EU-CHINA SUMMIT REACHES AGREEMENT FOR MORE TALKS

UNCLAS SECTION 01 OF 02 BEIJING 007430 SIPDIS SENSITIVE SIPDIS STATE PASS USTR STRATFORD GENEVA PASS USTR E.O. 12958: N/A TAGS: ETRD WTRO ECON CH SUBJECT: EU-CHINA SUMMIT REACHES AGREEMENT FOR MORE TALKS SUMMARY -------------- ¶1. (SBU) The EU-China Summit held in Beijing November 27-28, 2007 covered over thirty topics ranging from the EU arms embargo on China and human rights to macroeconomic issues and exchange rates. In a 47 paragraph joint statement, borrowing from last year's language, the two sides agreed to upgrade macroeconomics and financial services level dialogues to the Vice Primier level. In addition, a high-level dialogue will be held in early 2008 which will cover intellectual property rights and market access issues. A European Monetary Union delegation raised renminbi appreciation with the People's Bank of China but got no commitments. Mandelson was very displeased with the tenor of his exchange with Xinhua's President over Xinhua's infringement on the rights of financial information providers. Outgoing Minister of Commerce Bo Xilai dampened expectations for any Chinese movement on services beyond existing agreements. In the only apparent deliverable, a five hundred million Euro loan to China was signed for projects combating climate change. End summary. -------------- Upgrading the Dialog -------------- ¶2. (SBU) EU Mission Economic Minister Counselor Miguel Ceballos told Econoffs that the chief outcome of the 10th EU-China Summit was an agreement to upgrade to the Vice Premier level two senior dialogues on macroeconomic issues and financial services next year. No apparent progress was made on the rising trade deficit, but a high-level dialogue is expected to be held in March or April of 2008 which will include IPR and market access issues. ¶3. (SBU) At a Joint Committee meeting in June 2007 with then-Chinese Minister of Commerce Bo Xilai, Mandelson pointed out that existing economic tools were not successfully addressing the expanding trade deficit with China. Mandelson took the step to make public his discontent and a working group meeting soon followed. However, the EU and China held significantly divergent points of view, according to EU officials, with the EU citing lack of market access as the primary driver of the deficit and China offering to increase the number of trade fairs. -------------- --- No Movement on Renminbi or Market Economy Status -------------- --- ¶4. (SBU) In its first foray out of Europe, the European Monetary Union Troika (Eurogroup President Juncker, EU Commissioner Almunia and ECB-President Trichet) pushed renminbi appreciation in meetings with the People's Bank of China. Apart from setting up a working group with the People's Bank of China to deal with exchange rate related issues, the Troika did not achieve other concrete results, the EU Mission officials said. ¶5. (SBU) While China continued to push for market economy status the EU agreed to review China's concerns. Since the dialogue includes both political and economic issues the EU also brought up their concerns over human rights. Though not explicitly linking the two the EU delegation sought a "comprehensive" look at the overall EU-China relationship, according to EU officials. -------------- -------------- Xinhua Infringement, National Security, and Foreign Lies -------------- -------------- ¶6. (SBU) Mandelson raised the issue of Xinhua's infringement on the rights of foreign financial information providers in a two-hour side meeting with Tian Congming, President of Xinhua News Agency. The EU has concerns over Xinhua acting as a regulator and an operator. Xinhua, in implementing governing rules is also now requiring foreign companies to divulge proprietary information about their clients (including rates they charge). Tian, frequently interrupting Mandelson brought up references to national security, "foreign lies," and China's territorial integrity. Mandelson, clearly frustrated with this response, told Tian that he had been dealing with this issue for over one and half years, and "would have to draw his own conclusions" from the tenor of Tian's remarks. -------------- -------------- Don't Expect Movement on Services Says Outgoing Bo -------------- -------------- BEIJING 00007430 002 OF 002 ¶7. (SBU) In perhaps his last meeting as Minister of Commerce, Bo Xilai told Mandelson not to expect much movement on services beyond existing WTO and multilateral commitments under the Doha Development Agenda. -------------- -------------- Five Hundred Million EU Loan to Combat Climate Change -------------- -------------- ¶8. (SBU) In the only apparent hard deliverable of the summit, a five hundred million Euro framework loan from the European Investment Bank to the People's Bank of China was signed. The loan would support projects combating climate change. RANDT