» Wednesday, August 31, 2005

EU & China trade negotiations

Asked about the Prime Minister’s view of the current trade negotiations between the EU and China, the Prime Minister’s Official Spokesman (PMOS) pointed out that the European Commission was the sole negotiator in these circumstances, not the Presidency. That was the case for any trade issue. The role of the Presidency was to support the Commission and to be aware of the overall mood and overall position throughout the EU, and there would be a variety of different positions towards such a dispute within the EU as a whole. Our basic attitude to free trade and our support for it were well known. However we recognised that there were implications for particular countries and producers which meant that transitional arrangements had to be made. In terms of the negotiations themselves he would not give a running commentary. In saying that he would point out that this issue was a precise illustration of those problems the Prime Minister articulated in his speech in Brussels on Europe.

It clearly illustrated the need for Europe as a whole to modernise to meet the challenge from China and India and other countries. Also for the UK both in terms of its attitude towards trade and its attitude to education and doing what was necessary to meet that challenge coming from other countries. As we saw in this case, the pace of change was picking up speed all the time. Therefore as a continent and as a country we had to meet that challenge. These were some of the themes that the Prime Minister would want to touch on during his visit next week.

Asked what the Prime Minister thought of the way the Commission had handled the dispute, the PMOS said that there were difficult balances to be struck in terms of supporting free trade but also recognising that there implications for producers in particular countries. Getting that balance right was always going to be a difficult task. What we did was support the Commission in trying to reach an agreement with China and countries within Europe.  Put to him that the real dispute was not between the Commission and China but between EU member states and that therefore it should be the President of the EU brokering a detail to present to China, the PMOS repeated that first and foremost we were not the negotiating body in such issues. Secondly in any dispute you had to address the needs of both sides and the reality was that there were producers in the EU, in certain countries who would be affected by this issue. Therefore what you had to try and do was reach some sort of process which balanced the needs of those producers with the interests of China and so on. That was precisely the role the Commission was playing and we fully supported the Commission and the Commissioner in that.

Put to him that given the Prime Minister was going to China next week it would be impossible for him not to get involved personally with the negotiations, the PMOS said that the issue of trade was clearly an issue in general but the detail of this particular dispute was a matter for the Commission. Of course the issue would come up during the Prime Minister’s visit but any detailed negotiations to take place on this particular issue would be a matter for the Commision. He pointed out that the President of the Commission and the Commissioner for trade would also be in Beijing with the Prime Minister since the first day of this visit was an EU-China summit. Similarly with the visit to India.

Asked about the interests of consumers in terms of the inflationary pressures this dispute was causing, the PMOS pointed out that yesterday the Commission itself recognised the interests of consumers along with those producers who had to be taken account of in this issue.

Asked if the Prime Minister had any sympathy with Digby Jones’s view that the EU was falling back on its protectionist instincts, the PMOS said that in this kind of situation you always had to recognise that whilst of course we supported free trade, you still had to manage the process of transition, just as with the CAP you had to manage the effects of reform there. Put to him that that the management of that transition left something to be desired the PMOS said that the pace of change was something you could never predict in advance. What you had to recognise was that the  pace of change was picking up all the time. Put to him that this dispute had been on the cards for years, the PMOS said that equally the pace of production in China had been accelerating at the same time, that’s what he meant when he referred to the pace of change. That was equally true of market trends throughout the world including this country. There was clearly a differential in terms of responsiveness across Europe, that was obvious. Part of the Commission’s task was to try and manage that differential impact.

Asked if the Prime Minister recognised the concern that the reason China could produce things cheaper than other developed countries was because of the absence of rights for workers and that by just competing on price we risked a race to the bottom, the PMOS said that the Prime Minister recognised that there were issues that Europe had to face up to. He would not get involved in discussing internal matters in China, but in terms of the overall issue of competition we had to recognise, as we had been saying for a long time, there was a need to develop high quality products that people wanted, and to use technology and innovation to do so. In terms of globalisation, the effects of that could be seen in China and India and throughout the world.

Asked what the summits with India and China would actually be about, the PMOS said that it was partly about listening to and seeing for ourselves the reality of globalisation and how the economies were transforming. Equally as we saw at Gleneagles, climate change remained very much an issue for both countries. The summit was about the EU and the UK’s relationship with the two countries and taking forward the Gleneagles agenda which was about the transfer of clean technology and so on to countries such as India and China. It was also about the run up to the UN Millennium Summit in September and other general issues. There were also growing business relationships and there would be a large business delegation travelling with the Prime Minister.

Asked about the European directive regarding deportation the PMOS said that we should correctly understand the process. The Commission did not have the competence to impose restrictions. The role of the Commission was simply to put forward proposals which the Council, i.e. the Government, then decided whether to accept or not. We should wait and see what the Commission actually put forward before we give a view. On the issue of restrictions on deportation itself he would simply point out that other countries would have difficulties with this, not just the UK. In terms of our position we would have to actively opt in to any proposal, even if the council were to agree.

Briefing took place at 13:00 | Search for related news


  1. Tone’s on the run on this one then. It will be interesting watching him twist and turn next week.

    Comment by roger — 1 Sep 2005 on 1:24 pm | Link
  2. "you still had to manage the process of transition"

    The EU and UK did make a transitional plan – they implemented it – everyone was happy – then out of the blue they revoked the freedom of trade because certain people who influence those in power got upset that China was making money out of producing quality products.

    The government really needs to get its head together on this one – we have been encouraging the export of manufacturing jobs for decades – we are now actively exporting service sector jobs.

    The complete lack of accountability in government is leading us to a very uncertain future where we shall live with the consequences of decisions made by politicians who have feathered their nests and moved to a tax haven.

    The hilarious part of Tony’s trip will be that, even if he has been briefed, he won’t have sufficient understanding of the Chinese culture to realise that they see him as "EU president" and if you are top dog then either you are powerful and can make binding decisions or you are an empty shell that represents the nothingness of Western democracy.

    He will be treated with the utmost of outward respect and dignity – which he will confuse with reality. Whilst inwardly and in reality they will consider him to be an empty worthless fool.

    Comment by Roger Huffadine — 4 Sep 2005 on 10:53 am | Link
  3. "Whilst inwardly and in reality they will consider him to be an empty worthless fool."

    Could it be that the Chinese know more about human nature than the British electorate, do y’ think?!?

    Comment by PapaLazzzaru — 4 Sep 2005 on 11:20 pm | Link
  4. I agree.

    It’s a major mistake to believe that the Chinese will honour any part of a so-called ‘agreement’ except in so far as it suits their interests. And those interests will change as China develops.

    Equally it’s a major mistake to believe that multi-national companies will stick to political rules. Read J K Galbraith (New Industrial State, amongst others).

    The EU simply does not have enough clout to impress the Chinese. They know that they can out-manufacture and out-price anything that the EU can do. And very soon they’ll out-educate the West.

    Comment by Chuck Unsworth — 5 Sep 2005 on 12:42 pm | Link
  5. Good Call – Chuck. Some realism injected at last. One wonders if any of the present guys in Gvt have actually ever had a job that involved meeting and negotiating with people from nations outside Europe – but hey – look at the movie shot by the japs of the negotiations on Singapore.

    Comment by roger — 7 Sep 2005 on 12:32 am | Link
  6. Apropos the above. One should remember that these ‘negotiators’ are professional polititicians – not diplomats, merchants or businessmen.

    Political deals are different to business deals in so many ways.

    I’m reminded of Patten’s dealings with the Chinese over Hong Kong. Those of us who had any real experience of working and living in the Far East perceived his efforts as almost entirely self-serving – his chief concern being about his next job, rather than the one he was there to do.

    Naturally the handover was trumpeted as a huge success for democracy etc. But the Chinese are so much smarter than that………

    As to Singapore, well, yes. A complete failure to really understand the enemy, compounded by an unrealistic belief in the relative strength of the British position. Mind you, the Japs weren’t playing by our rules, were they, so we won the ‘moral’ victory didn’t we?

    Look at the phenominal rise of economic power in various countries other than Britain. There’s no guarantee that our economic enemies will play by our rules this time, either.

    Comment by Chuck Unsworth — 7 Sep 2005 on 9:11 am | Link

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