The European Union and China, locked in escalating confrontation over trade imbalances, have set October as the deadline for resolving their disputes.
Maros Sefcovic, the EU Commissioner for Trade and Economic Security, and Wang Wentao, China's Minister of Commerce, reached the agreement at the first EU-China trade and investment mechanism meeting held in Brussels, Belgium, on Sunday. The two sides decided to enter intensive trade negotiations over the next three months or so to avoid a looming trade war.
In a joint statement after the meeting, the EU and China said, "Both sides noted the significant importance of properly handling challenges affecting bilateral economic and trade relations, and agreed to seek practical and workable solutions." The joint statement said the two sides designated four areas as key topics for discussion — trade and investment balance, export controls, intellectual property rights, and World Trade Organization (WTO) reform — and agreed to continue working-level talks and hold another ministerial meeting this autumn.
The two sides also agreed to enhance transparency, build mutual trust, establish a joint monitoring system to manage and control trade friction, and exchange trade data. Based on the recognition that expanded market access helps balanced trade, they exchanged lists of requests related to tariff and non-tariff measures and market entry. The joint statement added that the two sides also agreed on the need to strengthen dialogue on export controls of key raw materials such as rare earths, the need for WTO reform to achieve substantial progress and to enhance the WTO's authority and effectiveness, and the need to improve the protection of intellectual property rights and the efficiency of law enforcement.
The meeting between Commissioner Sefcovic and Minister Wang came at a time when the EU, running a massive deficit in its trade with China, is seeking to raise trade barriers against China, while China has vowed retaliation, deepening the rift between them. Speaking to reporters after the meeting, Sefcovic said, "Not every problem will be solved or fixed," but added, "Between now and October is enough time for our working teams to deliver concrete results (in negotiations with China)."
The remark reflects expectations that solutions could be prepared by then to somewhat ease the growing problem of trade imbalance with China. China has invited Commissioner Sefcovic to Beijing in October.
Sefcovic stressed, "China's exports to the EU market continue to grow, while our share of the Chinese market continues to shrink." He added, "This trend is not sustainable, and maintaining the current state cannot be an option." He did, however, give a positive assessment of China's assurance that its rare earth export controls would not disrupt the EU's supply chain.
Last year, the EU recorded a deficit of 360 billion euros (about 634 trillion won) in goods trade with China, up 15% from the previous year. With the deficit in trade with China accumulating at a rate of 1 billion euros (about 1.7 trillion won) per day, voices within the EU calling for a swift resolution of the trade imbalance problem with China have grown louder recently.
