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2009-07-08 | All chapters

EU companies cut out of China's stimulus, says ambassador
Andrew Willis, EU Observer, 8th July 2009

EUOBSERVER / BRUSSELS – The European union's ambassador to China, Serge Abou, claims European companies are being cut out of projects funded by China's 4 trillion yuan (€421bn) stimulus programme.

"I have to say very clearly that some of our companies have suffered not to have been chosen," said Mr Abou on Wednesday (8 July), reports the Associated Press.

The sentiments are shared by the European Union chamber of commerce in China (EUCCC), which says the bidding process used to allocate stimulus projects is designed to exclude foreign-owned suppliers.

As an example, the chamber says European companies that produce wind turbines have been prevented from bidding for a €3.6 billion wind project financed by the stimulus programme.

Mr Abou did not rule out some form of European retaliation. "This principle of non-discrimination has to be respected," he said.

"If not, there is this clear fear that some European investment will be diverted from China and go elsewhere where the climate is more favourable for European investment."

EU options

Despite the prospect of the wind farm example being replicated in other areas, the EU is partially constricted by the fact that China is not a signatory to the World Trade Organisation's agreement on public procurement.

However, Europe does have a number of options open to it, says Fredrik Erixon, director of the European Centre for International Political Economy, a Brussels-based think-tank.

European products frequently offer better value for money he told EUobserver, adding that China might be persuaded to sign up to the WTO's agreement on public procurement in exchange for something in return.

"The problem in Europe … [is that] they believe that they can demand things from China and that China is going to deliver without having the right to ask for something in return," he said.

China is not the only country seeking to keep stimulus funds within its borders.

Earlier this year, both China and the EU were critical of United States initial intentions to attach a Buy American clause to projects funded under the country's $787 billion (€565bn) stimulus programme.

The US eventually adjusted the clause - that would have negatively affected foreign steel producers - to comply with its WTO obligations.

Source: http://euobserver.com/19/28431