Pascal Lamy, Former European Commissioner for Trade and former WTO Director-General speaks to CGTN Europe about the complexity of the trade negotiations.
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00:00former European Commissioner for Trade and former Director General of the World Trade Organization, Pascal Lamy joins us from Morocco now.
00:09Pascal Lamy, thank you very much for your time.
00:11So, Mr. Lamy, with Charles Michel and the Chiang meeting, how crucial are these face-to-face talks for diffusing these trade tensions between the EU and China?
00:23Well, first, I believe that it's always good to talk, to explain, and I'm happy they did it with this relatively calm tone, which contrasts with what we see in the media,
00:43who jump immediately in a trade war between EU and China. There is no such thing as a trade war between EU and China.
00:57There are trade frictions that have to be handled according to the WTO rules that govern trade frictions.
01:10The EU, on its side, believes that EU Chinese cars exported in Europe are sold at prices which are dumped by the impact of Chinese subsidization for car producers in China.
01:34And according to WTO rules, the EU has calculated a tariff that rebalances this impact of subsidies on the low price of Chinese EVs in Europe.
01:50If China is not pleased with that, and this is perfectly understandable, China will go to the WTO and initiate a dispute against the EU, probably arguing that the tariff of the EU is not in line with WTO rules.
02:12This will be litigated. On the other side, China believes that European cognac, in the occurrence French cognac, because there is no production of cognac in the EU anywhere in France, is sold at prices which are subsidized.
02:34Of course, of course, there is a strange coincidence between this Chinese new measure which, if the EU believes it is unfounded, which it may be, then will go to the WTO dispute settlement and try to argue that China does not have the necessary evidence that French cognac is subsidized
03:03and competes unfairly with Chinese domestic products. So, sorry for being a bit long, but this is the reality. It's not a trade war. There are trade frictions. There have always been trade frictions. There will always be trade frictions. We have WTO and a dispute settlement system that works, not between the US, but between the EU and China.
03:29Yes, Mr Lamy, it's very good to explain that because, as you said, there are always these trade frictions. So, how do these big leaders, how do they get over those frictions then? Is it this face-to-face talking?
03:43If, in these two cases, if EU is unhappy and if China is unhappy, the solution is very simple. You go to the WTO judge who will adjudicate this case. That's the short-term answer.
04:03If you look at the big picture, and we have to look at the big picture, and of course the picture is bigger for cars and EVs than it is for cognac or whatever strong alcohol, which is not a big economic thing. It matters, but it's not as big as cars.
04:34It has to be seen by both sides. The big question for China is do we export to the EU or do we invest into the EU? And the big question for EU is do we believe that an integration of value chains between China and Europe in electric vehicles is the way to go?
05:00Or do we behave like the US who believe that car production has to be decoupled between the US and China? And this is the big picture. And I hope, I hope that at the level of the highest authorities on both sides, they don't spend their time looking at the small picture. They have to look at the big picture.
05:25That's the big picture. The big picture is there is a big future for electric vehicles, production, trade. It's good to fight against carbon emissions. How do EU and China together look at this big picture? How much of integration or how much of arm's length separation needs to take place in the future?
05:52OK, Mr Lamy, as you mentioned there, the big picture, these are big players in trade. So we will see what happens. We really value your expertise there. Thank you very much for joining us.