MNI EXCLUSIVE: Reciprocity Top Concern for EU In China Trade

-EU Vice President Jyrki Katainen Talks To MNI About Obstacles To China Trade

By Iris Ouyang

     BEIJING (MNI) - Barriers to reaching a reciprocal trading agreement with

China remain a big obstacle for the European Union (EU), Jyrki Katainen, vice

president of European Commission, told MNI Monday following high-level economic

talks in Beijing.

     China's state subsidies for state-owned enterprises and trading practices

such as forced technology transfers are the biggest problems in trading with

China, Katainen said.

     "The EU is not siding with any party or any country," but it is working

with China to establish a working group to assess ways forward under the

auspices of the World Trade Organization, Katainen said at a press conference

following his talks Monday with Chinese vice premier Liu He, one of Chinese

President Xi Jinping's most trusted economic aides.

     The EU would solve trade problems based within the WTO framework, he said,

adding that it is "the only way to keep multilateralism and globalization on a

healthy path."

     China and the EU had "open and frank discussions" in a good atmosphere,

Katainen said of the annual top-level economic dialogue between officials from

both sides, though talks about overcapacity, technology transfer and cyber

security were still difficult and unresolved.

     "Our relationship with China is so good and strong that we can directly

address this kind of this issues," he said.

     "We don't start doing trade when forced," he said of the EU's stance in

trade dispute with the U.S. 

     Some EU member countries are interested in buying more energy to counter

the negative impact of the trade tension with the States, but that decision

would be made on their own for their own countries, and the EU bloc would not be

forced to agree such deals.

     As more countries are in trade disputes with the U.S., products from other

countries including China could be dumped to the European countries, he

cautioned. But the EU is making preparations for that, he added.

     National security concerns among European countries still surround tech

cooperation between China and EU but the situation is not as bad as many people

imagine, he said.

     "If there are concrete issues, both sides can discuss," he stressed.

     China and the EU are discussing an investment treaty, which only can be

achieved after the EU companies are treated equally and fairly.

     The EU is developing a new system to solve disputes regarding investment,

he said, without elaborating.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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