Beijing, Brussels dancing on special trade status for China

Published on
June 2, 2016

A frantic but little-discussed diplomatic game going on between Beijing and Brussels could have a major impact on seafood trade globally.

The European Union is set to make a decision this summer as to whether to grant market economy status to China. Offering China MES status would make it much harder for the E.U. to put retributive tariffs on Chinese goods if China begins dumping goods on European markets.

While the move appears likely, the United States, which has slapped tariffs on Chinese shrimp in recent years, has pressured Brussels not to grant MES to China. Many E.U. bureaucrats and politicians agree with that stance, claiming China hasn’t honored the commitments it as preconditions for it joining the World Trade Organization in 2001.

The World Bank itself is claiming that China doesn’t qualify as a market economy because it says the state, rather than the free market, dictates much of its economy. It has criticized China for its heavy-handed control of its financial sector and its “interference” in its market through state administrative and price controls and guarantees of credit lines through state banks.

The E.U. criteria for market economy recognition requires an economy have an open financial sector and property rights –both of which China doesn’t yet have (seafood firms acquiring land for aquaculture or processing factories get the right to lease land for 30-year terms, rather than freehold ownership rights). 

While Washington doesn’t want the E.U. to grant MES, Beijing has poured resources and pressure on Brussels to get a positive decision. It’s widely known that a Chinese pledge to invest in the E.U.’s recovery fund is predicated on a positive decision on China’s MES status.

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