News story

PM champions EU free trade deal with China

David Cameron arrives in Beijing with the message that ‘an open Britain is the ideal partner for an opening China’.

The Prime Minister will call for the European Union (EU) and China to negotiate a free trade deal unleashing tens of billions to the European and Chinese economies.

Leading the largest ever British trade mission to go to China, the Prime Minister intends to use the visit to shift the relationship up a gear and deepen a lasting partnership for growth and reform that can help to deliver the Chinese dream and long-term prosperity for Britain too.

EU-China free trade deal

At a meeting with Chinese Premier Li Keqiang in Beijing today, the Prime Minister will make clear he is ready to put his full political weight behind an agreement to liberalise trade between China and the EU - the world’s largest trading bloc and China’s biggest trading partner. Such a deal would deliver a sizeable economic prize with initial economic analysis suggesting it could be worth up to £1.8 billion every year to the UK economy alone.

Becoming the first European leader to champion such a deal in this way, the Prime Minister set out the reasons why a deal should be achieved in an article for the Chinese weekly business publication Caixin, saying:

Britain is uniquely placed to make the case for deepening the European Union’s trade and investment relationship with China. Building on the recent launch of EU-China negotiations on investment, and on China’s continued commitment to economic reform, I now want to set a new long-term goal of an ambitious and comprehensive EU-China Free Trade Agreement. And as I have on the EU-US deal, so I will put my full political weight behind such a deal which could be worth tens of billions of dollars every year.

The government has already started making the case for an ambitious EU-China free trade agreement, raising it with European partners, including at the Eastern Partnership summit in Vilnius last week.

The government has already identified that eliminating tariffs in the 20 sectors where they are highest would save UK exporters approximately $1 billion a year. The UK has significant sectoral strengths in these high tariff areas, which include vehicles, pharmaceutical, mechanical and electrical goods, and which together account for 36% of UK exports to China.

A free trade deal would also address issues such as services liberalisation and better intellectual property, where the gains could be even greater.

Investment & intellectual property

While an EU free trade deal will take time to negotiate, the Prime Minister will use this week’s visit to press ahead with closer co-operation in other areas that will help British businesses and boost the UK economy. These include:

  • inward investment into Britain from China will get a significant boost when the Chinese ministry responsible for authorising all major overseas investments signs a landmark deal backing Chinese companies to invest in the UK, as well as supporting more investment from British companies into China; this will be the first deal of its kind between China and a European partner
  • British businesses will also benefit from a new accelerated patent process – the Patent Prosecution Highway - that will provide swifter consideration of British patent applications if examination work has already been conducted at another intellectual property office; this will mean that a patent for an invention could be granted much sooner than would normally be possible, enabling firms to take action against infringers
  • an agreement between Standards Association of China and British Standards Institution to permit the mutual adoption of British and Chinese standards facilitating the supply of products across both UK and Chinese markets and regulatory compliance; and enhancing the market access opportunities for SMEs in both countries

These measures will help business concerned about the economic impact of intellectual property (IP) infringement in China, estimated to cost from tens of millions to several billion pounds. Infringement of intellectual property in China is a real concern for British businesses and a number of trade delegates accompanying the Prime Minister on the visit raised the issue with him during a meeting in Downing Street last week. Such issues can significantly add to the cost and difficulty of entering the market, especially for SMEs who account for around half of the business delegation. In 2012, 1 in 4 UK businesses were put off doing business overseas due to concerns around IP theft.

Jaguar sign £4.5 billion agreement for 100,000 car sales

The Prime Minister’s visit to China began with a visit to Jaguar Land Rover’s training academy in Beijing to mark its official opening as Jaguar Land Rover sign a new agreement to provide 100,000 cars to the National Sales Company in China over the next year, demonstrating the value of the UK market to British companies.

Jaguar Land Rover’s activities in China indirectly support 38,000 British jobs and China has now overtaken Britain to become its largest market. The technical academy in Beijing has the capacity to train 4,500 people a year – the trainees are technicians, sales consultants and service advisors. It’s the second such facility to open in China and will shortly be complemented by a new Academy in Guangzhou. Collectively these centres will see more than 10,500 technicians, sales consultants and service representatives trained to deliver world class levels of customer service across 223 authorised dealers in more than 90 cities.

Summing up his ambition for the China trip in Caixin, the Prime Minister said:

I hope that by advancing and extending our bilateral trade, by working together on the global issues that affect us all, and by maintaining an honest and open dialogue, my visit to China can plant the seeds of a long-term relationship which will benefit China, Britain and the world for generations to come.

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