WRITTEN QUESTION P-0107/03

by Luciana Sbarbati (ELDR) to the Commission

(20 January 2003)

Subject: Chinese products and competition

The European market is saturated with Chinese products marketed at very low cost. Their prices, with which European firms can in no way compete, are not always matched by their quality. Almost every major industrial sector is involved: electronics, household items, toys, engineering, agricultural products, textiles.

In order to comply with Community directives, our firms are forced to incur substantial costs and undergo numerous checks, in areas such as plant approval, the materials they employ, the registration of patents, labelling, waste disposal, etc.

Given that Italian industry is well known as being made up largely of SMIs which bear the full brunt of this competition, should these problems persist the risks to the economy and the social fabric are likely to become more and more serious.

What measures has the Commission taken to support European products?

Does it regard the presence on the same market of products subject to differing rules as fair?

Does the Chinese market offer similar access to European products?

Answer given by Mr Liikanen on behalf of the Commission

(14 February 2003)

The Commission would like to draw the Honourable Member's attention to the following points:

- All products marketed in Europe, whether they be of Chinese or European origin, are subject to the same technical regulations and must therefore comply with the same European standards where these exist.

- All producers, regardless of their origin, must therefore satisfy the same requirements on Community markets. The Community directives which seek to establish product safety rules introduce regulations to this effect concerning the obligations of producers, their agents or any other party responsible for placing products on the Community market.

- In case of unfair competition, Community industry can obtain protection from certain imports to the Community by using the EC trade defence instruments. Following the procedures laid down in the EC Anti-dumping(1) and Anti-Subsidy Regulations(2), import duties can be imposed on dumped or subsidised imports if these imports cause material injury to the Community industry. The Commission submits annual reports to the European Parliament with detailed statistics on actions taken under these two regulations, including country-specific details(3).

- In addition to these two instruments against unfair competition, the Commission has submitted a proposal to the Council for a regulation which would allow for the imposition of safeguard measures on Chinese imports if such imports increase rapidly so as to cause market disruption to the Community industry(4). This new trade defence instrument would implement, if adopted by the Council, provisions explicitly foreseen in the Accession Protocol of the People's Republic of China to the WTO. The Commission proposal is currently being discussed with Member States. Adoption is foreseen in February 2003.

- China's accession to the WTO has considerable reduced market access barriers to the Chinese market. The benefits of the Chinese accession are available to EU companies. Since the accession, notable progress has been made in changing the Chinese legislative framework to ensure transparency and equal treatment for foreign and domestic companies.

- However, the actual implementation of China's obligations is the real challenge and is closely monitored by the WTO members including the EU through the Transitional Review Mechanism (TRM) set up at the time of accession as a yearly exercise to assess the implementation by China of her WTO obligations.

- In addition, the European Commission is also involved in a comprehensive programme which aims to shape the development of a legislative and regulatory environment conducive to business activity in China (including that of European enterprises). Wherever possible, the aim is to promote the European regulatory approach in China, both at the level of enterprise policy and in terms of standardisation activities for industrial sectors. One of the objectives of this upstream activity is to ensure that Chinese products conform better with European regulations.

- In this context, the Commission and China set up a consultation mechanism in October 2002 on industrial products subject to technical regulations. The agreement makes provision for frequent exchanges on issues relating to these regulations concerning all industrial products and for cooperation mechanisms in order to prevent trade disputes or the misinterpretation of legislation. The Commission and the Chinese authorities will introduce a comprehensive consultation and information system on the regulations implemented by the two parties. The aim of this mechanism is to improve mutual understanding of the safety objectives in the legislation implemented by the European Union and the Chinese government.

(1) Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community OJ L 56, 6.3.1996, p.1, as last amended by Council Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1).

(2) Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidized imports from Countries not members of the European Community OJ L 288, 21.10.1997, p.1, as last amended by Council Regulation (EC) No 1973/2002 (OJ L 305, 7.11.2002, p. 4).

(3) For 2001 the following report was submitted by the Commission: Twentieth Annual Report from the Commission to the European Parliament on the Community's anti-dumping and anti-subsidy activities Overview of the monitoring of third country anti-dumping, anti-subsidy and safeguard cases (2001), COM(2002) 484 final/2, 27.09.2002.

(4) Proposal for a Council Regulation on a transitional product specific safeguard mechanism for imports originating in the People's Republic of China and amending Council Regulation (EC) No 519/94 on common rules for imports from certain third countries, COM(2002) 342 final of 25 June 2002 OJ C 227 E, 24.9.2002, p. 555 and Amended Proposal for a Council Regulation on a transitional product specific safeguard mechanism for imports originating in the People's Republic of China and amending Council Regulation (EC) No 519/94 on common rules for imports from certain third countries, COM(2003) 24 of 22 January 2003, not yet published in the Official Journal.