Trade between China
and the EU is worth €1bn a day (Reuters)
A mooted start to free trade talks between the European Union and China is adding fuel to the fiery debate around the UK's membership of the single market ahead of a proposed in/out referendum in 2017.
Officials in Brussels and Beijing are on the verge to agreeing talks over tearing down some of the trade barriers between the two economic giants and creating a better investment climate in the Asian powerhouse for European firms, reported Reuters.
They hope to unleash billions more euros of investment between both trading partners. China-EU trade is worth over €1bn ($1.3bn, £837m) a day, but certain tariffs and blocks, such as a cap on Chinese solar panel imports to Europe following a dispute, put a limit on the value.
As the UK heads towards a referendum on its EU membership, proponents of staying in argue that being part of the single market means it benefits from the vast 28-state economy that can wield power in lucrative trade deals.
If the UK were to leave and go it alone, they argue, it would be less influential and struggle to make the same deals as the EU bloc is able to.
"Over the last 20 years, a large part of the EU single market's success has been its ability to break down cross-border regulation barriers in Europe," said Katja Hall, chief policy director of the Confederation of British Industry (CBI), Britain's biggest business lobbyist.
"We must now use the EU as a launch pad to break down those remaining barriers to trade with countries such as China, the US and beyond."
However, others argue that waiting for the EU to negotiate trade deals takes too long and the UK may be better using its own initiative.
"While it is welcome that the EU has recognised that China is an important market, the reality is that this trade deal could take several years to complete, during which time Britain's own bi-lateral investment deal could be put at risk," said Matthew Elliott, chief executive of Business for Britain, a group campaigning for the renegotiation of the UK's EU membership.
"The EU is still locked in a tariff war with China and has said that this new deal will only be completed if several preconditions are met, potentially dragging out the process further.
"Many British businesses who want easier trade with the Far East will wonder if the UK government is not better placed to manage its own trade agreements with foreign governments."
The EU has already agreed a $200bn trade deal with the US.
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