EU should think twice before taking trade defense measures against China

The European Union (EU) on Thursday launched an anti-subsidy probe into wireless modems imported from China, after it targeted the same Chinese product with two separate investigations of anti-dumping and safeguards measures in June.

It is the first time that the EU has initiated triple investigations simultaneously into a single Chinese product, which is a rare practice among World Trade Organization members.

The move was the latest among a series of trade defense actions taken by the EU against China this year. According to EU statistics, the 27-nation trade bloc launched eight trade probes into Chinese products ranging from coated fine paper to ceramic tiles in the first nine months, already more than the total number of investigations opened last year.

And for the first time, the EU launched an anti-subsidy probe into Chinese products in April, targeting coated fine paper which had already faced anti-dumping investigation. Now it set another record by conducting triple investigations.

The frequent and unprecedented use of trade defense measures have led to China's concerns about increased protectionism in the EU. The rising tension serves no good to neither China nor the EU itself.

Accusing Chinese companies of unfair trade, the EU claims to be safeguarding its own legitimate interests, but things may go contrary to its wishes.

The 27-nation bloc apparently remains unclear of where its interests lie. As early as in 2006, then EU Trade Commissioner Peter Mandelson initiated a review of the EU's trade defense instruments, with a purpose to redefine Europe's "community interests" in a globalized world.

With more and more European companies outsourcing manufacturing to China for lower labor costs, they are also liable to harm caused by the trade defense measures taken by the EU.

Critics say those measures often hurt EU consumers and those European companies with a competitive edge resulting from globalized production, but coddle the laggards.

As in the case of wireless modems, the investigations would disrupt normal trade. This would only benefit one Belgian company, which is the sole producer of the same product in the EU, but millions of consumers in 27 member states would pay for that.

Unfortunately the review ended nowhere. It has become a routine that each time the EU takes trade defense measures against Chinese products, the decision would be opposed by its own industries and consumers, and EU member states are divided.

Putting aside the argument over the EU's interests, there is more need for the 27-nation bloc to have a second thought about its trade defense actions against China under the current circumstances.

Hit hard by the financial crisis and a sovereign debt crisis, the EU economy is still not out of the woods. Recovery remained fragile and to a large extent export-driven as private consumption and investment lack momentum of rebound.

Trade holds the key to a global recovery, which is no less true for the EU. By sticking to its pledge to keep markets open, the EU is in fact helping itself.

As the EU's second largest trading partner, China is doing its part to keep bilateral trade on track. It sent several business delegations to Europe to promote trade and investment last year when the EU economy was at its toughest time due to the financial crisis.

Official figures released by Eurostat showed EU exports to China actually managed to grow 4.1 percent in 2009, while its trade flows with all other major trading partners had plunged. Exports to China may actually provide a positive aspect in the EU's recovery.

In the time of crisis, the EU and China should need each other more than ever. However, the EU's move is running counter to the deepening relations.

Source: Xinhua