Free trade is only two signatures away

Belgian academic says EU and Chinese officials need to get their act together

Jan Wouters suggests that a free trade agreement between China and the European Union is the best way to reduce commercial tensions between the two strategic partners.

Due to the economic slowdown, both sides face the risk of protectionism. Wouters, a professor at the University of Leuven in Belgium, says it is important to act quickly and to begin early talks on a free trade agreement.

He advances many reasons in support of such talks, which would obviously be arduous, the main one being that China, with its increasing global economic clout, is the only economy that can help EU economies get back on the right track. This is a reality that Brussels must face, he says.

"If there is one country which is able to have the real impact like that (to revitalize Europe), it could be China," says Wouters, director of the Leuven Centre for Global Governance Studies and Institute for International Law.

His proposal is made against a backdrop in which Brussels has been looking to get free trade deals with China's neighbors, a quest that in many cases has been mutual.

To turn China's potential economic impact toward the EU into a real one, Wouters urges that the EU takes bold action with China's new leadership to expand access to each other's market.

"Brussels needs to act quickly to start free trade agreement negotiations."

In September both sides agreed at a summit in Brussels that a feasibility study should begin soon. But so far there is no sign of movement from either side.

Wouters, who specializes in international and European law, global trade regulations and emerging economies, is among a growing group of scholars in Europe who have added China to their academic portfolios in recent years.

With his university just 30 kilometers or so from the EU headquarters, he is well placed to analyze the EU's external relations with Beijing.

Wouters says he would like to focus on "priorities and specific arrangements" of the China-EU Comprehensive Strategic Partnership, which celebrates its 10th anniversary this year.

Wouters says the two sides have completed a long list of projects that enrich the strategic partnership but that the priorities remain unclear.

"A detailed agenda is urgently needed to turn the EU-China Strategic Partnership into a real one. One of the top priorities should be the launch of free trade agreement negotiations."

Recently, Singapore, after South Korea, became the second Asian country to reach an agreement with the EU on free trade.

Last month the Council of the European Union gave the go-ahead for talks with Japan, and EU-India talks that began more than five years ago are approaching their conclusion.

"However, the big name missing is China," Wouters says.

"From the perspective of an economist, if there is one country in Asia with which the EU should have an FTA, it is China."

While one obvious aim of such an agreement is to increase trade both ways, Wouters sees it as a significant way of increasing growth and employment in Europe by expanding market access for its business.

The EU, which has 27 member states, has forecast that its GDP will grow 0.4 percent this year after shrinking 0.3 percent last year, and its emergence from the economic slough is likely to be slow.

Looking for momentum, it urgently needs to expand its engagement with the world's biggest economies.

The EU is China's biggest source of technology imports, and China is the EU's second-biggest export market after the United States.

What puzzles Wouters is why China, almost alone among top Asian economies, is absent in the EU's free trade plans.

He guesses that the EU is procrastinating on the issue because of the extreme complexity it foresees in such talks, and presumes it will finally face up to the issue once trade agreements with other Asian countries have been signed.

"China is powerful economically, China has an enormous market, and China has its own wishes too. Brussels is taking steps, starting from the easier ones first."

The EU also wants to put itself into a stronger bargaining position, and this bargaining power may be stronger once the eurozone crisis is over, he says.

In addition, success in free trade negotiations with China's neighbors would give the EU the experience it needs in dealing with China and increase its confidence in such talks.

"For the time being, the EU may know it won't work with China." However, "in a couple of years, the EU will go to China and knock on the door".

But what is happening in Asia now particularly worries Wouters. At the ASEAN summit last year it was announced that free trade talks between China, Japan and South Korea would begin early this year. Talks are also due to begin on economic agreements involving 16 countries in the Asia-Pacific region.

"Though the (China-Japan-South Korea) agreements will largely depend on the political context, in particular the relations between China's new leadership and Japan's Abe government, this could be a spectacular new development for international trade if the three countries make the ambitious deal," Wouters says.

Shinzo Abe is in his second spell as Japan's prime minister after his party won elections last month, and Park Geun-hye is about to become South Korea's first female president. She has studied Chinese philosophy and speaks fluent Chinese.

The combined GDP of China, Japan and South Korea last year accounted for 20.4 percent of the world's total. The UK-based global professional services firm PricewaterhouseCoopers has forecast that China's GDP will rise 7.8 percent this year, Japan by 0.8 percent and South Korea by 3.1 percent.

A trade deal between the three might be at the expense of European companies, Wouters says.

"I am sure that Europeans and European businesses fear being left out if they do not speed up their own FTA efforts."

A trade deal between the 10 members of ASEAN and China, Japan, South Korea, Australia, New Zealand and India, whose total GDP accounts for more than a quarter of the world total, is another big worry for EU business, he says.

For EU policymakers, Wouters has a simple message: "They need to address China."

He thinks free trade would open new markets for European farmers in Asia.

"But it's so hard to convince the professional associations and politicians that opportunities are there too."

Instead of a plan to put a free trade agreement on the agenda, the EU has begun an anti-dumping investigation of Chinese solar producers, and in turn has been accused by China in the World Trade Organization.

Wouters says the anti-dumping investigation is particularly ill-timed.

"We in the West always want China to be more responsible and environmentally friendly when tackling global issues such as climate change, green energy, and we see the enormous growth of new green industries in China. But the EU picks on anti-dumping, rather than welcoming them.

"Attention should be paid not to worsen the relationship by dispute after dispute, and China striking back with complaints."

Wouters hopes that the new Chinese leadership will pursue an active policy in favor of a greater collaboration between the EU and China.

Liu Jia contributed to this story.

fujing@chinadaily.com.cn