From the Archive: China-EU Matchmaking Event in Brussels. 

The good, the Bad and the Hasty

China-EU 47th Anniversary & Europe Day 

Editor’s Note: How time flies! It has been 47 years since China and the EU set up their diplomatic ties on May 6, 1975. For better or worse, happy anniversary! Meanwhile, your editor has been hearing a lot about Saturday's open day of the EU institutions, which will take place ahead of Europe Day on Monday. Don't miss it if you're in town! This edition of the CCCEU Weekly Update follows, among other things, Chinese tyre companies' unnoticed win over the commission (sorry, Berlaymont...) and the EU's stepping on the gas with new rules on foreign subsidies. Enjoy reading and have a lovely weekend.

Triumph of Chinese tyres

Although it has yet to make a big splash, this piece of news has the power to boost Chinese businesses: the European General Court has ruled that the European Commission's anti-dumping and countervailing duties on Chinese truck and bus tyres must be annulled.

The court’s ruling on Wednesday found that the European Commission had failed to carry out a fair price comparison in its calculation of price undercutting, rejecting the commission’s arguments that certain pleas concerning breaches of procedural rights were inadmissible.

Brought by the China Rubber Industry Association (CRIA) and China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC), the case came in early 2019 after the commission imposed hefty anti-dumping and definitive countervailing duties on imports from China of certain pneumatic tyres, new or retreaded, made of rubber, for buses or lorries, with a load index greater than 121.

“This victory is particularly valuable and may herald the return of Chinese truck-bus tyres (TBR) to the European market,” CRIA was quoted as saying in a Chinese report. The association noted, in a bittersweet tone, that Chinese tyremakers have been subjected to various unfair trade remedy investigations here and there as trade protectionism rises.

CRIA believed that the commission's decision contained "numerous legal errors," as discovered by its legal team, and decided to submit indictments after consulting with Chinese tyre exporters in early 2019.

The significance of winning the case is two-thronged, said CRIA. “If the European Commission does not appeal, the judgement will take effect and the enterprises involved in the litigation can return to the EU market, and their importers can get back the duties they have paid.”

On the other hand, using legal tools to combat unfair trade practises could help businesses save their overseas markets, the association noted.

The commission has two months to decide whether to appeal against the ruling.

Brussels races to develop new rules on foreign subsidies 

This could be concerning for foreign businesses operating in the EU, including Chinese firms.

This week in Strasbourg, MEPs overwhelmingly approved the report on the new legislative regulation on foreign government subsidies as a position paper for the European Parliament's negotiation in the EU's trilogues on the regulation.

EU member states almost simultaneously approved and released the Council's negotiating position paper. The negotiations for the new regulation began on Thursday.

The three EU institutions are broadly united in their views on the need for legislation, believing that the new regulation would address the legislative gap between EU subsidies and foreign subsidies.

Both the council and the parliament presented their latest reports this week, proposing various amendment possibilities based on the commission's initiative last May, with the following major points of disagreement.

A broader definition of foreign subsidies: EU member states and parliamentarians are interested in broadening the commission's already broad definition of foreign subsidies, proposing a non-exhaustive list. The EP's version stressed two major amendments, namely the inclusion of situations where foreign enterprises are privileged in the domestic market in the form of exclusive or special rights and the abuse of transfer pricing by multinational tax planning arrangements, while the Council's version also refers to the former, arguing that the granting of special or exclusive rights to enterprises may result in "advantages " and thus enjoy benefits.

Various notification thresholds: The Council sets higher thresholds above which companies are obliged to notify the Commission of potentially subsidised acquisitions and public procurement bids. Specifically, the council proposed raising the turnover threshold triggering mandatory notification of potentially subsidised acquisitions involving EU companies to 600 million euros.

For public procurement, the Council's version of the notification threshold is that the net value of the contract is equal to or exceeds 300 million euros; the European Commission proposed 250 million euros, and the European Parliament proposed 200 million euros. The commission and the council proposed 5 million euros as the threshold determining whether a foreign subsidy distorts the internal market, while the parliament proposed 1 million euros less. 

Public procurement: the council has made numerous amendments to articles on public procurement, aiming for more say in this sector. For instance, it suggested that in certain cases, contracts concerning the bloc’s defence and security equipment market should not be subject to the new rules. On the contrary, the parliament seems to be more "aggressive," suggesting that the commission could bar companies from participating in public procurement procedures if they fail to meet certain criteria.

Other differences: more specific proposals on prior notifications, corporate consultations, and transparency have been proposed by the European Parliament and the European Council. The European Parliament has also raised multilateral concerns, urging that a conversation with third countries be developed, a consultation system be established, and the law be abolished if multilateral rules have rendered the EU's new rules completely superfluous.
 

EU announces new round of sanctions 

On Wednesday, EU member states met to discuss the sixth package of sanctions against Russia submitted by the European Commission. According to the draft, the EU plans to gradually phase out Russian supply of crude oil within six months and refined products by the end of the year.

The European Commission also proposes to de-SWIFT Sberbank – by far Russia's largest bank, and two other major banks, plans to ban three big Russian state-owned broadcasters from operating in the EU and to sanction Russian military officers accused of war crimes, Commission President von der Leyen said during the presentation of the draft at the European Parliament.

AI: MEPs want EU to be global standard-setter

On Tuesday, the European Parliament adopted the final recommendations of its Special Committee on Artificial Intelligence in a Digital Age (AIDA). The text says that the public debate on the use of artificial intelligence (AI) should focus on the technology’s enormous potential to complement human labour. It notes that the EU has fallen behind in the global race for tech leadership, while MEPs believe the EU needs to act as a global standard-setter in AI.

MEPs say that, combined with the necessary support infrastructure, education and training, AI can increase capital and labour productivity, innovation, sustainable growth and job creation.

The AI Act is to be voted on jointly by the two committees in late September.

EUCCC released a report

The European Chamber, in partnership with Roland Berger, released a survey on the impact that China’s COVID-19 policy and Russia’s war in Ukraine are having on European business in China. The results show that both factors are creating severe challenges to European business operations, with logistics suffering the most overall.

Fed raised rates, ECB may follow in July

According to CNBC, the Federal Reserve on Wednesday raised its benchmark interest rate by half a percentage point, the most aggressive step yet in its fight against a 40-year high in inflation.

Isabel Schnabel, a member of the ECB's Executive Council, said it is time for policymakers to act to curb inflation and that a rate hike could come as early as July. Schnabel argued that inflationary pressures are "spreading" after a 7.5 percent spike in consumer prices in April and that the central bank must "prevent high inflationary expectations from becoming entrenched."
 

What are experts talking about?

In April 2022, The European Think-tank Network on China (ETNC) posts a report titled “Dependence in Europe’s Relations with China Weighing Perceptions and Reality.” The idea that Europe has grown dependent on China has become a common refrain across the continent since the Covid-19 pandemic began. This report sets out to examine how this notion of dependence relative to China is understood in Europe, and how it influences policy making across the continent. The analysis found in this report will help to lay some of the groundwork for considering what comes next in the China- Europe relationship.

The Center for International Security and Strategy (CISS) of Tsinghua University posted "The Perilous Situation in the Taiwan Strait in the Context of the Russia-Ukraine Conflict" by Zhao Minghao. When Russia and Ukraine started the Donbas War, the U.S. is raising tensions in the Taiwan Strait once again, and at the same time implicating a major new adjustment in the strategic landscape of the Asia-Pacific region. This paper focuses on the critical situation in the Taiwan Strait in the context of the Russia-Ukraine conflict and points out that how to manage the critical situation in the Taiwan Strait is a common challenge for China and the United States.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.