EU, Japan, US jointly sponsor WTO reform

Decision is part of an effort to prevent China from distorting global market

Photo: EPA Cecilia Malmstrom

Trade Commissioner Cecilia Malmstrom, US Trade Representative Robert Lighthizer and Japanese Economy Minister Hiroshige Seko met in New York on 25 September to discuss WTO reform, jointly denouncing trade-distortive practices long-pinned on China. In a statement issued after the trilateral summit, they said they share a common view on the need for the reform of the organisation and, with respect to its monitoring and surveillance function, agreed as a first step to co-sponsor it as part of an effort to prevent unnamed “third countries” to engage in “severe overcapacity” and create unfair competitive conditions, which threatens technological development and ultimately distorts global trade.

The proposed change, in particular, concerns the notification system for domestic industrial subsidies and strengthening the activities of the regular committees of the Geneva-based global trade watchdog. “The trilateral partners continue exploring how to increase the costs of transparency and notification failures and how to strengthen the ability to obtain information on subsidies,” the statement said, referring to China, albeit it refrained from naming that country explicitly.

The meeting on sidelines of the UN General Assembly comes as some WTO members such as Beijing have failed to comply with the notification system under which WTO members are required to report to the 164-member body when they extend subsidies to domestic industry. Sharing Washington's concern about Beijing's alleged intellectual property and technology theft, the ministers affirmed that no country should require or pressure technology transfer from foreign companies to domestic companies, including through licensing processes and the use of joint ventures.

“Market-oriented conditions are fundamental to a fair, mutually advantageous global trading system and that their citizens and businesses operate under market-oriented conditions,” the ministers announced, adding that they “found such practices to be deplorable” and noting the three economies were considering “possible measures” that could be undertaken.

The international efforts to strengthen the multilateral trading system come at a time when EU and Asia hope that the WTO's reform is key measure for easing US dissatisfaction and keeping Washington from taking unilateral actions such as raising tariffs. “I believe such efforts will lead to deterring or averting a trade war or that kind of thing to be carried out between two countries,” Seko said. The three parties are expected to submit their final proposal to the WTO as early as next month.

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