EU-China deal: Expert says China is ‘devoid of credibility’
Brussels went soft on Beijing and gave the Chinese Communist Party huge freedoms to pump the country’s state-backed businesses full of cash in a draft EU-China investment pact. The provisions are thin compared to the bloc’s demands in the wrangling over the 1,246-page UK-EU trade and security treaty. Under the EU-China Comprehensive on Investment, Brussels was far more lenient on Beijing than it was on Britain when defining how much cash can be handed to a company before it needs to be declared.
The European Commission settled on a threshold of 450,000 Special Drawing Rights (£473,000) over three years, anything less will not be regarded as subsidies.
In comparison, the EU-UK Trade and Cooperation Agreement sets the threshold for subsidies at 325,000 SDR, according to the Politico website.
The SDR is a accounting metric used by the International Monetary Fund.
Michel Barnier, the EU’s chief negotiator, spent months insisting Britain would have to align to Brussels’ state aid laws as the price of any agreement.
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While the EU eventually watered down its initial proposals, the bloc can still slap Britain with “remedial measures” if it believes a state aid subsidy has created an unfair competitive advantage.
Whereas in the EU-China pact, Brussels doesn’t have the ability to confront Beijing on subsidy payments because the issue is excluded from the dispute resolution mechanism.
The Commission reportedly settled for the 450,000 SDR figure because it is standard across international trade deals, such as the ones with Japan and Mexico.
Brussels is said to be planning extra measures that will help the bloc tackle Chinese subsidies outside of the current investment agreement.
A Commission source told Politico: “The reasons for such exclusion are self-evident and do not diminish the robustness and enforceability of the detailed transparency rules.”
China is synonymous with handing out state support to its businesses in a bid to expand its grip on global trade.
An analysis of its 2018 corporate subsidies found that Beijing and local governments handed out a record £16.3 billion to listed companies.
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By comparison, the UK Government spent 0.4 percent of its GDP, or £8.2 billion, on state aid, according to the EU Commission’s 2017 scoreboard.
MEPs are already threatening a rebellion over the EU-China deal because of the rogue state’s horrendous human rights record.
There is particular anger at Beijing’s treatment of Uighur Muslims and the link between Chinese firms and forced labour camps.
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Responding to reports that the US will crack down on Chinese products from the Xinjiang region where China is oppressing the Muslin-minority, Belgian MEP Guy Verhofstadt called on Brussels rethink its ties with Beijing.
Mr Verhofstadt said: “Do the right thing, Ursula von der Leyen. Back to the drawing table on the investment agreement with China.
“Otherwise the European Parliament will do it for you.”
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