International   

Rising trade gap with China worries E.U.

London: European Union officials are in a quandary over the multi-nation organisation’s trade and economic relations with China in the context of the ever-widening trade imbalance in favour of China, currently growing at the rate of $15 million to $20 million per hour.

There is growing talk in Brussels about adopting a new strategy to contain the embarrassing trade gap, which may go up to $200 billion by the end of the year.

E.U. officials have so far vehemently rejected the option of imposing any form of trade sanctions or barriers against imports from China. However, E.U. Trade Commissioner (Minister) Peter Mandelson is mulling a strategic alignment with the United States to contain the Chinese “juggernaut”. According to the European Commission — the executive arm of the European Union — the E.U.’s trade deficit rose by one-fifth last year and is rising at an hourly pace of $15 million to $20 million.

The Commission recently brought out a “strategic document” on trade with China and acknowledged that dialogue and co-operation with China has failed to secure concessions for Europe.

European officials are calling for more “aggressive action” to narrow the trade gap. The European response has been articulated by German Chancellor Angela Merkel and French President Nicholas Sarkozy.

The 27-nation E.U., with a population of 450 million and a $12-trillion economy, is currently rated as the largest important of Chinese goods. Despite this, the E.U.’s exports to China are less than what it (E.U.) exports to the tiny Switzerland.

A European official stated that this embarrassing situation cannot continue “indefinitely”.

Ms. Merkel and Mr. Sarkozy are advocating a more aggressive stance towards the emerging Asian economies.

There is a slew of trade disputes between the E.U. and China over items such as steel, clothes and textiles.

Senior department officials of trade at the European Commission have been asked to work on various “strategic options” to narrow the trade gap with China.

In a four-page letter to the President of the European Union, Mr. Mandelson outlined the issues that could lead to a confrontation with China.

The Europeans are also concerned over the prospect of rising unemployment in the background of recessionary economic and trade conditions.

The GDP growth rate of the European Union may be less than two per cent this year. Mr. Mandelson pointed out that the Chinese juggernaut is now “out control” and that the European Union is “sitting on a policy time bomb.”

It is argued that non-tarriff barriers and regulatory discrimination cost European companies €20 billion a year. The Europeans are still ardent advocates of the “free market” trade strategy but as one E.U. official put it: it can only be sustained indefinitely at “level playing fields not mountain barriers”.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Australia may review uranium offer
A cowardly act, says Rajapaksa
Rising trade gap with China worries E.U.
McCain fighting talk he is too old for presidency
IMF to give poor nations more votes
Argentina contests U.K. claims to seabed

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu