Evaluation of the EC Market Access Partnershiptrade.ec.europa.eu/doclib/docs/2013/april/tradoc_150848.pdf · In-depth assessment of the functioning of the local Market Access Team

Evaluation of the EC Market Access

Partnership

In-depth assessment of the functioning of the

local Market Access Team in China

Client: European Commission, Directorate General for Trade

Rotterdam, 25 August 2012

Personal data in this document have been redacted according to the General Data Protection Regulation 2016/679 and the European Commission Internal Data Protection

Regulation 2018/1725

Evaluation of the EC Market

Access Partnership

In-depth assessment of the functioning of the local Market Access Team in China

Client: European Commission, Directorate General for Trade

Marieke Reichwein

Dr. Floor Smakman (ed.)

Rotterdam, 25 August 2012

2

AC23760

Table of contents

Evaluation of the EC Market Access Partnership 3

1 Introduction 5

2 Background EU-China Trade and Investment Relations 7

2.1 EU-China trade and investment flows 7

2.2 Key trade and investment barriers in China 8

2.3 EU-China trade and investment relations 12

3 The local Market Access Team – Set up and Process 13

3.1 History and composition 13

3.1.1 Launch and structure of the MAT in China 13

3.1.2 Organisation and involvement of key stakeholders 14

3.2 Focus and activities 15

3.3 Procedures, communication and information exchange 17

4 The Local Market Access Teams – Performance and Results 19

4.1 Key barriers addressed 19

4.2 Key results achieved 20

4.3 Added value of MAT 21

5 Key Findings and Conclusions 23

5.1 Key findings on functioning of the MAT and MAP in China 23

5.1.1 Procedures and communication 23

5.1.2 Performance and results 23

5.2 Key factors behind successes and/or failures 24

Annex I Audit Trail Error! Bookmark not defined.

5

Evaluation of the EC Market Access Partnership

1 Introduction

The Market Access Partnership and local Market Access Teams

The Market Access Strategy was originally launched in 1996 and aimed at enforcing multilateral

and bilateral trade deals and at opening third country markets to EU exports. The strategy has two

pillars: 1) providing EU businesses with information on market access conditions and 2) creating a

framework within which the barriers to trade in goods, services, intellectual property and investment

are tackled.

The strategy and particularly the second pillar of the strategy was given a further impetus in 2007

with the launch of the Market Access Partnership (MAP), which brings together the European

Commission (EC), national governments and businesses with the ultimate aim of removing barriers

for EU exporters and investors on markets outside the EU. The MAP is built up of three mains

platforms of coordination for all key stakeholders: (1) The Market Access Advisory Committee

(MAAC) and (2) Market Access Working Groups (MAWGs) on the EU side and (3) the local Market

Access Teams (MAT) in third countries, established as diplomatic trade tools in third countries.

The local Market Access Teams (MAT), bring together the MAP partners based in the third country

concerned. While the concept of a MAT is a flexible one, MATs can functionally being seen as

mirroring the MAAC-structure in Brussels: from providing a general platform for coordination among

the Commission and MS, involving business where needed, to creating specific thematic Working

Groups when necessary. The format of a MAT does therefore range from regular trade counsellor’s

coordination meetings on market access issues (between Commission DEL and MS and involving

business when appropriate) to very specific, working group-type meetings that focus on a special

barrier or sector. While in some countries, this sort of coordination on trade barriers has already

been well established (and served as best practice for new MATs), for other countries the launching

of the Market Access Partnership has given a new impetus.1

In-depth review of MAT in China

As part of the overall evaluation of the MAP (including its main platforms), five countries were

selected for a more in-depth review of the functioning of the MAT locally and within the context of

the MAP. China was one of the countries selected.

This review focused on the functioning of the MAT in China. The methodology adopted for this

review included desk-based research of existing documentation followed by in-depth interviews with

a selected number of stakeholders in China viz. the EU Delegation in China (EUD), Embassies of

Member States (MS) and the European business community in China.

Field work for this review took place between 6-25 June, 2012.

The Ecorys team would like to thank all interviewees for their time and contributions.

1 http://trade.ec.europa.eu/doclib/docs/2010/june/tradoc_146233.pdf

7


2 Background EU-China Trade and Investment Relations

2.1 EU-China trade and investment flows

Overall EU-China trade has increased dramatically since the early 2000s: between 2007 and 2011

it increased by approximately 40 percent. The EU is now China’s biggest trading partner, with

China being the EU’s largest source of imports and the second largest export destination for EU

goods and services. China is also a strategic trading partner as one of the fastest growing markets

in the world and source of various important raw materials such as rare earths.

Trade in goods

Figure 2.1 below presents EU27 trade in goods with China, which shows an increasing trend since

2000. It also illustrates the large EU trade deficit with China; the value of EU imports from China is

approximately double that of exports. EU imports from China decreased sharply in 2009, as a

consequence of the economic and financial crises, but recovered in 2010 and reached an all time

high of EUR 282.5 billion in 2011. In contrast, exports only showed a decreasing growth (no

decline), as China was significantly less affected by the crisis. Exports of goods from the EU to

China increased form EUR 78.2 billion in 2008 to EUR 82.3 billion in 2009. Thus the trade deficit

decreased somewhat, as EU exports to China increased by more than 20 percent in 2011, while its

imports increased by only 3.45 percent.

The EU mainly imports industrial goods from China such as machinery and transport equipment

and miscellaneous manufactured articles. The EU’s exports to China are also concentrated on

industrial goods, which are mainly machinery & transport equipment, miscellaneous manufactured

goods and chemicals.

Figure 2.1 The EU-27 trade with China in goods (millions of EUR)

Source: Eurostat

0

50000

100000

150000

200000

250000

300000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Exports

Imports

8 Evaluation of the EC Market Access Partnership

Trade in services

Table 2.1 below summarise the latest figures for services trade between the EU27 and China.

Trade in services clearly shows a different pattern than trade in goods, with the EU having an

increasing trade surplus, which reached EUR 7.2 billion in 2011.

Table 2.1 The EU-27 trade with China in commercial services (billions of EUR)

Year Imports

(billions of

EUR)

Share of total

Extra EU

imports (%)

Exports

(billions of

EUR)

Share of total

Extra EU

exports (%)

Balance

(billions of

EUR)

2008 15.2 3.4 20.2 3.9 5.0

2009 13.9 3.3 19.1 4.0 5.4

2010 16.3 3.7 22.3 4.2 6.0

2011 17.2 - 24.4 - 7.2

Source: DG Trade.

While services exports have thus clearly increased over the past years, it has been noted that

growth potential is still substantial as many European services companies find it difficult to enter the

Chinese market due to substantial regulatory (non-tariff) barriers2 (see further below).

Foreign Direct Investment

Since 2008 FDI flows between the two economies have increased gradually, with the EU clearly

being a much more substantial investor in China than vice-versa. EU FDI outflows to China

amounted to EUR 7.1 billions in 2010, while Chinese FDI flows to the EU amounted to only EUR

0.7 billion. EU FDI stock in China stood at more than EUR 75 billion in 2010. Table 2.2 below

presents FDI flows between the EU and China.

Table 2.2 The EU-27 FDI with China (billions of EUR)

Year Inflows

(billions of EUR)

Outflows

(billions of EUR)

Inflows of stocks

(billions of EUR)

Outflows stocks

(billions of EUR)

2008 -0,4 6,5 5,6 54,7

2009 0.1 6.5 5.6 63.6

2010 0.7 7.1 6.7 75.1

Source: DG Trade.

2.2 Key trade and investment barriers in China

Since the EU and China are significant trading and investment partners and China is emerging as a

dominant economic and increasingly political force on the word stage, the EU is strongly committed

to further developing its partnership with China and access to the Chinese market in particular.

While EU exports to and investments in China have shown a remarkable growth trend, substantial

market access barriers are still seen to remain in China, implying the full potential of the Chinese

market is still much bigger. Table 2.3 below lists the key market access barriers in China as

established in the publicly available key barriers list on the DG Trade website.

2 http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/352&type=HTML

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/352&type=HTML

9


Table 2.3 Key trade barriers in China

Barrier Description

Public Procurement - "Buy

Chinese" policy, the

Indigenous Innovation

Scheme and discrimination

against Foreign Invested

Enterprises (FIEs)

The main problem remains an active 'Buy Chinese' policy where, in principle,

only Chinese companies are allowed to bid in public tenders and foreign ones

are only allowed under exceptions. Government agencies and related entities

are required to purchase equipment and technology from Chinese state or

privately owned manufacturing companies. There is limited access to public

tenders, insufficient publicity of all public tenders. This barrier is related to the

implementation of the Government Procurement Law (GPL) adopted on 29

June 2002. In addition, China submitted its GPA initial offer end of December

2007 and a revised offer in July 2010. However, the main economic offensive

interest of EU suppliers, namely the State Owned Enterprises (SOEs) in the

utilities sectors (water, energy, transport) are presently not covered by Chinese

local procurement legislation and not included in the offer. In addition, a

specific accreditation procedure for the indigenous innovative procurement

schemes is being developed in China which might cause grave concern to EU

industry in particular in the IT and green technology.

Computer Reservation

Systems (CRS) - non

granting of licences

Obstacles and anomalies persist in China which prevents foreign CRS

operators from supplying into the Chinese market. China has not introduced a

legal framework that would regulate the possibility to use foreign CRS services

and hence, European CRS is effectively kept out of market as it can not be

used to issue tickets.

China - Meat products (pig

and poultry meat) - non-

application of pre-listing

The EU applies the principle of pre-listing to China and to all other trading

partners (i.e. the EU relies on the official control systems applied by the

Competent Authorities (CAs) of exporting countries), rather than having to

carry out inspections of the individual establishments. However, China does

not apply this principle to EU products except for aquaculture. The Chinese

procedure of inspecting individual EU establishments causes enormous delays

and obstacles to market access for EU exporters of, in particular, fresh meat

and meat products.

Intellectual Property Rights

(IPRs) - Lengthy and costly

notarisation and legalisation

procedures

The access to the Chinese administrative and judicial enforcement system in

China remains problematic for EU companies, notably for SMEs. In particular,

the legalisation and notarisation requirements for Power of Attorney and

foreign evidence make the defence of IP rights burdensome and time-

consuming for foreign right holders. Moreover, interim injunctions are difficult to

obtain in practice and the damages awarded by the Courts remain often too

low.

Medical Devices - Dual

Regulatory Controls

Two types of mandatory registration with the same scope of requirements are

required from SFDA and AQSIQ but they do not offer any additional safety

benefit for patients and users.

Compulsory Certification

System (CCC) - Unnecessary

burdensome certification

procedure notably for

automobiles, machinery,

ceramics

The Chinese Compulsory Certification (CCC) system, it remains a

burdensome, expensive and time-consuming conformity assessment

procedure. In particular, the CCC scheme is still unclear, non-transparent and

leaves room for various interpretations. EU concerns relate in particular to the

scope of the products covered by the CCC scheme, confidentiality, factory

inspections, uncertain application of national treatment, surveillance of

imported products. For example, under the 'Regulation of Certification and

Accreditation' and 'Regulation of Certification for Automotive Products',

automotive products must obtain a China Compulsory Certificate (CCC) mark

and are subject to random inspection at the border.


Barrier Description

IT Security - Chinese

standards deviating from

existing international

standards and global

practices

EU industry is concerned about the overall complexity and lack of transparency

in the regulation and certification aspect of China's infosec industry. This web

of measures includes the requirement for China Compulsory Certification

(CCC) for ICT products, the Regulation of Commercial Encryption Codes

administered by the Office of State Commercial Cryptography Administration

(OSCCA) and the Multi-Level Protection Scheme (MLPS) administered by the

Ministry of Public Security and the Ministry of Industry and Information

Technology (MIIT). The combined effect of these initiatives, as well as their

interaction (if you do not need one certification, you need the other) is to

severely hamper market access to foreign and foreign-invested companies in

China. It is essential to continue the dialogue between EU and CN so that

current government and market practices in managing information security

risks are discussed, wide implication of these policies are addressed and

market access barriers be effectively removed.

Insurance - Discriminatory

practice in branch approval

Foreign insurers remain subject to de facto branch approval on a consecutive

basis and are limited to two licenses a year. Compared to domestic insurers,

whose geographic expansion is only subject to their own financial and

operational considerations, European insurers are still facing additional

numerical constraints in approval of provincial branches or sub-branches or

sales service centres.

Investment Catalogue The revision of the Chinese investment catalogue was announced in April

2010. A State Council Circular of April 2010 on 'Opinions on further improving

the use of foreign capital' refers to a 'more open and positive/advanced

investments environment'. It also refers to the revision of the Guidance

Catalogue On Foreign Investment with a pledge to 'open up more areas and

encourage foreign investments in high-end manufacturing, new high tech-

technology, modern services, energy-saving and environmental protection

industries'. The revision of the Catalogue is under National Development and

Reform Commission (NDRC) responsibility and represents a good opportunity

to try and open up investments in priority sectors. Many sectors are at present

still under the prohibited or restricted category.

Raw Materials - Export

Restrictions

China still is applying an increasing number of export restrictive measures,

such as export duties and quotas, affecting access to raw materials by foreign

companies. As a consequence, the EU industry is facing great difficulties in

securing its supply with primary raw materials, especially when no alternative

source of supply or no alternative raw material is available, but also its supply

with secondary raw materials. Raw materials currently subject to Chinese

export restrictions either in the form of export quotas or export taxes include

antinomy, bauxite/alumina/aluminium, cobalt, coke, copper, fluorspar, indium,

lead, magnesite/magnesium carbonate, manganese, molybdenum, nickel, rare

earths, silver, tin, tungsten, wood, yellow phosphorus and zinc.

Postal and Courier Services -

potential breach of

implementing measures of

the new postal law with

WTO/GATS commitments

For several years now, China has been working on a new postal law which

was adopted in April 2009 and that entered into force in 1st October 2009. The

postal law contains a ban for foreign operators to deliver letters domestically

and it potentially raises issues of compatibility with China's WTO commitments.

One of the main problems concern the definition of the 'reserved area' (i.e.

activities potentially within China Post monopoly). Chinese implementing

measures need to be monitored very closely.

Source: MADB, DG Trade

11


The Trade and Investment Barriers Report 2011 identified 21 barriers in six trade partners/regions

that are of major importance for European business. With regard to China, the major barriers

identified are related to: trade of raw materials (e.g. trade in rare earths); public procurement ;

intellectual property and the “indigenous innovation” policy aimed at supporting Chinese firms

moving up the value chain; specific Chinese standards and related burdensome third-party testing

and certification procedures; and investment as a number of important sectors remain closed to

foreign investment in China.

The T&I report also lists a number of areas where some progress in addressing market access

barriers has been achieved, particularly in relation to raw materials and the indigenous innovation

policy. See Table 2.4

Table 2.4 Trade barriers where some progress was achieved

Sector Description of barrier Key factors in overcoming the barrier

Raw materials The WTO Panel issued its report in

July 2011 which clarified that export

restrictions, as applied by China on a

number of raw materials, are

inconsistent with China's obligations

under WTO law. The exports quotas

imposed by China on this set of raw

materials were found to be violating

the general prohibition to introduce

quantitative export restrictions.

China appealed the Panel’s report and, on 30

January 2012, the WTO Appellate Body confirmed

the illegality of the Chinese quotas and export

duties.

In the course of 2011, the Commission also

continued raising the broader issue of export

restrictions on raw materials beyond the specific

WTO case, since this Chinese policy continues to

cover a very wide range of fundamental raw

material components, such as rare earths.

'indigenous

innovation'

policy

This policy is based on is based on

the principle of providing access to

public procurement only for innovative

products whose intellectual property is

of Chinese origin.

China made concrete steps in 2011 towards de-

linking procurement from requirements on the origin

of intellectual property, e.g., by removing any

reference to indigenous innovation from the draft

implementing decree of the Government

Procurement Law and by committing to suppressing

mandatory catalogues (including provincial

catalogues). The Ministry of Finance (MOF)

adopted a notice announcing the abolishment of

three national indigenous innovation-related

policies. At the US-China Joint Commission on

Commerce and Trade meeting in November 2011,

China made further concrete moves on the issue of

ensuring implementation of commitments at

provincial level.

Source: Trade and Investment Barriers Report 2012

According to the Trade and Investment Barriers Report (TIBR) 2012, during 2011 no substantial

progress was made in reducing trade and investment barriers in the area of standardisation and

technical regulation, especially Chinese barriers in the ICT security, which is considered to be a

priority. With regard to investment barriers, China did not further open foreign investment

opportunities, e.g. in the area of telecommunication, financial services, construction, retail, express

delivery or some manufacturing sectors such as cars (notably in the electrical vehicles subsector).

In 2010, a bilateral EU-China taskforce on investment was launched and there are on-going

discussions on the launch of negotiations of an EU-China investment agreement that should

include market access aspects as well as the highest standards of IP protection for investment and


would include further transparency mechanisms to increase legal certainty for EU investors in

China3. In addition, the TIBR 2012 identified two new significant areas of concern in trade relations

with China. First, the national security review mechanism for mergers and acquisitions involving

foreign investors, which will allow China to block foreign acquisitions on the ground of national

security considerations. Second, export financing and subsidies as China uses export credits not in

conformity with the OECD/WTO disciplines to boost its national champions' exports in capital-

intensive, often high-tech sectors.

2.3 EU-China trade and investment relations

The relationship between The European Union and China was formally established in 1975, and

subsequently laid down in the 1985 EU-China Trade and Cooperation Agreement. Since then EU-

China relations have been growing not just in terms of trade and economic activities, but also in

terms of the breadth and depth of cooperation.

In 2003, the EU and China therefore launched a comprehensive strategic partnership, which was

upgraded in 2010 to include foreign affairs, security matters and global challenges such as climate

change and global economy governance. In 2006 the European Commission adopted a major

policy strategy (Partnership and Competition), aiming for a closer and comprehensive partnership

with China in both bilateral and multilateral contexts as well as for convincing China to trade fairly.

Furthermore, in 2007, the EU and China started negotiations on a comprehensive Partnership and

Cooperation Agreement (PCA) to replace the 1985 one. At present approximately one quarter of

the chapters on trade and investment are concluded, however, the positions remain far apart on

many important chapters4.

In 2008, the High Level Economic and Trade Dialogue was launched with the purpose to

strengthen the dialogue at high level between the European Commission and the State Council of

China. This dialogue serves as a tool to discuss mutual concerns in the areas of investment, market

access and intellectual property rights protection, as well as other issues related to trade. In

addition, at the EU-China summit in 2012, the High Level People-to-People Dialogue was launched.

The EU was strongly supporting China’s accession to the WTO and China became a formal

member of the WTO in 2001. The accession to the WTO showed that China is taking an important

step towards the integration into the global economic order and secured the improved access to

China’s market for EU firms. Moreover, import tariffs and other non-tariff barriers were sharply and

permanently reduced.

3 Trade and Investment Barriers Report 2012

4 “Overview of FTA and other trade negotiations, updated” 26 June 2012.

http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf

http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf

13


3 The local Market Access Team – Set up and Process

3.1 History and composition

3.1.1 Launch and structure of the MAT in China

In 2011 the Minister Counsellor and Head of Trade and Investment Section at the Delegation of the

European Union (EUD) in Beijing initiated the establishment of a local MAT as part of the EC

Market Access Partnership (MAP). There are currently eight local MAT operational focusing on

specific issues or sectors: (1) Public Procurement, (2) Intellectual Property Rights (IPR), (3) Medical

Devices, (4) Insurance, (5) Raw Materials, (6) Postal & Courier Services, (7) Sanitary and

Phytosanitary (PSP), managed by DG AGRI, and (8) IT Security, addressed in a G9 set-up. Three

more MAT are still in the process of being established: Compulsory Certification System (CSC),

Computer Reservation Systems (CRS) and Foreign Investment.

While the launch of the renewed Market Access Strategy took place in 2007, MAT in China were

established relatively late for several reasons. Firstly, the European Chamber of Commerce in

China (EUCCC) already had about 40 Working Groups (WG), Forums and Desks in place, closely

working together with the EUD and the MS. The EU Private Sector (PS) was satisfactorily

represented by the EUCCC, and felt close enough to the EUD in its exchanges. Secondly, there are

no lobbying mechanisms or organizations in China comparable to the ones in Brussels or other

countries to come closer to the decision- or policymakers in China. The local authorities are not

easily accessible at an official level in a lobbying context.

With an active, well functioning PS lobbying organization in China in place, specifically in the form

of the EU-China Chambers of Commerce (EUCCC), and with the trade policy formulation and

negotiations being an EU mandate, the MS became to some extent excluded in the exchange of

information and views regarding market access barriers and the lobbying with the Chinese

authorities. Moreover, market access issues are not only industry or sector related, but often also

related to more general policies and the regulatory environment, particularly as it relates to cross-

cutting issues. The need was therefore expressed to also have a structure in place in a formal EU

context in order to move forward in the area of market access barriers5. Therefore, the EUD took

the initiative to formally establish a local MAT in 2011. The proposal for the establishment of local

MAT was presented at the monthly MS Trade Counsellors’ Meeting in January 2011 by the Minister

Counsellor and Head of Trade and Investment Section of the EUD.

Initially the envisaged composition was 11 individual MAT, one for each key barrier. The suggested

structure was two to six people per MAT chaired by the EUD, together with a representative from

the management of the EUCCC, the chair or vice-chair of the relevant EUCCC WG, plus up to

three representatives of MS (based on election if needed). After consulting with the MS, it was

agreed that the MAT would be open to all MS, without a limit on the number of participants. MS and

companies who are not a member of the EUCCC, but with a strong interest, are also welcome to

join a specific MAT. The current attendance at the operational MAT varies from five to 20

participants per MAT.

5 EU CCM 18 Jan. 2011


3.1.2 Organisation and involvement of key stakeholders

Member States

The level of active participation of the participants varies per MAT. In the interviews with the

stakeholders at the EUD, EUCCC, MS and PS it was expressed that some MS could and should be

more pro-active and less passive in their exchange of information and follow-up.

The reasons for passive participation of some of the MS are:

Capacity, resources;

Limited expertise, background;

Trust issues;

Personal issues;

No unified trade policy;

Competition issues;

Strategic interests;

Priorities.

All MS are represented in Beijing, and have Trade or Economic Departments or dedicated staff to

deal with Market Access issues. The MS maintain active relations with both the EUD and EUCCC.

In general, market access issues are discussed with the representatives of the MS during Trade

Counsellors meetings at the EUD. These meetings take place on a monthly basis or ad hoc when

necessary, alternatively in Beijing and Shanghai. Interviewees indicated they tended to be too short

for discussing the key issues, and the expertise of the participating Trade Counsellors is seen as

limited.

Private sector representatives

The EU PS representation is mainly channelled via the EUCCC. A chair or vice-chair of the EUCCC

WG participates in the relevant MAT. When companies are not a member of the EUCCC, they can

still participate in MAT on a need to be basis.

The EUCCC was originally founded by 51 member companies based in China on 19th October

2000. The rationale for the establishment of the Chamber was based on the actual need of the PS

and EUD to find a common voice for the various business sectors. The EUCCC now has a total of

more than 1,600 members in nine cities: Beijing, Chengdu, Chongqing, Nanjing, Guangzhou,

Shenzhen, Shanghai, Shenyang and Tianjin. The Chamber is recognised by the EC and the

Chinese authorities as the official voice of European Business in China. The EUCCC is a member

driven non-profit fee-based organisation with a core structure of over 40 working groups (WG),

Desks and Forums. It is recognised as a Foreign Chamber of Commerce with the Ministry of

Commerce (MofCOM) and China Council for the Promotion of International Trade (CCPIT).

The EUCCC WG, Desks and Forums are organised per sector or industry such as Aerospace,

Agriculture Food & Beverage, Auto Components, Automotive, Aviation, Banking & Securities,

Carbon Market, COCIR, Construction, Consumer Finance & NBFI, Cosmetics, Energy,

Environment, Lamp, Wood, Government Affairs, Finance & Taxation, Healthcare Equipment,

Human Resources, ICT, Information Security, IPR, Lighting, Logistics, Low Voltage Initiative Desk,

Manufacturing, Maritime, Marketing Communication, Petrochemicals, Chemicals & Refining,

Pharma, Private Equity, Public Procurement, Rail, Retail & Distribution, SME, Standards &

Conformity Assessment, and Travel.

15


The EUCCC is in partnership with various important EC-funded projects, such as the IPR SME

Helpdesk and the EU SME Centre, and is home to various China Desks with European industry

associations to focus on specific industry-related issues.

The EU SME Centre functions as a Support Service Provider for European SME. Specifically, the

Centre assists SMEs to establish, develop and maintain commercial activities in the Chinese

market – through export and/or investment – by providing support through the provision of

information, confidential advice, networking events and training, particularly at the crucial early

stages of their market penetration strategy. The Centre also acts as a platform facilitating

coordination amongst MS and European public and private sector service providers to SMEs.

The China IPR SME Helpdesk supports European Union (EU) small and medium sized enterprises

(SMEs) to both protect and enforce their Intellectual Property Rights (IPR) in or relating to China,

through the provision of free information and advice.

The PS also maintains contact with their MS representatives (Trade or Economic Departments) in

China.

3.2 Focus and activities

The most important function of MAT according to the interviewees is to share and exchange

information in order to be able to deliver a message with one voice to the Chinese

authorities. In order to achieve this with a unified approach, a structured and organised procedure

is required where the MS, EUD and PS are all represented. When the message is delivered with

one voice only, the Chinese counterparts are more able to respond accordingly, and less

opportunity is given to be divided and consequently ruled by the Chinese counterparts. A

synchronised voice of the EU is to be positioned on the same level as the one voice of the US and

the one voice of Japan. Once synchronised, it also becomes easier to achieve a unified approach

together with the US and Japan when conducting dialogues with the Chinese counterparts.

A second important function is the early detection of possible market access barriers. MAT

function as the channel to immediately exchange information between the PS, MS and EUD.

The third important function is to be able to formulate and take joint action accordingly.

The respective operational MAT have convened two or three times over a period of one year.

Inception meetings were held to inform the participants on the purpose of MAT. The Raw Materials

MAT used the format of Terms of Reference to formulate the objective, structure, functioning and

reporting.

The initial meetings have been mostly event-oriented with invited experts giving presentations. The

meetings convene on a need-based principle, ad hoc; there is no predefined regularity. As a

general guideline meetings may convene, if possible, ahead of important EU China bilateral events,

or relevant policy decisions in the EU or China.

Next to DG TRADE (main initiator of the MAP) The EUD may also represent other relevant

Commission services, such as DG Enterprise and DG SANCO.

The EUD works in close co-operation with the EUCCC when managing the MAT. For instance, the

EUCCC Shanghai facilitates by providing office rooms and video conferencing equipment.


MAT may also extend invitations to join specific meeting to representatives of other major trading

partners such as the US, Japan, Canada, Australia and South Korea.

The actual barriers addressed vary per MAT, which are organised by sector or cross-cutting issue.

The Raw Materials MAT is crosscutting, and currently focuses on market barriers mainly

concerning rare earths. This is a WTO compliance issue. The MAT aims to formulate one voice on

behalf of the EU stakeholders. This is being achieved by exchanging information and at length

discussing strategies for sustained systematic lobbying. The understanding and viewpoints of the

market access issues of the PS in China and of their HQ in the EU MS differ at times. A regular

dialogue is also needed to achieve the one voice within the PS.

The Medical Devices MAT focuses on registration and standardisation procedures. A regular

dialogue is conducted by DG TRADE, DG SANCO and their Chinese counterparts at different

levels. The existing procedures are complex, and the Chinese authorities acknowledge the issues.

The EUD, EUCCC WG, EUCCC Desk and their respective Chinese counterparts (Ministries,

Administrations, think tanks, academic sector, industry sector, etc.) are jointly working on possible

improvements in the sector.

The IPR sector is also a crosscutting MAT. Besides the focus on facilitating a better, common

understanding of IPR relevant policy, administrative and judicial issues, it has recently been

suggested to work on a EU China Investment Agreement. An investment agreement could be a

more effective instrument to further promote and protect foreign investment, including IPR, in

China.

Compared to the Brussels based MAP structures, the MAT in China focuses more on cross-cutting

and specific issues such as public procurement, IPR and IT security. The MAWG in Brussels have

a clear product or services focus such as Textiles, Electronics and ICT, Tyres, Automotive,

Alcoholic Beverages, Leather, Chemicals, Medical Devices, and Postal and Courier Services, the

exception being SPS.

The key market access barriers identified by the MAT partners in China are as follows:

1. Public Procurement

2. Computer Reservation Systems

3. Sanitary and Phytosanitary (SPS)

4. IPR

5. Medical devices

6. Compulsory Certification System (CCS)

7. IT security

8. Insurance

9. Investment

10. Raw materials

11. Postal and courier services

This horizontal emphasis has been developed because there were several structures already in

place at the start of the MAT, with a very specific product and services focus. This is mainly due to

the existing organisation of the EUCCC. Working closely together with the EUD, it has a mature

structure in place with the same purpose of lobbying with one voice. Therefore the need for more

horizontal and less industry or product focus was pronounced, avoiding overlap, and ensuring

complementarity to the EUCCC structure. This pre-existing structure already reflected quite well the

realities of key MA barriers in China.

17


3.3 Procedures, communication and information exchange

The First Secretary of the Trade and Investment Section of the EUD is responsible for the

management of all specific MAT. There are nine EUD representatives who chair (or back-up) MAT,

and they are mainly communicating with the relevant DG in Brussels to exchange relevant

information. There is a specific MAT Unit at the EUD which channels the communication with

MAAC/MAWG. None of the interviewees were familiar with the role and responsibilities of the

MAAC/MAWG, or the communication tools of the MAP.

The EUCCC appoints one co-ordinator and one chair or vice-chair of the relevant EUCCC WG,

Forum or Desk to participate in the MAT, in close co-operation with the EUD. The EUCCC

interviewees indicated that they are willing and able to provide more in-depth information, but it

needs to be indicated by the MS and EUD what the actual demands are.

The roles and responsibilities within MAT are clear, but expectations among the participants vary.

The interviewees – EUD, PS and EUCCC, expect a more dynamic exchange in the near future with

more synergy. There is an unfulfilled expectation of a more active contribution and participation of

some of the MS. EUD has stressed that it depends on the active participation of its participants, and

MAT cannot be seen simply as a forum for the EUD to provide ‘one way’ information. However, it

was also noted that the MAT had only been established for less than a year and that more active

participation may take place once all participants become more familiar with the process and what

is expected and more knowledgeable of the substance of MA issues.

Besides the MAT – and for the most part preceding its establishment - market access barriers are

monitored by all stakeholders within their own context. MS have their own departments responsible

for market access issues, often not only in Beijing, but also in Shanghai, Hong Kong, Guangzhou,

Chengdu, Chongqing, Kunming, Shenyang or Xi’an. In other words, where their companies are

mostly active. Most MS maintain active links with the PS, and their own organisations in the home

state.

The EUCCC has over 40 active WG, Forums and Desks. The EUCCC is located in Beijing,

Shanghai, Tianjin, Nanjing, Pearl River Delta, Shenyang and Chengdu. They publish the annual

EUCCC position paper outlining the current state of affairs and giving recommendations for the

relevant stakeholders.

EUD has its own monitoring tasks and on occasion outsources monitoring of trade barriers.

Each in their own context and from their own perspective thus has mechanisms and processes

addressing market trade barriers, but often these include at least one of the other MAP partners.

Examples of such structures and forums include:

High and low level official dialogues and events: Besides the official high-level EU China

dialogue, there are many bilateral and multilateral events to deliver the message, and to get

more insight in current affairs. On a lower level a similar official dialogue is conducted. However,

meetings with lower level officials of the Chinese authorities are still very strict, and are limited

to conveying a message, based on pre-approved scripts for meetings.

Dialogues with local think-tank and experts: The Chinese think-tank organisations and other

experts are often indirectly involved in policy-making and decision-taking processes. They are

willing to meet on a regular basis with representatives from the EUD, MAT, PS and EUCCC.

They actively feed the message into the governmental channels.


Other EU organisations and projects: There are other EU supported organisations engaged

in market barriers projects in China, such as the SME Help Desk and the IPR Help Desk in

Beijing. The EU China Trade Project II6 is also instrumental in the dialogue.

PS and EUCCC lobby: This is a professional lobby with a long-term proven record. Staff of the

PS and EUCCC often stay longer in China compared to representatives of MS and the EUD

who move on to a new appointment every three to four years. A longer stay and extended

career enables the staff to maintain their relations with the relevant counterparts and deepen

their insights in Chinese politics, society and economy. EU and MS officials are often restricted

by the limited knowledge of the Chinese language, and are depended on interpreters and

translations. The nationality issue may also affect the dialogue. Representatives of the PS with

a Chinese nationality are considered to have more insights and be more able to “read the tea-

leaves”.

G9, G5 or likeminded MS processes: There are many combinations of countries and

organisations meeting for different purposes but with the same objective on a regular or ad hoc

basis, addressing the same or similar market access issues. For example, the MAT concerning

IT is led by a G9 organisation.

For crosscutting issues, on a rather informal and confidential level, UK, GER and FRA meet on

a regular basis with the EUD. These processes often depend on the individual willingness.

Given all these dialogues, meetings, events, projects and processes on different levels between all

stakeholders, one can tell the cohesiveness is great and there are positive dynamics. All

stakeholders acknowledge the need for and the effectiveness of sharing information and speaking

with one voice when lobbying in China for the removal of trade access barriers.

Although there is a great cohesiveness, within MAT or similar processes, the level of trust has its

limits. The willingness to share depends on the person involved, and on the position the relevant

MS has taken on a national level. Competition between MS and the major players of the PS exists.

This is sometimes but not often reflected in MAT or EUCCC WG. On occasion MS will defend their

own interests and take action bilaterally – as opposed to going through EU structures – likely with

the objective to attract more investments in or from China. This is more likely in the case of big MS

such as Germany, which have enough (economic) influence to establish a dialogue with the

Chinese Government independently.

6 The EUCTP II is the third major EU-China trade related technical assistance project since 2000. From 2010 to 2015,

project activities will support the Chinese government's trade reform and sustainable development agenda by working

under the EU-China economic and trade dialogues to promote fair competition and value for consumers; facilitate

harmonisation with international standards and promote safe products; improve food safety and quality; modernise

customs; encourage a more transparent legal environment, and work towards transparency, good governance and

sustainable development. The EUCTP II will hold approximately 400 individual activities, organised under five linked

components covering 40 technical files, to support China's continued integration into the global trading system.

19


4 The Local Market Access Teams – Performance and Results

4.1 Key barriers addressed

Table 4.1 provides an overview of three specific key barriers and how they were addressed, based

on information obtained during interviews in China. It gives an idea of the kinds of actions

undertaken in the context of the MAT.

Table 4.1 Overview of selected number of key barriers addressed

Key barrier Description Action

Medical

Devices

Dual regulatory controls of the General

Administration of Quality Supervision,

Inspection and Quarantine (AQSIQ) and the

State Food and Drug Administration (SFDA)

involve repetitive and unclear procedures.

This duplicative system increases the cost

and time of approval of medical devices in

China for EU based companies, which face a

competitive disadvantage vis-à-vis, their

Chinese counterparts.

Information is being shared between MAT

participants. A continuous constructive

dialogue and active co-operation with the

Chinese authorities is taking place.

Raw Materials Crosscutting issue. China is applying an

increasing number of export restrictive

measures, such as export duties and quotas,

affecting access to raw materials by foreign

companies. As a consequence, the EU

industry is facing great difficulties in securing

its supply with primary and secondary raw

materials. Chinese export restrictions

concern antinomy, bauxite / alumina /

aluminium, cobalt, coke, copper, fluorspar,

indium, lead, magnetite / magnesium

carbonate, manganese, molybdenum, nickel,

rare earths, silver, tin, tungsten, wood, yellow

phosphorus and zinc. The rare earth issue is

related to WTO compliance.

Strategies for effective lobbying are

discussed among MAT participants, insights

are being shared, action plans are being

developed. Other processes are taking place

in an informal setting with likeminded MS

only.

IPR The access to the Chinese administrative and

judicial enforcement system in China remains

problematic for EU companies, notably for

SMEs. This is a crosscutting issue.

Continuous constructive dialogue with the

Chinese counterparts. Negotiations regarding

a possible EU China investment agreement is

the latest development. Sub-MAT on an issue

level are considered.

These key barriers are aligned with the list of MAAC, but in a more horizontal structure. There is a

need expressed for establishing sub-MATs to be able to deal with prioritised topics.

The interviewees indicated that there is an overall consensus on how to address the barriers, and

there is little debate. The cohesiveness in approach is positive, and the willingness to function as

one unified actor is great. Interviewees all agreed on the relatively ‘soft’ approach taken by the EU


compared to the more aggressive approach taken by the US when dealing with the Chinese

authorities. The soft approach stands for a constructive dialogue, assisting the Chinese counterpart

in resolving the trade access issues by offering training, instruments, technology, knowledge, and

sharing experiences in developing improved systems.

4.2 Key results achieved

With the establishment of MAT structure initiated only one year ago, and only seven out of 11 MAT

operational, it is too early to assess the impact of MAT and to boast success stories. However,

achievements have been made in terms of enhancing communication between MAP partners and

promoting one EU voice.

One voice

The key result achieved is the fact that the EUD has actually linked the representatives of the EUD,

MS and PS in a structured and organised partnership on a local level. Before MAT were in place,

this was a missing link. EUD efficiently maintained relations with PS channelled by the EUCCC.

The EUD maintained appropriate relations with MS, convening regularly Trade Counsellor

Meetings. MS maintained contacts with national PS and the EUCCC. All was in place, but the

synergy of all three groups of stakeholders united in one structure was missing. In the context of

maintaining contacts and lobbying with the Chinese counterparts, the position of the MS was

therefore weakened. Moreover, the Chinese counterparts were able to make use of this

unstructured setting of the stakeholder groups. With MAT in place, the stakeholder groups are

facilitated in sharing information, defining strategies and actions, and synchronising one voice, and

therefore enabling each of them more efficiently and effectively dealing with trade access issues

and facing Chinese counterparts.

Proving causality

Apart from the issue of the limited time that the MAT has been operational in judging achievements,

to claim causality between the work of the MAT and progress in the removal of market access

barriers in China is simplifying complex processes. There are many reasons and factors related to

these market access issues and their possible removal (or not). Moreover, Chinese authorities

would never admit to such causality or even be confronted with the suggestion.

Early detection

With MAT functional, information and expertise exchanged, and strategies unified, early detection

has become one of the most obvious and potential achievements. With the stakeholder groups

united, it has become possible to monitor developments extensively. Consequently, much earlier

concerted action can be taken. There are examples of timely feedback to the Chinese authorities

when changes in legislation and policies were made public in order to solicit opinions. These

examples concern postal services and public procurement, which were shared in MAT context at a

later stage.

G3 US, Japan, EU

The EU with a synchronised voice has become a more likely player on the same level as the US

and Japan. An example of the positive role to be played by MAT, based on long term achievements

of the EUCCC, is the recent invitation from MofCOM to the EUCCC to jointly discuss with the US

and Japanese Chambers of Commerce on the establishment of a mechanism to fight IPR

infringement, a so-called ‘open window’. In this constellation the PS, EUD and MS can actively

participate in dialogues conducted with Chinese counterparts and the US and Japan.

21


Success story

Public procurement is an important sector of the economy, and requires constant attention. Early 2012 the

Ministry of Industry and Information Technology (MIIT) published a preliminary list of 412 models of cars

that were approved for procurement by government agencies. All of the cars on the list were local brands,

no foreign or joint venture brands were included. The preliminary list was open for public comment, and

became subject of a debate whether or not to promote the domestic car industry using protective measures

and how to curb (excessive) government spending on cars.

Both EUD and EUCCC immediately took action. EUD and EUCCC raised the issue during meetings with

the relevant counterparts in the government, and the EUCCC released press statements. The purpose of

the lobbying was to avoid having brands of foreign and joint venture car manufacturers excluded based on

‘nationality’ only.

The selection of government cars is also based on a different set of requirements such as engine capacity

not exceeding 1.8 litres and cost no more than RMB 150,000. Moreover, the government imposes other

requirements to the car manufacturer. For example, in the last two years companies have spent no less

than 3% of annual revenue on research and development.

The proposed list of brands of cars approved for procurement is still not officially published yet. It is

expected that purchasing of government cars will be delinked from ‘nationality’.

4.3 Added value of MAT

With the establishment of MAT, the added value compared to the situation before the MAT

structure was in place can be found in:

More expertise and insights from different perspectives available;

Mechanism in place for timely in-depth exchange of detailed information;

Mechanism in place for the exchange of insights and confirmation of relevant

developments, not depending on individual initiatives;

More results feasible due to joint early monitoring;

More well informed stakeholders;

MS inclusive mechanism in place linking EUD and PS;

Open structure to meet with relevant other non-EU stakeholders;

Synchronised voice, concerted strategies and actions;

Consistent structure in place, not depending on individual initiatives;

EU positioned at same level with US and Japan;

Facilitated structural dialogue (delivering the message) with relevant Chinese

counterparts;

Contributing to the dialogue of the PS and MS with their respective headquarters;

More focus on horizontal, crosscutting and policy issues, complementing industry and

sector related existing mechanisms such as the EUCCC;

Improved cohesiveness in lobbying with the Chinese authorities and dealing with market

access issues;

Confirmed consensus on the ‘soft’ approach of dealing with Chinese counterparts, which is

preferred over the aggressive approach of the US.

23


5 Key Findings and Conclusions

5.1 Key findings on functioning of the MAT and MAP in China

5.1.1 Procedures and communication

The procedures and communication has been initiated and led by the EUD in early 2011. The

purpose of MAT is clear with the stakeholders: delivering the message with one voice with a unified

approach. The EUD brings the PS and MS together in MAT, in close co-operation with the EUCCC.

The MAT functions efficiently, effectively and appropriate. It is in line with the MAP platform, and

complementary to the existing EUCCC. The process is locally driven.

However, interviewees indicated the MAT meetings tended to be too short for discussing the key

issues, and the expertise of the participating Trade Counsellors is seen as limited.

This passive participation might resolve over time, as it is still early in the process. The assumption

is that the participants understand the expectations of their role.

The PS, MS and EUCCC interviewees all expressed their appreciation for the very professional and

well prepared work the EUD has delivered for the MAT.

5.1.2 Performance and results

The main achievement so far is to have successfully initiated a process where the MS have

become more involved in the trade and investment discussions. This is taking place besides the

general regular Trade Counsellors Meetings. With all relevant stakeholders - EUD, MS and PS,

participating in the MAT platform, it is feasible to formulate a message and speak in one voice, to

be translated in concerted strategies and actions.

The focus is more on horizontal and crosscutting policy issues. The sector and industry related

issues are sufficiently dealt with in the existing structure of the EUCCC.

There are, however, different expectations among the three stakeholder groupings in the level of

dynamics. It depends on the individual, and the specific issue whether the participant is actively

joining MAT. The importance of this one voice is acknowledged by all stakeholders, and the

cohesiveness is considered to be good, however the level of active participation is seen as rather

low (by the PS in particular) with representatives of some MS. This might improve over time, as it is

still early in the progress, or needs to be expressly addressed.

The EUCCC representative indicated that the organisation has much more to offer given its wide

network, access to information and ample experiences, and that it is willing to further develop its

role.

The unified voice of the EU cannot be ignored by the Chinese counterparts, and ranks at the same

level as the US and Japan. The removal of existing barriers has therefore become closer, because

it is more obviously placed on the agenda of the EU China trade and cooperation negotiations on

different levels and from different perspectives (PS, official, semi-official, informal, think-tanks,

events, exchanges and so on). One voice from different perspectives strengthens the argument that

is being made.


The early warning function of MAT is useful, because at this point in time it is often still possible to

negotiate with and influence the decision makers. The Chinese authorities use a system where new

rules and regulations are first to be published at an early stage in order to solicit opinions from the

public. When MAT in co-operation with the EUD, EUCCC, PS and MS are jointly monitoring these

announcements from their own perspective, timely action can be taken as well as concerted

lobbying at different levels. This was the case with issues concerning the postal services and public

procurement.

5.2 Key factors behind successes and/or failures

Key factors:

Professional management of MAT by the EUD;

Willingness and ability of all stakeholders to share information;

Pro-active participation, MS in particular (at this moment still considered weak);

No overlap with existing processes, complementing, guiding and reinforcing function;

Need-based meetings, ad-hoc, flexibility;

Flexibility in issues to be addressed, varying from horizontal, cross-cutting to the level of a

particular issue;

Open structure, increased synergy, to allow EU stakeholders with strong interest to

participate;

Platform function, increased synergy, exchange with variety of actors, non-EU parties such

as non-EU Chambers of Commerce, think tanks, officials and experts.

Expectations management, for example by defining Terms of Reference of the specific

MAT;

Appropriate follow-up after the inception or initial meetings for specific MATs.

BELGIUM – BULGARIA – HUNGARY – INDIA – THE NETHERLANDS – POLAND – RUSSIAN FEDERATION – SOUTH AFRICA – SPAIN – TURKEY – UNITED KINGDOM

Sound analysis, inspiring ideas

3006 AD Rotterdam

The Netherlands

Watermanweg 44

3067 GG Rotterdam

The Netherlands

T

F

E @ecorys.com

www.ecorys.nl

Documents

Evaluation of the EC Market Access Partnershiptrade.ec.europa.eu/doclib/docs/2013/april/tradoc_150848.pdf · In-depth assessment of the functioning of the local Market Access Team