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The European Union will soon grant China the recognition it has long coveted as a market economy, former World Trade Organization head Pascal Lamy says.
He made the prediction as the 15th anniversary of China’s accession to the organization approaches on Dec 11.
Lamy, who was the WTO’s director-general from 2005 to 2013, said in Beijng recently that while the EU is likely to recognize China’s market economy status, it will also probably change its anti-dumping regulations in a nondiscriminatory way.
As a condition for being admitted to the WTO, China agreed in 2001 that other members could treat it as a “non-market economy” for 15 years, ending on Dec 11 this year. This status has made it relatively easy for aggrieved parties to prosecute anti-dumping claims against China.
Lamy says that changing anti-dumping regulations has long been a subject of debate in the EU, and changes that are made are likely to affect not only China but all other countries that trade with the EU.
The EU will recognize China’s market economy status, he says, “but in some way anti-dumping measures will be reformulated”.
Lamy, who is now honorary president of the Paris think tank Notre Europe, played a key role in negotiating China’s admission to the WTO.
Reviewing the past 15 years, he says China has fulfilled the commitments it made when it joined the organization. As globalization has proceeded, it has also increased the value it adds to the goods it produces, and that has been important in the country’s economic growth.
“China adds more value to what it produces. Twenty years ago it would import 60 and export 100, adding 40 of value to the 60 it imported. Today it imports 30 and adds 70, instead of 40, and that is good news for China,” Lamy says.
The country has pledged to open up more and wants to proceed with more economic reform, and that is a good signal, Lamy says, adding that he hopes more action will soon be taken, particularly regarding the services markets, which will help push domestic consumption and benefit Chinese consumers.
“Better service will come from more competition in the service industry. And more competition in the service industry will come with more services being imported or foreign service providers establishing themselves within the Chinese system,” he says.
The opening-up of trade is still the main trend in the world, he says, even if there is opposition in the EU to Chinese steel imports, and there is an anti-free-trade backlash in the United States. Protectionism cannot guarantee people’s livelihoods and social well-being but is in fact destructive and will not make a return, he says.
“My understanding is that the connections in today’s world between production systems, between trade flows, between financial flows, between people flows are such that stepping back from openness would be damaging for everybody, much more than it was in the past.”
In Europe, despite Britain’s decision to leave the EU, things are stable, and notwithstanding some calls for protectionism, it will not increase, he says: “Trade remains open. If you look at trade today, it is more open than yesterday, when it was more open than the day before, so the direction is right.”
While protectionism was not becoming a reality, vigilance was needed, Lamy says: “We cannot in today’s world close our borders, build walls everywhere and go back to the Middle Ages.”
Reducing obstacles to trade, whether multilaterally, bilaterally or regionally, should be the common goal for all organizations, he says.
And the major obstacles to trade in the future might be those stemming from differences in standards, packaging and safety regulations about how to protect consumers from risks such as safety, or traceability requirements.
For each country to benefit from the opening-up of trade, they need to keep pushing to build global trade systems and environmental rules that are equitable, he says.
(China Daily European Weekly 12/09/2016 page25)