China has condemned a decision by the Members of the European Parliament (MEPs) in a vote last week not to grant it the market economy status (MES). Beijing considers the MES its right under World Trade Organization (WTO), describing the MEPs’ decision as “not constructive”. The vote against sent an important message to China that unless it meets the obligations of the World Trade Organization (WTO), the EU will not support the MES. The resolution, which was passed last Thursday (12 May), has a non-legislative character and it was supported by 546 votes to 28. MEPs said that until Beijing fulfills the criteria, the EU must treat China in a “non-standard” way.
According to the “non-standard” methodology, China’s costs and prices must be assessed whether they are market-based to ensure a level playing field for EU industry and defend EU jobs. The MEPs, however, say that Brussels must find a way to combine the non-standard methodology with its international obligations within the WTO, in particular with respect to China’s WTO Accession Protocol, which defines how China should be treated after 11 December 2016. The EU Parliament now urged the Commission to come up with a proposal to deal with these imbalances and coordinate the EU’s policy with that of other major stakeholders, such as G7 and G20 groups.
Many stakeholders including trade unions and business leaders have been worried about the potential consequences for jobs, EU’s economic growth and the environment. Opponents of the granting of MES to China are concerned about the country’s production capacity and the resulting cut-price exports, which could have a variety of social, economic and environmental repercussions. However, China is at the same time the EU’s second biggest trading partner with daily flows of more than 1 billion euros while the Chinese market is getting increasingly important for many European firms and their brands.