Friday, 23 October 2015

The China problem

How well I remember the 2008 credit boom. Everything was plentiful and cheap. Our markets were flooded with cheap Chinese goods from DVD's, portable stereos to lawnmowers. Most of which were crap and will now reside in a landfill somewhere, probably back in China. We got ourselves heavily indebted to by useless junk that we didn't need and didn't work very well either.

I remember well the petrol lawnmower I bought. Just pulling the starter cord ripped out most of the workings and the cast chassis cracked within two months. So to do I remember 1995 when our markets were opened to cheap and lethal Chinese fireworks. As a budding teenage pyromaniac and vandal, I was delighted!

That is not to say all cheap Chinese imports are bad, but those europhiles who want to exalt the virtues of the EU-China trade agreements cannot then do likewise for supposed EU safety regulations and its environmental record. In fact in any instance, the EUs environmental record, excluding the wasteful Chinese trade triangle, is abysmal.

While we supposedly have CE markings you know from your own experience that just about any piece of plastic tat from China is now permitted to carry one, and its value has gradually been eroded over the years. As to Chinese automotive safety... fuhgeddaboudit!!

It's not as bad as it was as China has recently started a New Car Assessment Program, C-NCAP, with standards that will allegedly soon match those of Europe. That's Europe, not the EU. That's because the standards are made and set by UNECE. Only through regulatory convergence will China be allowed to export its cars to the EEA.

But as with the CE mark, there are growing concerns that China may do likewise with C-NCAP. While we are broadly supportive of the idea of a global single market, we are extremely wary of that process happening without our voice at the top table - as is happening while we are in the EU.

UNECE standards are based on a wide consultative consensus on vehicle safety issues between the government, industry and consumers, calling in expertise from all the major Western academic institutions. CATARC which runs C-NCAP on the other hand, is a government-affiliated institute and operates largely in secret - and obviously in a foreign language which takes it out of the Western sphere of transparency. Grumble about the EU all you like but transparency is one thing in its favour. Everything I have pieced together in my own cumbersome way has been by referring directly to EU documentation. We're certainly not going to get it from our media - so as ever, we must turn to the blogs.

Chinese Automotive blogger ChinaAutoWeb has some serious concerns about C-NCAP asking if the system is a scam purely to gain access to European markets. "The program lacks neutrality and fairness due to its for-profit activities. For those automakers who choose to pay for the crash tests of their own models, the program routinely selects as test cars models of top trim levels, which come with more safety features, even if those models are rare on the market."

"Compared with NCAP tests in other parts of the world, the tests C-NCAP carries out are often insufficient, less strict, and based on compromised requirements. C-NCAP administers three tests: frontal of 100% and 40% overlap and side impact, omitting pedestrian protection, rear impact, and side impact pole tests. And it usually crashes cars at a lower speed than other NCAPs, opting for 50km/h in the frontal test–compared with 64km/h in Europe, Australia and Latin America, and 56km/h in the US. What’s more, a model can get credits for many extra-test factors, such as how many airbags it has, whether the seatbelt reminders are installed, and the way it gives out these extra credits often seems non-consistent and arbitrary." Alarming stuff.

As we have noted on this blog trade doesn't really happen between nations and blocs anymore. Opening our markets is no longer about agreements to drop tariffs between nations because they are minuscule anyway. Trade deals now are all about removal of technical barriers to trade - ie regulatory convergence. In this dynamic, the talks for a Mutual Recognition Agreement with the Chinese automotive industry will take place between UNECE and CATARC. In this, because its a trade matter the EU has exclusivity so it can force us to vote for the agreement even if we don't want it - and I can think of several reasons why we wouldn't.

The inherent risks there are that we could be forced into a MRA with China, and we open our markets to cheap and unsafe cars because the EU says so. Outside of the EU, like Norway, we would have a veto at the UNECE level. That's real influence. Being subjugated by the EU is dangerous.
Since the new trading dynamics is inter regulatory agency mergers and MRAs, we need to be at the top table with our own voice and our own veto to protect our own standards and where necessary protect those industries that are strategic national assets.

Europhiles ask "Is it better to step back and let the big countries set all the rules?" - whereas I ask what could possibly worse that having two massive global regulatory agencies setting the rules without having a voice in that? As antidemocratic as that is, what it usually means is big money talks at the top and we end up allowing cheap and dangerous imports. Europhiles need to set out in detail why that is a good thing. Again, the advantages are lost on me.

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