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Eu-China Trade Dispute, Essay Example

Pages: 1

Words: 985

Essay

The European Union and Chinese leaders had a meeting in Brussels, September 2012, to discuss common concern issues including the recent trade frictions. Early September 2012, there was a launch of anti- dumping investigation by the European Commission on solar panel imports and crucial components from china. The European Union claimed that the export of products from China were below cost, which threatened the EU product counterparts (Guérot, 2012, p. 1). The Chinese manufacturers, however, argued that the competitiveness of Chinese products was an outcome of technological advances, raw materials price decrease, intensive production, and hard work on the Chinese workers part and not an ill-intended maneuver.

The mechanism of dispute settlement follows the criteria set by the World Trade Organization, of which EU is one of the members. The Dispute Settlement Understanding the rationale as per the WTO aims to provide members clear legal frameworks for dispute resolutions, which may come while implementing the World Trade Organization agreements (Guérot, 2012, p. 1). The most desirable way of solving disputes is the clearly agreed solutions between Members. However, if this fails to work, members can request for panels and perhaps procedures of appeal where the WTO solves the disputes, by interpreting the rules. When a Member fails to comply with the recommendations of WTO by bringing its practice in tandem with the rules of WTO, then trade sanctions or compensation may follow (MILLER, 2012). For instance, this can happen in the form of suspension of WTO obligations or duty increases. The members of World Trade Organization (WTO) have constantly used the mechanism in trade disputes. However, we note that the EU does not initiate dispute settlement cases before exhausting other means of finding solutions.

So far, the dispute resolution mechanism has worked immensely resulting in solving of crucial disputes while avoiding wars (MILLER, 2012, p.1). Thus, the EU considers that the system has helped to ensure real market opening and works well. In addition, the system, in terms of efficiency and speed, compares extremely well with other international systems of dispute settlement. The mechanism guards weaker members against unilateral action by the strongest by providing a multilateral forum for settling disputes.

Germany is a Member of the WTO through the EU while China is a Member of the WTO (Guérot, 2012, p. 2). The European Union makes the decisions regarding trade disputes for Germany. In the recent past, there have been increased trade disputes between the EU and China.

The European Union has to play a role in the prevailing crisis or else the current economic crisis will worsen. The EU leaders can opt to enter investment treaties with China. This means that powerful states such as Germany, which is a member of EU, will have to go by what EU and China agree. There is an increase in the exports of products from China to America and a decrease to the European Union (MILLER, 2012). The European Union has to reconsider the way it has been applying the WTO rules. In the past cases on trade disputes, there has been seemingly a bias towards China by the US and the EU. China is one of the key global trade players at present, and if the management disputes of trade do not find a solution, then the EU as well as the world economy may suffer a lot.

The EU deals with reinforcing the issues of dispute resolution including the following.

Introducing a system with more permanent panelists

  • Clarification, on implementation, of DSU provisions (Guérot, 2012, p. 2). This covers sequencing issue, procedure of arbitration on the concessions suspension level and procedure establishment to lift concession suspension once a losing party implements changes.
  • Provisions improvement on trade compensation, a bid to create attractiveness before moving to concessions suspension
  • Greater transparency, required to ensure continued confidence in the WTO system and public support.

Trade between EU and China, in 2011, rose to $556 million, but there have been grievances on both sides threatening the relationships (MILLER, 2012, p.2). Wen Jiabao, the Chinese Premier, complained about the Brussels’ refusal to grant China market economy status as well as arms embargo. The EU complained on disparities existing between EU and China in terms of open markets. The Chinese corporations carry out their shopping in the EU market without any interference. This is contrasting for EU corporations, which experience a difficulty trying to shop in China where most companies are either, not for sale or off limits.

It is worth noting that Germany plays a key role in the EU-China stand off because it wields much of the EU trade about 48% (Guérot, 2012, p. 2). Germany has seemed to champion for the supremacy of EU but on the other hand, sabotaging it. This is evident in Germany’s plea to the EU to drop the solar panel export case on China’s misbehavior.  Since Germany should strive to support the EU, being one of the members, there is a notion of state sovereignty erosion by supra-state IGOs. These IGOs are ‘swallowing’ up states. Germany is a strong economy in the EU, and if it follows the decisions of EU then its sovereignty is negated. The EU has a role to engage in negotiations more than Germany. Chancellor Merkel is of the opinion that the EU and China solve the disputes through negotiations (MILLER, 2012, p.2). This indicates that EU plays a critical role yet Germany is the country, which has felt the greatest effect from China’s solar dumping action. Germany’s solar products are facing unfair competition from China’s. This case also shows that war has become obsolete, and trade has become more crucial than armies have. Trade negotiations play a critical role in local as well as regional economy. Unlike in the past when countries engaged in war, the present trend shows non-war interventions more prevalent (Guérot, 2012, p. 2). Countries are engaging more in trade than investing in armies and peace has been embraced by many rather than undesirable wars.

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