Trade Is A Two-Way Street, EU Reminds China

Europe's openness to a recent flood of Chinese imports has helped China's rapid export-led growth.

BRUSSELS, Belgium (AP) - China should open its market to foreign companies to prove that trade is a ''two-way street,'' the EU said Tuesday.

It said Europe's openness to a recent flood of Chinese imports had helped China's rapid export-led growth - but now it was time for Beijing to reciprocate by strengthening its commitment to economic openness and market reform.

''China must show that it is committed to embracing globalization as a two-way street,'' the European Commission said in a paper outlining how the EU should deal with China in the future.

It acknowledges China as a new global trade force, saying it is essential the two regions manage to strike the right balance.

''China's re-emergence is having a major impact on every part of the global economy. It will be felt in people's daily lives, from the cost of petrol to the price we pay for our clothes,'' the Commission said.

Europe had a $133 billion trade deficit with China last year. The EU is China's largest export market.

China's export surge was both a boon and a threat and Europe needed to be convinced that open markets were a good idea as it saw some jobs and investment head to Asia.

Beijing could help it win that argument by giving Europeans a real advantage to trading with China - by meeting World Trade Organization rules that guarantee foreign companies a level playing field.

The EU said China still needs to do ''substantial work'' to implement WTO trade law and should honor a commitment to join a global agreement to open up government tenders to foreigners.

But China also needed to go beyond that to improve market access for EU companies, it said.

The EU asked Beijing to beef up legal protection for foreigners doing business in China, stop demanding European companies hand over technology to Chinese partners and end unfair subsidies to ''strategic'' industries.

''EU companies often find themselves competing on unfair terms in China,'' it said. ''The absence of conditions of fair market competition and inadequate legal protection pose serious problems. China's policies on the environment, social standards, currency valuation and natural resources can distort trade.''

Europe also plans a major program to protect intellectual property rights in China _ the country which tops its lists of problem areas. The EU will set concrete benchmarks to measure China's progress, it said.

The EU worried that a ''China first approach'' was emerging in key sectors such as cars, steel, semiconductors or shipbuilding. Taxation, banking and local content requirements already favor local companies over EU exports, it said, highlighting a risk that antitrust policy and a lack of independent regulators would see the law give preference to Chinese companies.

Europe wanted China to be ''stable, prosperous and open economy,'' it said. To do that, China needed to rely less on exports for growth and help increase domestic demand by unlocking consumer and business spending power.

Consumers are hurt by the obligation to pay their own health and social security costs, it said, while companies' savings are ''very large'' _ two factors that ensure most of China's production is exported and it imports little from abroad.

It also criticized ''unjustifiable'' barriers to trade that European companies face _ from Chinese product standards that differ from the international norm to ''unreasonable sanitary and health requirements.''