An overview of the sectoral dialogues between China and the EU
What are Sectoral Dialogues and what drives them?
Relations between the European Union and China have intensified tremendously in recent years. To some extent this is the natural consequence of China’s impressive economic growth and her increasing importance on the world stage as a major political partner. But substantial impetus for the rapid development of the relationship also stems from the shared interests that exist between the EU and China.
Evidence of this complementarity of interests can clearly be seen in the political arena, in areas such as multilateralism and global sustainable development. Considerable further evidence is to be found in the less visible, but flourishing area of exchanges on sectoral policies and technical issues or, as they are known, ‘sectoral dialogues’ between China and Europe. These dialogues have grown considerably in recent years and now cover a wide range of areas: from science and technology to enterprise regulation, and from environmental issues to education and the information society.
In many of these areas China and the EU face similar problems and favour similar approaches to them. Some examples:
- In the area of competition policy: China is trying to establish a competition regime that should apply to companies that operate in the Chinese market. The fact that the EU has, over the years, developed a wide ranging competition policy has not gone unnoticed in China. As a consequence, during the last few years exchanges of experiences have taken place between Chinese and European policy makers and specialists on this subject. China is currently drafting comprehensive competition law and the draft law bears many similarities to the EU model.
- On Internal Market issues: like the EU, China is committed to eradicating market fragmentation in order to reap the full benefits of a large internal market. The free movement of people and goods, the provision of services without frontiers, and public procurement all continue to present regulatory challenges to both sides.
- Regional policies and other income re-distribution mechanisms: China’s political leaders have expressed concern over income disparities that are emerging in China. Achieving “balanced development” is an explicit goal under China’s economic policy. The EU, for its part, has a wealth of experience in regional and rural development policies which squarely addresses the issues related to disparities in regional growth. Chinese and EU specialists have started exchanging experiences on these issues with the intention of intensifying co-operation in the years to come.
China and the EU are both major players in internationaltrade and very close interaction at all levels on trade issues is in place. Both Chinese and EU policy makers are fully aware of the benefits of free and open markets, but social and regional considerations also play and important role in decision making. Both sides tend to seek consensus-oriented solutions in order to avoid conflict – a path which implies lengthy co-ordination before decisions can be taken.
In short, China and Europe have considerably more in common than might appear at first sight. This creates a strong mutual interest to promote the exchange of experience and know-how.
China today is experiencing challenges which Europe started to tackle a number of years ago in areas such as the environment, the internal market, and competition. The EU is demonstrating its willingness to share this experience with China. And China has shown an interest in using the best practices of the “EU model” in these policy areas.
In other areas too, both Europe and China are simultaneously confronted with new challenges, such as rapid advances in science and technology and problems with health protection. This is a two-way street. In some areas Europe could usefully benefit from Chinese know-how and experience. Peaceful nuclear research is an example of such an area, where Europe will soon have to close down its ageing experimental nuclear reactors, whereas China is currently building state-of-the-art facilities. As a consequence of the conclusion of a new Euratom agreement - concluded at the December 2004 EU-China Summit – China is prepared to share the technology behind her new facilities with European researchers.
Common interests and complementarity – together with political receptiveness on both sides - thus help to explain why the Sino-European relationship has grown so quickly on many fronts.
Who participates and how do they work in practice?
The purpose of this document is to provide an overview of the European Commission’s sectoral activities which now cover 24 different areas. It does not deal with exchanges that take place in the areas of human rights and migration, which are of a somewhat different nature and more directly related to the EU-China political dialogue. The new Tourism Agreement (also known as the Approved Destination Status Agreement – ADS) is also not covered here, although it will serve to bring Chinese and Europeans closer together through the facilitation of travel for Chinese citizens to EU destinations.
Exchanges take place under different denominations depending on the specific context of the sector. They are referred to as ‘dialogues’, ‘regular exchanges’, or simply as ‘co-operation’, and they take place at various hierarchical levels, from working level to ministerial level. A variety of participants may be involved, including officials, politicians, business organisations, and private companies. Proceedings are organised in a flexible way and take the form of working groups, conferences, annual formal meetings or simply informal exchanges. Specialists from nineteen Directorates General in the European Commission are involved in regular exchanges with their respective counterparts in China.
What purpose do they serve?
Sectoral dialogues have helped to develop a solid foundation for the EU-China relationship which is now characterised by increasingly close policy co-ordination in many important areas. The European Commission strongly encourages these dialogues, which are an important area of support to the overall relationship.
The dialogues constitute an effective tool for further widening and deepening EU relations with China, for exploring new areas of common interest, for exchanging know-how, and, especially in the area of economic reform, ‘EU models and practices’. A new support facility for dialogues and exchanges has been prepared with Commission financing of €5 million, and will shortly become operational to support activities.
Sectoral dialogues tend to pave the way for business and other operators by eliminating potential regulatory obstacles, and through raising awareness and facilitating contacts. Regular exchanges between specialists, officials and the business community serve to boost mutual understanding, and provide the substance for further developing the EU-China ‘strategic partnership’. This is a stabilising element for the relationship which helps to counterbalance other more sensitive issues such as human rights, migration, and trade negotiations.
What does the future hold?
Most of the dialogues have been established over the past two to three years, and they reflect the massive growth in activity that characterises the relationship. Sectoral dialogues & agreements are expected to play an increasingly important role in building a privileged EU-China relationship with important benefits for both sides.
EU- China sectoral dialogues: What are the areas?
On 15 July, 2005, a Joint Declaration was signed between the Chinese Ministry of Agriculture and the Directorate General for Agriculture and Rural Development of the European Commission, establishing a dialogue on agriculture between the two sides. The objective of the dialogue is to promote bilateral cooperation and to facilitate the communication on issues that may arise and work on an efficient solution. The working methods include regular meetings during which new legislation and regulations, new technologies, quality policies (including geographical indications and organic production) and any other topic of mutual interest, relating to agriculture, will be discussed. In October 2006, a two-day session took place in Brussels between experts on both sides. Of particular use was the fact that the meeting enabled Commission experts of three Directorates General - Agriculture, Trade, Health Matters and Consumer Protection – to speak jointly with their Chinese counterparts.
The need to develop a new framework for China-EU civil aviation relations was highlighted by a judgment of the European Court of Justice, in 2002. The Court ruled that the bilateral air services agreements between European Member States and third countries such as China run counter to European law if they discriminate against carriers from other Member States. This is the case under practically all existing bilateral air services agreements between EU Member States and third countries, including China. China has agreed to restore legal conformity through negotiating a single over-arching agreement that would bring bilateral agreements in line with Community law. Negotiations on this agreement started in 2005 and are expected to be concluded by 2006.
The Chinese side has furthermore shown strong interest in enhancing technical co-operation and assistance in a broad range of areas including aviation safety, security and air traffic management. A successful co-operation project in this area financed by the Commission and European and Chinese industry was in 2005 extended until-2006. A successful EU-China Aviation Summit, organised by the European Commission and the Chinese civil aviation authority CAAC, took place on 30/6 and 31/7 2005 in Beijing.
Competition policy is a crucial issue in the context of China’s efforts to restructure its economy. China’s large economy needs a sound competition regime. The fragmented domestic Chinese market needs improved regulation to create a level playing field for market operators and to accompany the reform of large inefficient state-owned enterprises. In the medium-term improved regulation should also alleviate the current risks of trade dumping and economic instability emanating from China. With this in mind, in May 2004 China and the EU agreed upon a permanent mechanism for consultation in this area. The dialogue will enhance the EU’s technical and capacity building assistance to China in the area of competition policy with the aim of developing a proper Chinese competition regime which is shaped in the right way to fit the Chinese reality. The process is facilitated by the fact that the emerging Chinese competition system follows the “European model”.
China is one of the EU’s most important trading partners when it comes to consumer goods, and this relationship can only be expected to grow in the coming years. By developing a common understanding between Europe and China on product safety issues, a culture of mutual understanding and trust can be developed. The recent Memorandum of Understanding between the European Commission’s DG for Health and Consumer Protection (SANCO) and the Chinese governmental agency for Quality Supervision, Inspection and Quarantine (AQSIQ) aims at enhancing the co-operation on these issues and to establish better communication and collaboration between the responsible authorities on product safety. A Working Group has been established between DG SANCO and AQSIQ to implement the different actions under the agreement.
Close co-operation between customs authorities is vital to facilitate trade and to help combat illegal activities such as fraud and counterfeiting. An agreement for EU-China customs co-operation was signed in December 2004; among other things it opens the way for inspection missions in both directions in order to ensure the effective enforcement of customs regulations.
The European Commission’s new Erasmus Mundus programme came into force in 2004. It provides financing for students from third-countries to pursue post-graduate studies in Europe. Special ‘windows’ for China and other Asian countries have been set up to attract significant numbers of students from this region to study in Europe. Further ways of enhancing dialogue and co-operation in the field of education and culture are currently being explored.
On 5 September 2005, at the EU-China Summit in Beijing, Commissioner Vladimir Špidla signed with the Chinese Minister of Labour and Social Security, Tian Chengping, a Memorandum of Understanding (MoU) on EU-China cooperation on Labour, Employment and Social Affairs. This MoU provides the framework for EU-China dialogue on areas such as social protection, social cohesion, labour legislation, employment, labour relations and social dialogue. Each side will visit the other at least once a year in Brussels and Beijing alternately. The first China-EU event under the MoU, a seminar on "Employment Promotion and Vocational Training", took place the day after the signing of the MoU. The next event will take place in Brussels in November 2006 and the theme will be "Labour Mobility in the EU and China". In addition, the EU will assist China in the modernisation of its social protection systems through a five-year EU-China Social Security Reform Cooperation Project that has started on 1 April 2006.
Energy – including nuclear energy
China’s increasing appetite for energy has significant repercussions on global markets and on the environment. The energy dialogue has been in existence since 1994 and is one of the earliest sectoral dialogues. It takes the form of annual working group meetings and a bi-annual Conference on EU-China Energy Co-operation. Current subjects of discussion include energy policy and development strategy, the evolution of energy markets, and security of supply and sustainable development. At the recent EU-China summit a Memorandum of Understanding on transport and energy strategies was concluded. Concrete actions are envisaged in areas such as energy regulation, renewable energy (including alternative transport fuels), energy efficiency, natural gas, clean coal technology (near zero emissions) and other new technologies in the energy sector. The new EURATOM agreement with China focuses on research into the peaceful use of nuclear energy and grants researchers from both sides access to each other’s facilities. It is particularly interesting for European researchers to work in new state-of-the-art Chinese facilities, at a time when older European research reactors will soon be phased out. The EU and China are both participating in the international ITER programme for the construction of an experimental controlled fusion reactor.
On 4 March 2005, the Commission’s Directorate General for Transport and Energy (TREN) and the Chinese Ministry for Science and Technology (MOST) signed an Action Plan on Clean Coal and terms of reference for an Action Plan on Industrial Cooperation on Energy Efficiency and Renewable Energies.
Chinese policy makers increasingly see environmental protection as a major challenge for the country and with the 11th Five Year Plan they have set some specific goals to reduce certain environmental pressures. China has an important global role to play in the area of environmental protection and climate change mitigation.
Over the last decade, contacts between the European Commission and the Chinese State Environmental Protection Agency (SEPA) have been intensified. The dialogue on environmental issues, which covers most of the environmental problems of concern in China, was upgraded to ministerial level in 2003. A substantial part of the EC/China financial assistance budget is allocated to environmental support programmes in response to the clear wish among policy makers in China to learn from EU experience. Co-operation and exchanges cover a wide range of environmental issues, from biodiversity, climate change and waste management to water and air pollution, vehicle emissions, environmental indicators, sustainable consumption and production and chemicals management.
The Joint EU-China Declaration on Climate Change and Partnership, adopted at the September 2005 summit, is a major achievement and adds the important component climate change to the policy cooperation between the EU and China. The partnership is characterized by a strong focus on concrete steps to be made in tackling the problems of climate change. The flagship project is the agreement to cooperate to build in China a near zero emission coals fired power plant before 2020. The technology will allow the use of coal while avoiding most of the CO2 being emitted. A Memorandum of Understanding commencing this project was signed in Shanghai in February 2006.
Food safety - Sanitary and phytosanitary (SPS) issues
Co-operation between China and the EC in this field can bring benefits to consumers both in the EU and China, and facilitate trade in agricultural goods. A Joint Technical Group was established in 2002 to deal with regulatory questions in this area. The recent Memorandum of Understanding between the European Commission’s DG for Health and Consumer Protection (SANCO) and the Chinese governmental agency for Quality Supervision, Inspection and Quarantine (AQSIQ) aims at considerably enhancing co-operation on these issues and at establishing better communication and collaboration between the responsible authorities on food safety and SPS issues.
The European Galileo programme will provide high precision global satellite navigation services, an area in which China is keen to develop links with the EU. A co-operation agreement was concluded in October 2003 under which China has invested already € 65 million to the programme, the estimated total cost of which amounts to some €3-4 billion. A follow-up agreement between the Chinese Remote Sensing Centre and the Galileo Joint Undertaking was signed in October 2004, for the first time opening this Community undertaking to the full participation of a non-EU country. Chinese participation in the programme has resulted in tangible scientific and industrial cooperation projects. The next challenge for the two sides will be to review the cooperation in satellite navigation in light of new developments such as Galileo moving to the implementation phase.
The dialogue on information society started in 1997 and all exchanges in this wide area (Information Technology, telecoms, audiovisual) have now been grouped under one umbrella dialogue, covering both research cooperation and policy discussions. On the cooperation side the aim is to promote collaboration between European and Chinese research teams. This is seen as essential to ensure exploitation of research results at a global level and to build interoperable technology and standards solutions. It is of high value for the competitiveness of European industry, and is of great interest to the Chinese government. It also offers a means to reach consensus on global critical issues such as security and dependability. Key issues on the policy side include the respective developments in telecom policy and activities in areas such as e-Government, security of networks, and the promotion of e-Commerce. At the same time, the Dialogue offers the possibility for both sides to pursue concerns – for example for the EU this includes issue such as such as the assignment of 3G licences (third generation mobile communications) in China, delays in the emergence of a transparent regulatory framework for telecommunications, difficulties in accessing telecom services markets, and a number of standards issues. The dialogue is being backed up with a considerable number of technical assistance activities under the development cooperation programme (China-EU Information Society project, EU-China Trade Project) and has developed links to the Regulatory and Industrial Policy Dialogue (e.g. for telecom equipment certification issues) and the Intellectual Property Dialogue (for IP issues regarding telecom equipment).
China has made considerable efforts to adapt its IPR legislation to the ‘Trade-Related aspects of Intellectual Property Rights Agreement’ (TRIPs) – a cornerstone of the World Trade Organisation’s (WTO) legal framework. China became a WTO member in 2001. Further concrete action is however needed on the Chinese side to update its legislation on IPR and in particular to establish a more effective enforcement system for IPR. A formal dialogue on this was signed in October 2003. The Commission has been financing an important IPR technical co-operation programme. A follow-up programme, which includes many enforcement issues, is being prepared for funding under the 2005-06 financial assistance programme.
More info at:"EU-CHINA Dialogue on Intellectual Property" [12 KB]
Macro-economic policyand the regulation of financial markets
At the EU-China Summit in December 2004, an EU-China dialogue on macroeconomic and financial regulatory issues was launched. The first meeting took place in Brussels, on 22 February 2005, jointly chaired by, on the Commission side, Mr. Regling, Director General for Economic and Financial Affairs, and Mr. Schaub, Director General for Internal Market and Services, and on the Chinese side Mr. Li Yong, Vice Minister of Finance. On 15 May 2006, Commissioner McCreevy and Chinese Finance Minister Jin Renquing participated in the second dialogue, in Beijing. At both meetings the European Central Bank was represented by a board member.
This dialogue brings together in one single venue all Chinese key authorities on these matters for a thorough discussion with officials of the European Commission and the European Central Bank. Concerned on the Chinese side are the Ministry of Finance, the People’s Bank of China (China’s Central Bank) and the key Regulatory Commissions respectively for Banking, Insurance and Securities. On the macroeconomic side, issues discussed concern the macroeconomic situation, global imbalances and monetary and fiscal policies. On the regulatory side main topics are China’s financial sector reform and further integration of the financial sector in the EU. Other issues that have been addressed during these full-day meetings concern accounting standards and corporate governance. The two sides have agreed to continue and further develop this dialogue and a third dialogue meeting will be held in Brussels in 2007.
In 2002, a maritime agreement was signed between the EC and its Member States and China to improve conditions for maritime transport carried out by EU and Chinese companies between the EU and China and to third countries. The agreement, later amended to cover the 10 new EU Member States who joined in 2004, promotes notably the freedom for both sides to provide maritime transport services and to have unrestricted access to ports and auxiliary services. It also deals with the commercial presence of shipping companies. Cooperation, notably regarding safety, security and training will now be extended to inland waterways and ports. Annual monitoring of the implementation of the agreement is taking place alternately in China and the EU.
China is facing considerable regional development disparities between the booming coastal regions, the underdeveloped Western parts of the country and the North East with its declining traditional heavy industry. There is a more general issue of income disparities, in particular the urban/rural divide.
The dialogue on regional policy provides a basis for sharing EU experiences in developing and implementing its regional policy, governance and partnership issues and other related topics of mutual interest. In addition, the role of EU regional policy in areas like competition policy and state aid rules, public procurement, transport and environment contributes to cooperation with China in these policy areas. The EU-China dialogue on regional policy should also help contributing to other dialogue topics as presented in this paper related to, for instance, trade, sustainable development and good governance. A first China-EU Regional Policy Seminar took place in Beijing, in May 2006.
The objective of the Regulatory Dialogue is to ensure regulatory convergence between the EU and China in the long term. This should help to eliminate obstacles to trade and investment. Both sides try to achieve this through a comprehensive system of consultation and information on technical regulation, standards, certification procedures and market surveillance systems implemented by the two parties. Exchanges take place on best regulatory practices. In result trade should be facilitated and the quality and safety of goods sold on both markets and elsewhere should further improve. The dialogue provides for annual meetings where major issues of common interest are discussed and future co-operation is planned. A wide scope of technical issues is dealt with in greater detail in 13 Working Groups. Subjects dealt with in these Working Groups concern conformity assessment, standardisation, technical barriers to trade (TBT/WTO), electrical and mechanical products, toys, textile, lighters, medical devices, pressure equipment, automobile standards, cosmetics and radiation of mobile phones.
The Industrial Policy Dialogue promotes and enhances mutual understanding and awareness of current and forthcoming policy approaches including sustainable development, legislation and related issues in the industrial sector with a view to increase coherence between EU and Chinese industrial policy. The Parties promote consultations, mutual understanding and transparency. Working groups have been established in three sectors (automobile, metals and textile).
See also: "Regulatory and industrial policy" [16 KB]
The EU-China dialogue on Science and Technology started in the early 1990s and was one of the first areas of cooperation between the European Commission and China. The first EU-China S&T agreement entered into force in late 1999 and it was was renewed in December 2004. Cooperation has increased substantially since the first S&T agreement was signed. Its aim was to promote mutually beneficial research activities in a variety of areas, such as food and environmental safety, the management of natural resources, the control of infectious diseases etc. Today, this cooperation shows growing dynamism as is demonstrated, for instance, by the participation of Chinese partners in more than 100 research projects funded by the Commission’s Framework Programme for research.
China is rapidly becoming one of the most active actors on the international research scene and in several areas it is a world leader – examples of the latter are nano materials and energy components. The momentum gathered from both the launch of the 7th Framework Programme on the EU side (2007-2013) and China’s 11th Five Year Plan (2006-2011) together with the forthcoming EU-China “S&T Year” may be used to review the present cooperation scheme. It would also seem a good occasion to launch new strategic projects in areas of mutual interest and to seek to increase the number of Europeans in projects funded by China.
The Commission and the Chinese government also launched a dialogue on cooperation in space science, applications and technology. Managers of aerospace companies and research institutions attended a workshop in April 2004. High level meetings took place in July 2006 to explore ways how to implement the dialogue among the various parties concerned. Different fields of cooperation were reviewed, such as for instance earth observation, in particular with regard to the Global Monitoring for Environment and Security (GMES).
This dialogue covers multilateral issues of strategic interest such as the Doha Development Agenda, issues related to regional integration and free-trade areas, and key bilateral issues. The dialogue focuses on strategic issues and therefore complements the institutional bilateral meetings (which cover, inter alia, trade), such as the Economic and Trade Working Group and the Joint Committee. The first high level Trade Policy Dialogue took place in June 2004. The second one in July 2006.
To pre-empt potential conflicts after the abolition of textile quotas on 1 January 2005, the textiles trade dialogue examines ways in which a smooth transition to the quota-free textiles trade environment can be assured. The process contributed to the textiles agreements forged in the summer of 2005. The Commission expects the dialogue to lead to practical results which will have tangible and positive effects on trade in textiles and clothing between the two sides, based on fair and healthy competition in the marketplace. In addition to the government-to-government dialogue, an EU-China business dialogue is also being set up.
A Memorandum of Understanding on transport and energy strategies was concluded with the Chinese National Development and Reform Commission which will allow for the institutionalization of cooperation in the transport sector. It was in particular agreed to launch cooperation on road and railway transport.
See also: Current Architecture of EU-China Relations Political Dialogue [13 KB]