The paper explores the causes of China's rising manufacturing exports to the EU

after WTO accession. While the European trade policy environment remained largely

unchanged in most sectors, a spillover from a change in US trade policies towards

China is emphasized. In the proposed model the transmission occurs through a global

component of the fixed costs firms must pay in order to export. If a large fraction of

this component can be covered from exporting to one destination, exporters will serve

also other markets to maximize their profits. The empirical analysis makes use of the

removal of US tariff uncertainty in conjunction with China's WTO accession. It shows

that: (i) the structure of China's export boom to the EU conforms to the pattern of

US tariff uncertainty; (ii) the adjustment takes place at the extensive margin, (i.e. a

good is exported to more destinations); and (iii) the effect phases out after a few years.

The results have implications for the scope of international policy negotiations and

provide suggestive evidence on the nature of the fixed costs that manufacturing firms

in low-wage countries must overcome.