During a recently completed EU-China summit, the European Union demanded that Beijing commit to respecting intellectual property rights before both parties move further to strengthen their trade relationship.
Brussels and China signed an agreement committing China to “non-discriminatory” and “broader” market access for European companies, without forced technology transfers. China also committed to cut its state-subsidies, which will help level the competition for foreign companies.
Chinese Prime Minister Li Keqiang offered assurances that European companies will enjoy “equal treatment” in China.
“For the first time China has agreed to engage with Europe on this key WORLD Trade Organization reform,” the President of the European Council Donald Tusk said.
The annual EU-China comes a month after the European Commission branded Beijing a “systemic rival,” ahead of the signature of a Memorandum of Understanding with between Italy and China.
The EU is worried about China’s 2025 policy that is designed to make Beijing the world’s most dominant nation in high-value manufacturing over the next five years. For years, access to the world’s second-biggest economy has been conditional to technology transfers, a balance that was challenged by Washington and, belatedly, by the European Union.
Europe and China have a trade balance of 1 billion a day, but China has repeatedly ignored European concerns about geographical indications and intellectual property. Furthermore, European contractors do not have access to major connectivity projects, including the Belt and Road Initiative.
Procurement is also a big stumbling block in Europe’s relations with China. Large-scale projects account for 16% of the EU’s GDP. This has led the EU to echo some of the same concerns as the Americans about the Belt and Road Initiative, which Brussels has said is a series of “debt-traps” for the emerging economies involved.
The European Commission is now considering shutting procurement to foreign bidders unless China abides by the reciprocal terms of the Sino-EU deal. Under this clause, the EU would introduce a 20% surcharge to foreign contractors. Brussels is also considering raising environmental and social standards across the board, which would raise the bar for Chinese companies.