but also dialogue on streamlining regulation in areas such as technical standards and certification procedures. Differences here often mean lost business opportunities.

The HED also provides the opportunity to create a more favorable investment climate, by achieving legal certainty, equal treatment and removing unnecessary obstacles to investors.

And, the HED gives both sides a means of working towards more effective protection of intellectual properly rights, especially patents- as there are crucial for innovation, investment and the transfer of technology. We are also working on strengthening our customs cooperation, which is vital in the fight against IPR infringement, as well as streamlining administrative and legal procedures in IPR protection.