‘Market economy status’ to China? A bad, bad idea


According to a leaked paper published by the daily Politico this morning, granting China the status of a ‘market economy’ by the end of 2016 would not have the best consequences for EU economy. Directorate-General TRADE, the European Commission’s “ministry” responsible for these matters, in its own working document states that this move would not only entail significant job losses in Europe (up to 188,300 jobs), but also increase in imports (between 17 and 27 percent) currently affected by anti-dumping measures. The manufacturing sector would take the hardest hit and particularly Italy. It is little surprise then that Italy’s Prime Minister Renzi is expected to ‘lean strongly’ against DG TRADE’s push for granting China the market economy status.

One has to wonder what exactly pushes the European Commission – and European political elites in general – in the craze for constantly more ‘free’ trade without minding too much the consequences. The problem with free trade policies is that they only make sense if the competition is on the same ground. How can EU manufacturers compete if our environmental, health, work and social standards are on a higher level than in China? They are more protective, but also make the cost of the comparative EU product more expensive and less competitive as a consequence with the economies that have their system set differently. Yet this obvious truth, told already two hundred years ago by German economist Friedrich List, seems to be repeatedly ignored by the European Commission. The beneficiary of opening economic borders without minding whether there are really comparable standards is fairly clear: transnational corporations who can produce cheaply in China and sell with a big margin back in Europe. Is it the case that the Commission works only for the benefit of these corporate stakeholders?


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