China as a WTO developing member, is it a problem? CEPS Policy Insights No 2019/16, November 2019

The developing member status is an area identified for WTO reform by the US, the EU and the Trilateral Trade Ministerial Cooperation. The grievance is that some of the world’s top trading nations that declared themselves as developing members are taking advantage of the 155 special and deferential treatment provisions embedded to date across the range of WTO agreements, resorting to weaker commitments, undermining the functioning of the multilateral trading system and impeding the negotiation of future agreements. The developing member status per se is not a problem in relation to China’s commitments undertaken at its WTO accession, neither following accession as far as the three agreements that China participated in are concerned. China relinquished most special and differential treatment provisions at its accession, and many of its commitments are WTO-plus in nature. Within this remit, the problem lies in China’s lack of faithful compliance with certain accession commitments, such as notification and transparency. However, China’s developing member status could be a problem for the ongoing fisheries subsidies negotiations, especially given its world-leading fishing capacity. This presumption could also be true for other negotiations, for example those regarding the joint initiative on the trade-related aspects of ecommerce. China’s persistent claim of developing member status at the WTO may be understood as a result of political positioning, too, because championing “South-South cooperation” is a strategic priority for China’s diplomacy

Dinner for three: EU, China and the US around the geographical indications table. CEPS Policy Insights No 2020-07 / April 2020

China is the EU's second biggest agri-food exports market. It is also the second destination for the export of EU products protected by geographical indications (GI), accounting for 9% of its value, including wines, agrifood and spirits. The EU-China Agreement on the Protection of Geographical Indications, concluded in November 2019, is expected to realise higher potential for exporting EU GIs to the country since market access is now guaranteed. But the US-China Economic and Trade Agreement, signed in January 2020, has set down a couple of precautionary measures, including a consultation mechanism with China before new GIs can be recognised for protection in the Chinese market because of international trade agreements. As a result, EU GIs could be brought under tighter US scrutiny before being recognised for protection in China. Analysis reveals, however, that only a handful of EU GIs may be affected by the latter Agreement, if at all

Compulsory licensing and access to future Covid-19 vaccines. CEPS Research Report 31 Jul 2020.

Since the recent World Health Assembly failed to declare future Covid-19 vaccines a global ‘public good’, they are confirmed as private (intellectual) property and will be subject to patent rights protection as a pharmaceutical product. This confirmation could, however, trigger concerns about access to vaccines on the grounds of public health, which is a valid consideration for both developing and developed countries, including EU member states. Would developing countries have access to affordable Covid-19 vaccines, once available? Would an EU member state be eligible to import generic versions of a patented vaccine if it has insufficient or no manufacturing capacity? Moreover, how to enable an expeditious and predicable multiple patent examination process so that Covid-19 vaccines could become market-ready more efficiently? This paper examines compulsory licensing and Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health as policy alternatives to voluntary licensing for access to affordable future Covid-19 vaccines. With regard to manufacturing capacity, the EU and its member states may not be eligible to import since they opted out of the Paragraph 6 system outright (although they may still export under the same system). Fortunately, this does not appear to be a major problem since statistics show that most EU27 imports of all pharmaceuticals are from Europe itself, with China a distant second supplier. For China, however, its pharmaceutical-related patent protection measures under the US-China Economic and Trade Agreement on admissibility of supplemental test data and effective patent-term extension are conducive to a predicable multiple patent examination process for streamlined searches and consistent examination results. To this end, a few initiatives launched in the past at regional and international levels, such as the European Patent Convention and the Patent Cooperation Treaty and, among the world’s largest patent office, the Trilateral Cooperation (on patent) and IP5 Cooperation, for example, will be essential to deliver on these objectives. As contracting members, EU member states will benefit from all these mechanisms

Reciprocity and Mutual Benefits: EU-China cooperation on and protection of geographical indications. CEPS Research Reports No. 2018/04, June 2018

Geographical indications are a distinctive type of intellectual property rights, protected by the TRIPS Agreement. The EU and China started to negotiate the Agreement on the Cooperation on, and Protection of, Geographical Indications in March 2011. It has recently been revealed that one or two more rounds of negotiations may be necessary to conclude the Agreement. Recall that in July 2017, as a major step forward in the negotiations, the EU and China each published a list of 100 GI products that may be granted protection under the other’s jurisdiction. Both Europe and China are endowed with a sophisticated food culture, featuring many high-quality GI products protected in their respective territories. An agreement on GI protection will facilitate more GI exports and further enhance overall bilateral trade in foodstuffs, which has seen steady and quick growth over the last decade. According to the latest statistics, China is Europe’s second-largest export market for foodstuffs (over the last few years), while Europe is China’s fifth largest. This report illustrates that, in the context of negotiating the GI Protection Agreement, the EU succeeded in extending its GI protection philosophy, i.e. the so-called ‘old-world’ approach, and model to China, paving the way for more GIs to be registered in the country for future protection. The EU leverages GI protection to enhance its food quality policy, which goes hand in hand with the reform of the common agricultural policy. As for China, although further work on technical details, including strengthening GI enforcement, is required, doubling down on GI exports to Europe and through ambitious trade agreements with other trading partners should be a goal. Thus China’s ancient food culture would serve the modern purposes of enhanced trade – just as the EU has achieved. Moreover, the forthcoming GI Protection Agreement between the EU and China is instilled with the principles of reciprocity and mutual benefits, which should be a sine qua non for trade relations applicable to all partners. In this regard, both sides should strive to extend their constructive cooperation on GI protection to other trade areas to facilitate a win-win spirit in overall bilateral trade relations. The Report covers in extensive detail the Chinese aspects of GI protection, as they are not well-known in Europe

EU-China Leadership in Trade Policy: Feasible? Desirable? CEPS Commentary, 20 March 2017

Given the nationalism and blunt protectionism that characterises President Trump’s trade policy, the primary focus of the EU should not be on how to respond to his rhetoric. The EU should rather double its efforts to pursue its own, sensible trade and investment liberalisation agenda. This is not only rational because of the economic gains that will come in the longer run from competitive winds that will blow in Europe, it is also appropriate because Trump is likely to find himself pretty much alone in his nationalistic and selectively protectionist agenda. The intended ‘bilateral deal’ approach, driven by (im)balances in bilateral goods trade, does not seem to have the backing of many, perhaps of no-one

Systemic rivalry and balancing interests: Chinese investment meets EU law on the Belt and Road. CEPS Policy Insight No 2019-04 /21 March 2019

For years, the EU has refrained from criticising China’s attempts to shape globalisation according to its own interests. Member states have allowed the Belt and Road Initiative (BRI) to tip the balance of power towards the companies that China owns or subsidises. Alarmed by recent Chinese takeovers in strategic industries, the EU has flagged up its intention to toughen rules on foreign investment flows into Europe. The brand-new EU Strategic Outlook on China adopts a multifaceted approach and defines the ‘Middle Kingdom’ simultaneously as a cooperation and negotiation partner with whom the Union needs to find a balance of interests, an “economic competitor” in pursuit of technological leadership, and a “systemic rival” promoting alternative models of governance. This CEPS Policy Insights paper takes stock of BRI investments in Europe and of member states’ concerns about economic and national security. It examines the EU-wide legal bulwarks and regulatory responses that are intended to hedge against unfair practices. It concludes that while a more realistic and assertive European approach toward Chinese market behaviour is welcome, the EU should take China up on its pledge to embolden the BRI with ‘soft connectivity’, i.e. legal infrastructure, rather than risk mutual harm by adopting too protectionist a stance. This should benefit not just the EU and China but also the other ‘16+1’ countries along the central corridor of the BRI, which passes through the Caucasus, the Balkans and Eastern Europe – all in the spirit of the EU’s 2018 connectivity strategy with Asia

From UK customs fraud to Danish money laundering: lessons for Brexit and the EU. CEPS Commentary, 11 October 2018

Serious lapses by national authorities have recently come to the fore, ranging from customs fraud in the UK to money laundering through Danish banks operating in Estonia. These incidents are symptoms of a wider issue which needs to be tackled

Does ASEM work? CEPS Policy Brief No. 321, 14 October 2014

This CEPS Policy Brief is based on a larger study for the EEAS and European Commission, written by the same authors in the run-up of the Milan ASEM summit of 16-17 October 2014. The main idea of the study is to assess whether ASEM works and how, by verifying the factual evidence in detail. After all, ASEM has no institutions, no budget and no treaty, whilst dialogues and a loose improvement over time in Asia-Europe relations refer to process much more than genuine ‘results’. The stocktaking covers all ASEM activities since the 2006 Helsinki summit. Summit and foreign ministers’ declarations and ASEM calendar of activities (and interviews) are used to trace ASEM activities in the three ASEM pillars (political, economic, and peoples-to-peoples/cultural). All the ‘regular’ ASEM meetings at ministerial and other levels (many of which are only known to relatively few) have been mapped. Also the ASEM working methods, based on the 2000 AECF framework and many subsequent initiatives, have been scrutinised, including whether they are actually implemented or not or partially. Such methods refer to how to work together in areas of cooperation (beyond the typical ASEM dialogue), organisation, coordination and ASEM visibility. The main conclusion is that ASEM works reasonably well, once one accepts the ASEM of today, although some inefficiencies still characterise the ‘system’. There is a host of secondary conclusions on the three pillars, the foreign ministers, the strong government-to-government nature of ASEM and the working methods. We recommend that today’s ASEM needs no reform and that not having ASEM would entail political and diplomatic costs. We emphasise that ASEM is well placed to stimulate exchange of information between the mega-FTAs such as TPP, RCEP and TTIP. However, the ASEM of tomorrow might be different, given the great changes in geo-political and economic conditions since ASEM began in the mid-1990s. Moreover, the size of ASEM has become such that classical ways of operating with (after Milano) 53 countries (including the EU and ASEAN) cannot possibly be effective all the time. We suggest that, in the run-up to the 20th ASEM birthday (2016), EU and Asian independent think-tanks get together to write an ‘options report’ reconsidering options for a new ASEM, as the basis for a profound and wide debate how to get more value-added out of ASEM

China-EU Leadership in Globalisation: Ambition and capacity. CEPS Policy Insight No 2017/18, May 2017

This CEPS Policy Insight attempts to offer a first verification of whether China and the EU are ready to exercise leadership in global trade and investment, not only in words but also in deeds that would underpin credibility for the world trading and investor community. A distinction is drawn between the ambition to exercise such leadership and the effective capacity to do so. The EU’s capacity to lead is not at issue, but, as is shown, it does face a few difficulties. The paper analyses China’s effective leadership capacity based on aspects of its energetic FTA strategy, investment protection agreements, the progress of its domestic market-oriented reforms (required for economic openness) and its record in negotiating the WTO plurilaterals. Some reflections on a possible joint leadership of the EU and China are offered in the conclusion

Can dialogues advance EU-China trade relations? CEPS Research Paper 09 Nov 2020.

The EU pursues its trade agenda with China through a web of economic and sectoral dialogues. We show that these dialogues do matter for wider EU trade policy. After a brief overview of the architecture, we map the trade-related dialogues and identify seven possible functions of them, giving examples of dialogues on public procurement; reforms of state-owned enterprises (SOEs); forced technology transfer; the protection of intellectual property rights; and sustainable forestry and the timber trade. The assessment seeks to answer four specific questions: Do dialogues improve market access? Dialogues would seem to have facilitated market access in a variety of ways. The EU has also insisted on reforms in China with a view to easing restrictions that hinder effective market access. For some aspects this seems to have worked, but not for the big issues, for example SOE reforms. Can the web of dialogues be seen as an ‘unbundled’ free trade agreement (FTA)? The answer is, not really. The trade dialogues do not seem to substitute, even imperfectly, for an FTA. Can the dialogues stimulate ‘sustainable development’? A recent convergence of EU and Chinese objectives has been extremely helpful for effective bilateral cooperation, on social matters (labour standards and social protection) and the environment & climate. Cooperation on energy, climate strategies and other environmental concerns, following dreadful neglect and indifference in China, are achieving results, such as better (for instance, risk-based) regulation, higher ambitions and more effective enforcement. Can dialogues reconcile or at least mitigate ‘systemic’ differences? Here, dialogues have not proved very useful in terms of results. From the EU end, addressing systemic differences effectively when the partner country takes pride in enjoying a ‘socialist market economy with Chinese characteristics’ is intrinsically impossible. It is an accomplishment when channels of cooperation are kept open