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`Non-trade barriers' deprive EU firms of billions, study says

European businesses lose billions of euros every year in lost opportunities in China because of local practices that keep foreign companies out, a study produced for the European Commission said on Tuesday.

European firms lost 21.4 billion euros (US$28.2 billion) in 2004 because "non-trade barriers" effectively shut them out of markets for goods and services, said Philip Bartley of the Emerging Markets Group consultancy, who prepared the study for the EU executive.

EU exporters of traded goods lost an estimated 12.4 billion euros in lost opportunities while the services industry lost 8.9 billion euros in 2005.

Speaking to an EU-China conference organized by the commission, he said there was a feeling the playing field was not level in some sectors, mentioning cars, machinery and pharmaceuticals as well as problems in certain regions where extra rules and standards make it harder for foreigners to start doing business.

Bartley said that European businesses believe they were sometimes held to higher environmental and social standards than their Chinese counterparts who also benefit from state subsidies and exclusive access to government contracts.

Limited trade flows in telecoms and banking meant overall economic losses were hard to estimate, the study said.

Bartley said China would benefit from opening up its market, mentioning EU and US concerns over copyright and piracy enforcement.

"Lax intellectual property rights in may ways keep Chinese companies lazy in terms of their own research and development," he said.

Bartley also said state subsidies were going to have a negative effect on Chinese private sector companies who would be pushed out of the market.

But substantial government aid gives state-owned companies a comfortable environment where bankruptcies are rare and business strategies are directed by political aims, the study said.
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