The EU was China's third largest trading partner in 2003. According to Chinese statistics, the bilateral trade between China and the EU in 2003 reached US$125.2 billion, up by 44.4 per cent.

Of this, China's exports to the EU totalled US$72.15 billion, up by 49.7 percent, while China's imports from the EU were US$53.06 billion, up by 37.7 percent. China had a surplus of US$19.09 billion.

Tariff and tariff administration measures

The average EU tariff in 2003 was 6.4 percent. However, tariff peaks exist in such sectors as food, beverage, tobacco and textiles. For example, in the agricultural sector, tariff peaks were maintained on meat, dairy products, processed and non-processed grains, processed fruit and vegetables, parts of which even reached 209.9 percent.

Tariff peaks impeded the exports of footwear, poultry and fishery products from China to the EU.

Meanwhile, seasonal duties are frequently levied on certain fruit and horticultural products in the EU. Such duties are adjusted when similar products of EU origin begin to be placed on the market.

Frequent changes in the tariff rates designed for agricultural produce and horticultural products bring inconvenience to the exporters of relevant Chinese products.

The EU has initiated negotiations with other trading partners, including the United States, Pakistan, India and Thailand, on the application of tariff quotas on imports of rice.

The Chinese side will watch the equality and fairness of the application of tariff quota on imports of rice.

Quantitative restrictions

Quantitative restrictions are applied to 41 categories of textile products imported from China. However, only a dozen textile categories exported by many other Asian countries are subject to the quantitative restrictions. In addition, the annual increase rate of quotas granted to Chinese products is much smaller than that granted to those countries.

According to a bilateral textile agreement signed between China and the EU, the Chinese side can apply to transfer quotas which were not used up in the previous year to the same category of products or different categories.

In practice, however, when the Chinese side files the application, the EU side usually postpones the reply for quite a long time, at least two months, which affects the internal quota administration on the Chinese side.

Technical barriers to trade

The EU has developed, in recent years, a large number of technical regulations and standards. Some of the technical regulations establish overly-strict requirements on products. Some even lack sufficient scientific proof, which directly or indirectly constitutes a kind of barrier to exports from third countries, in particular developing countries.

The report mentioned its concern over the following regulations or drafts: Directive on the Restriction on the Marketing and Use of Certain Azocolourants; the Directive on Waste Electric and Electronic Equipment (WEEE); the Directive on the Restriction of the Use of Certain Hazardous Substances in Electric and Electronic Equipment (RoHS); Draft of Registration, Evaluation and Authorization of Chemicals; Eco-design Directive Draft; Draft Directive on Traditional Herbal Medicinal Products; and the Amendment to the Battery and Accumulator Directive.

On February 13, 2003, the EU promulgated the Directive on Waste Electric and Electronic Equipment (WEEE) and the Directive on the Restriction of the Use of Certain Hazardous Substances in Electric and Electronic Equipment (RoHS).

Under WEEE, producers should provide a deposit for the expenses incurred in the collection, treatment, recycling and environment-friendly disposal of waste electric and electronic products, as of August 13, 2005.

The RoHS directives provide that member states ensure restriction of the use of lead, mercury, cadmium, and chromium VI in electric and electronic products placed on the market as of July 1, 2006.

The Chinese side is concerned over the effect of the two directives on the bilateral trade in electric and electronic products.

The Ministry of Commerce has been keeping in touch with the relevant EU agencies. The Chinese side is particularly concerned over the sharing of the cost for the disposal of waste that arrived in the EU before the directive takes effect, and the current absence of standard testing methods for the implementation of the RoHS directive, which may increase the cost to small and medium-sized enterprises outside the EU.

EU enlargement impacts on trade remedies

Anti-dumping and safeguard measures are taken against 33 products and one product respectively of Chinese origin by the end of 2003.

Export volume of the involved products to the 10 new EU members in the past three years reached US$100 million annually on average.

The automatic application of the EU trade remedy measure to the 10 countries will have a great impact on related exports from China and play a destructive role on the trade channels established by Chinese exporters in the 10 countries. Some of the products exported from China may even be driven out of the market.

Barriers to service trade

Doctors of traditional Chinese medicinal science cannot obtain a practitioner's licence, and in addition, medical insurance in the EU does not cover treatment by traditional Chinese medicinal science (excluding acupuncture and massage).

Certain EU member states also impose very strict control on foreign investment in chain stores. Investment in a new supermarket in France not only needs to seek the approval of local residents by a vote of all residents, but also that of the local retailer's association.

A large supermarket group in Shanghai encountered great difficulties when it planned to set up a Chinese supermarket in Brussels, Belgium.

(China Daily June 18, 2004)