Bismarck BRUSSELS: The European Union pressed China Wednesday to amend its trade practices to stop technology theft, counterfeiting and discrimination against foreign firms after failing to make Beijing budge on its exchange rate. Opening a day-long summit with Chinese Premier Wen Jiabao, European Commission President Jose Manuel Barroso said the EU-China commercial relationship, worth 327 billion euros ($453 billion) in 2009, was one of the most important in the world and vital for the global economy. German Chancellor Angela Merkel, leader of Europe's biggest export powerhouse, met Wen Tuesday evening and pledged to work for China to be granted the 27-nation EU's coveted “market economy” trade status by 2016. That would give Beijing better protection against European anti-dumping penalties – a major irritant for the Chinese. But EU Trade Commissioner Karel de Gucht set out a litany of European grievances on which he said China must make progress if it wanted that status before it automatically receives it in 2016 under World Trade Organization rules. “This question must be considered on the basis of clear commitments, for example, on access to the Chinese market, public procurement, protection of intellectual property and even the exchange rate,” De Gucht told French daily Le Monde. Euro zone policymakers urged Wen Tuesday to allow the yuan to rise more rapidly. But he politely rebuffed them, repeating Beijing's standard line on seeking currency stability. The monetary dialogue came against a backdrop of growing global “currency wars” in which major industrial nations such as Japan and the United States are seeking to weaken their exchange rates while emerging economies such as Brazil and South Korea are taking or threatening measures to curb capital inflows. Separately Wednesday, the EU signed a free trade agreement with South Korea, its first such pact with an Asian partner, after announcing Tuesday the launch of negotiations for a similar accord with Malaysia. With the Doha round of global trade liberalization talks at an impasse, Brussels is increasingly looking to bilateral and regional trade agreements as a way forward to boost commerce, especially with fast-growing Asian economies. The United States urged the EU this week to join it in high-level pressure China to change policy on intellectual property rights and foreign investment. While some European business leaders want the EU to develop new trade defense instruments that could be used as leverage to change Chinese practices, others are dead against such sanctions, which would anyway divide member states. Arnaldo Abruzzini, secretary-general of Eurochambres, the association of European chambers of commerce, said the EU should use its position as China's number one trade partner to force Beijing to reach agreements on counterfeiting. “They are really stealing the value of our business,” he said. “The idea to have a sort of EU-wide embargo of their products is something we should put on the table. The EU has that potential weapon.” But Marc Stocker, chief economist at the main EU industry umbrella group, BusinessEurope, said Europe should resist calls to join a recent move by the US Congress to impose trade sanctions on China for failing to revalue the yuan. “We don't have such complaints about the currency in our community right now,” Stocker told journalists. “Trade retaliation is as such not a good response,” he said.
