Mandelson says EU-China 'grand bargain' possible

BRUSSELS - The European Union and China can strike a "grand bargain" on trade if Europe adapts to China's dramatic growth and Beijing meets its World Trade Organisation obligations, the EU trade commissioner says.

Speaking just as the European Commission is drawing up plans for new anti-dumping measures against Chinese shoes and plastic bags, Peter Mandelson said China's gains from falling barriers to trade around the world had to come with new responsibilities.

"In return, Europe must accept the Chinese challenge to adapt and compete," he said in remarks prepared for an EU-China trade conference in Brussels on Friday which was also due to be attended by Chinese Vice Minister of Commerce Yu Guangzhou.

"Is there the material for a grand bargain here? I believe there is," Mandelson said.

Mandelson argued China needed to enforce intellectual property rules and open up more to European investment and imports.

China's spectacular economic rise has seen an EU trade surplus with Beijing in the 1980s transposed into a deficit of more than €100 billion ($211bn) last year - the EU's biggest bilateral deficit.

Mandelson said China was turning the approach to the European supply chain on its head with European companies investing heavily and producing there.

"China sometimes still talks as if it is at the edge of the WTO system looking in. But China now is the system," Mandelson said, while questioning the logic of arguing that "cheap Chinese exports" were threatening European livelihoods.

Mandelson is planning to review the EU's relationship with the Asian giant later this year, including possible reform of the bloc's anti-dumping rules to reflect the growing interests of European companies that are manufacturing in China.

China has complained about EU's plan for its leather shoe exports and it has also challenged the legitimacy of the investigation into its plastic bag exports to the bloc, which are worth an estimated US$300 million ($496m) a year.

- REUTERS