Up to 3.5 million European jobs could be at risk if EU leaders bow to Chinese lobbying on market economy status (MES), industry groups warn.
Beijing believes that, according to the terms of its World Trade Organisation (WTO) accession agreement signed in 2001, it should automatically qualify for MES by the end of 2016.
China's hopes were given an unexpected boost following the announcement by the European Commission's legal services in July that, "it would be unwise not to grant market economy treatment to China."
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The German and British governments are currently reaping the benefits of strong bilateral trade with China. They have publicly backed Beijing's ambitions, while EU trade chief Cecilia Malmström is also an enthusiastic supporter.
However, this enthusiasm is not universal. A number of European industry groups, MEPs and other EU member states as well as the US have raised concerns that granting China MES will remove current anti-dumping safeguards, leading to the loss of hundreds of thousands of jobs.
Ahead of today's (13 Jan) college of Commissioners orientation debate on MES for China, EU industry groups set out their assessment of the risks to European industry.
"China is placing political pressure on national and EU policy makers to prematurely grant it the status of a market economy," warned Axel Eggert, director general of European steel association Eurofer.
"The country is arguing that its WTO protocol assures it MES by the end of 2016. However, the WTO protocol was established under the presumption that China would make sufficient progress towards becoming a market economy; progress that it has studiously failed to implement."
Eggert added; "We insist that policymakers think long and hard about the political direction of the EU''s trade relations with China, or else face the potential demise of the [steel] sector on which Europe was built."
Speaking at a conference in the European Parliament on the effects on European industry of MES for China, Milan Nitzschke, a spokesperson for industry alliance group AEGIS Europe, urged caution. "Europe simply cannot grant MES to a country that does not merit it. Doing so would have an immensely negative impact on European industry."
"The Chinese government's aggressive, export-led economic model encourages enterprises to dump on foreign markets, as well as favouring financial and currency exchange manipulation to support its economy."
"Granting MES to China would be equivalent to gifting a licence to dump," he stressed, adding; "The Commission has not consulted with key EU stakeholders or carried out a thorough impact assessment, something that was promised for all significant legislative proposals”.
"EU industry has already lost thousands of jobs, in large part due to the knock-on effects of China's overcapacity and the resultant dumping. European industries impacted include motor vehicle parts, steel, ceramics, glass, aluminium, bicycles and many others besides."