The EU’s New FTA Adventures and Their Implications for China

Abstract

With the EU having an adventure in FTA negotiations after the serious setback from the Doha Round trade negotiations, China becomes increasingly concerned about the potential trade diversion effects and the possible G2 domination by the EU and the US in terms of rule-making power in world trade. This article offers both a quantitative and qualitative analysis of the potential impact on China from the EU's two major FTA negotiations - one with the US and the other with Japan. Chinese intellectuals who are paying attention to these two FTAs, however, have very mixed opinions, which can be characterized as positive, negative or what can be termed as 'marginal impact'. On the basis of the analysis of the mixed opinions, the authors make further predictions about the possible responses of the Chinese government towards new FTA strategy of the EU, and suggest that the EU's FTAs need to exhibit sign of greater amicability and accepting of differing opinions and most importantly, they should form building blocks, instead of stumbling blocks, for the multilateral trading system.