CHINA'S TRADE POLICY POST-WTO ACCESSION: FOCUS ON CHINA-EU RELATIONS Fredrik Erixon, Patrick Messerlin and Razeen Sally 1 Our purpose is twofold: first to interpret China's overall trade policy since its accession to the World Trade Organisation (WTO); and second to home in on China-EU relations. Both are not exactly minor topics. To state the obvious: China's continued rise in the world economy makes its trade policy systemically even more important than it was at the time of WTO accession. And, perhaps less obvious, China-EU relations have rapidly become one of the major planks in the world trading system. The first part of the paper covers China's trade policy in the round. It briefly summarises policy trends leading up to WTO accession, as well as recent trade and foreign direct investment (FDI) patterns. Then it looks at China in the WTO: its record of implementing WTO commitments; its participation in the Doha Round; and in dispute settlement. The next section looks at China's trade-related reforms outside the WTO, especially unilateral measures and preferential trade agreements (PTAs). The final section highlights challenges for China's trade policy: in the context of domestic reforms; in the WTO; in PTAs; and in its two key bilateral relationships – with the USA and EU. The second part of the paper focuses on China-EU relations. It summarises bilateral trade and FDI patterns. Then it looks at macroeconomic issues, especially on the current account and exchange rates. The following section has a longer discussion of key trade-and-investment issues in bilateral relations, and concludes with recommendations for managing tensions, containing protectionism at both ends, and deepening commercial engagement. 1. China’s trade policy: trends post-WTO accession a. Trends up to WTO accession; trade and FDI patterns 2 1 Fredrik Erixon is Director of the European Centre for International Political Economy (ECIPE) in Brussels. Patrick Messerlin is Professor of Economics at the Institut D'Etudes Politiques in Paris and Director of the Groupe Economie Mondiale. Razeen Sally is Director of ECIPE and on the faculty of the London School of Economics.