Protectionist moves

In a latest sign that protectionism has reared its ugly head in Europe, the European Commission has launched an investigation into China’s public procurement of medical devices, purportedly to determine if European suppliers of devices have been given fair access in the country.

The probe, the first under the European Union International Procurement Instrument, could lead to the bloc imposing restrictions on Chinese medical device companies bidding in EU public tenders if there is substantial evidence to support the claims by some European companies that they are being treated unfairly in China in terms of market access. The investigation was launched on Wednesday, just a day after the European Commission raided Chinese security equipment company Nuctech’s Dutch and Polish offices — seizing its IT equipment and employees’ mobile phones — on the pretext that the company, which makes airport, freight and baggage scanners, has received unfair State subsidies which put its EU peers at a disadvantage. The unusual step the EU has taken against the Chinese company is, as Financial Times noted, “awkward” for the European Commission as it “signed off on spending EU funds to buy those products for use by national customs authorities”. The media outlet provided an inkling of the motivation for the move as the company is one of those that the United States has targeted claiming that it is involved “in activities contrary to the national security interest of the US”.

Given that the bloc is able to verify and resolve any issues through various other means, such as communication with the enterprise or relevant government departments, the raid on Nuctech and the investigation into China’s public procurement of medical devices are worrying signs that the EU is willing to employ high-handed means to demonstrate to Washington that it is not soft on Beijing. It is common that trading partners have differences and disputes. Yet rather than conducting dialogue and consultation to resolve them, the EU has instead sought to take unilateral actions against China — its third-largest partner for exports of goods and largest partner for imports of goods. This will inevitably and unnecessarily ratchet up trade tensions and undermine the mutually beneficial cooperation between them.

The EU has always taken pride in being the most open market in the world, with its international trade in goods and services accounting for around one-fourth of its GDP. Yet the series of steps that it has taken recently to suppress and restrict Chinese enterprises, with no justification, have raised concerns about the bloc turning against free trade. The EU already launched a major probe into imports of Chinese electric vehicles in October, while also looking into alleged subsidies received by Chinese suppliers of wind turbines and solar power equipment destined for Europe, which could lead to the group slapping much higher tariffs on Chinese products.

The EU’s raids on Nuctech prompted the China Chamber of Commerce to the EU to lodge a protest, saying they “send a detrimental message not only to Chinese enterprises but to all non-EU companies conducting business in the bloc”. Europe turning increasingly protectionist bodes ill for the development of the comprehensive strategic partnership between China and the EU. There is a high degree of complementarity and shared interest between the Chinese and EU economies. The EU should honor its words of commitment to the open market and the principle of fair competition, and stop wantonly going after and restraining Chinese companies under various pretexts. The two sides should strengthen their communication and coordination to solve the problems that exist between them.