On September 2nd, the European Chamber launched the 2010-11 edition of its annual Position Paper.

This Position Paper provides detailed recommendations to improve the operational business environment across 24 industries, 11 horizontal topics, and specifically in 8 cities and regions. Those 43 individual papers have been prepared by the European Chamber's Working Groups and Forums in our seven Chapters throughout the country.

It is the tenth year of the European Chamber in China and the publication of the Position Paper marks a milestone in our history. In these ten years, the Position Paper has expanded from our initial 16 individual topics back in 2000 to the 43 papers we have published this September, reflecting the growing diversity and complexity of China's market environment.

This year's Position Paper highlights the need for fairness in the marketplace and the market access problems encountered by European firms when they invest in China.

China has too many regulations and these regulations are implemented unequally. China continues to be one of the most legislated and controlled of the world's major economies and excessive red tape continues to be a significant barrier to trade. In our Position Paper, we highlight three main regulatory barriers:
- Compulsory certification and licensing,
- Intellectual property policies
- Discriminatory government procurement policies.

Compulsory certification and licensing schemes are being used in China to regulate a growing market and are restricting European businesses access to the Chinese markets. Despite its commitments to open up services markets when China entered the WTO back in 2001, licensing requirements continue to exclude foreign companies from entire service sectors. Take as an example the Telecom services industry. When China acceded to the WTO, it signed the Basic Agreement on Telecommunications and the conditions that accompany it, which included establishing an independent regulator, the adoption of transparent policies and regulations, national treatment, equal access to radio spectrum, and so on. To date, none of these commitments have been fully implemented, either in word or in spirit. This completely excludes European business from the telecom service industry.

A series of "Indigenous Innovation" policies have established preferential treatment for products containing "indigenous" intellectual property. This policy can affect Chinese consumers, restricting their choice of products and also discriminating against foreign companies, deterring them from developing and marketing innovative products in China.

Recently China has taken a number of measures which have made the government procurement process less transparent and potentially discriminatory. These include the 'Buy China' regulations and the draft implementation rules for the Bidding Law and the Government Procurement Law. This new regulatory trend will make it more difficult for China to join the WTO Government Procurement Agreement (GPA) and excludes foreign enterprises from competing for government procurement contracts. I hope that China's new GPA offer marks a turning point in this trend.

This excessive regulatory burden is made worse by unequal implementation and regulatory uncertainty. Many laws affecting foreign businesses are enacted without adequate consultation. More worryingly, these laws are often implemented in an inconsistent and unpredictable way. For example, in April 2009, MOF and the State Administration of Taxation issued the Notice Concerning Corporate Income Tax Treatment for Enterprise Restructuring, which applied retroactively from 1 January 2008. The retroactive application of laws makes it very difficult for our members to plan their spending and adds an extra risk to their Chinese investments.

Once enacted, these laws are not always applied in an equal and consistent manner. Arbitrary enforcement of regulations continues to be one of the biggest problems for foreign business in China. Existing Chinese laws often lack specific procedures for implementation and the competent authorities are often given wide discretion to enforce legislation. This leads to different implementation across the country, creating uncertainty for foreign investors and undermining their confidence in the fairness and reliability of the legal system.

European companies doing business in China wish to ensure that they fully comply with Chinese laws in all their activities but they are becoming increasingly frustrated by this uncertain legal environment. European companies are still heavily restricted in their investment possibilities in China. When it comes to strategic sectors in particular, European investors continue to be constrained in areas ranging from telecom services to insurance, construction and the automotive industry. Yet in Europe, many of these same companies play an influential role in advising their own governments on China policy and the vast majority are pressing for reciprocal approach in Europe and in China, including less protectionism and more fairness in trade and investment. I hope our Position Paper can encourage China to do the same by providing some practical solutions to alleviate the regulatory restrictions.

The annual Position Paper provides an opportunity for open discussion on issues affecting European business. The paper has an audience with high level policy makers in China and Europe. It was compiled by our member companies, based on their 'on the ground' experiences in China. It provides a comprehensive overview of the problems affecting European business as well as  recommendations on how European companies can best contribute to China's continuing economic success.

As part of the process of dialogue and discussion on the future of the Chinese business environment, I look forward to presenting the 2010/2011 European Chamber Position Paper to policy makers across China and Europe in the months ahead.

Yours,

Jacques de Boisséson