EU, WTO Investigations Cool China’s Trade Relations with West

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Sept. 17 – Despite recent assurances by Premier Wen Jiabao at the World Economic Forum in Tianjin that foreign companies would receive fair treatment on the mainland, two of China’s largest trading partners launched investigations into alleged protectionism of Chinese goods and services.

Over the past few days, both the World Trade Organization and the European Union opened separate investigations into foreign complaints of Chinese trade violations.

The United States filed two complaints with the WTO on Wednesday, alleging that China is favoring state-owned financial payment service providers and imposing unfair antidumping duties on U.S. steel imports.

The Obama administration “is fighting for the American jobs threatened by China’s actions, and insisting on the level playing field promised in our WTO commitments,” U.S. Trade Representative Ron Kirk said on Wednesday.

In the discrimination case against American debit and credit companies, the United States alleges that China Union Pay, China’s state-owned financial services company, has been favored and used to crowd out foreign companies in processing debit and credit transactions on the mainland.

The second claim asserts that China imposed antidumping duties on U.S. steel without sufficiently investigating whether or not the United States was indeed dumping steel on the Chinese market.

Separately, the European Commission announced on Thursday that it would probe claims by Belgian wireless internet technologies manufacturer Option NV that China has subsidized wireless modem technologies manufactured in China and exported to the European Union. These claims imply that Chinese manufacturers have dumped their products on the EU market, making competition for EU companies difficult.

China’s Ministry of Commerce issued a statement expressing displeasure with the European Union’s decision, citing concerns that an investigation could facilitate EU protectionism and disrupt trade.

The EU investigation seems to clash with recent remarks made by EU ambassador to China, Serge Abou, who struck a hopeful note on Tuesday for the future of EU-China relations. Bilateral trade between China and the European Union totaled US$426.9 billion in 2009.

“We cannot be satisfied with the figures,” Abou declared at the Belgium Pavilion at the Shanghai World Expo, referencing Chinese foreign investment in the EU, which reached US$390 million in 2009.

Both cases by the United States and European Union highlight an increased sensitivity during a time of global economic revitalization, as well as the struggle involved with balancing foreign trade while promoting domestic interests.

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