Info Service on WTO and Trade Issues (Sept18/05)
14 September 2018
Third World Network
EU, US poised for combined assault on China's trade policies
Published in SUNS #8750 dated 12 September 2018
Geneva, 11 Sep (D. Ravi Kanth) - The European Union and the United
States seem to be ganging up against China for a combined assault
on Beijing's trade policies, after closing ranks on some bilateral
issues, according to people familiar with the development.
The EU and the US appear to be on the same wavelength when it comes
to major changes to rules at the WTO barring issues concerning the
improvements in the dispute settlement system.
The two trans-Atlantic trade elephants on Monday signalled their intention
to conclude a partial agreement in the area of technical barriers
"An early harvest in the area of technical barriers to trade"
could be concluded between the EU and the US by November, according
to a report in the Financial Times of 10 September.
The US Trade Representative Ambassador Robert Lighthizer indicated
that the proposed deal on technical barriers to trade will reduce
regulatory hurdles that "hamper commercial exchanges across the
Atlantic, such as conflicting standards on car safety, medical devices
and pharmaceuticals, which had been the subject of lengthy negotiations
between the Obama administration and officials in Brussels,"
according to the FT report.
"We discussed how to move forward and identify priorities on
both sides, and how to achieve concrete results in the short and medium
term," EU Trade Commissioner Cecilia Malmstrom tweeted after
the meeting with Ambassador Lighthizer. "Lots of work remains
this autumn," she wrote.
Significantly, the US had blocked several proposals from the EU in
the Doha negotiations on industrial goods for addressing non-tariff
barriers, particularly technical barriers to trade.
For example, the EU along with Norway, Switzerland, India, Malaysia,
Thailand, and the Philippines had floated a proposal on "international
standardization" on 19 January 2011.
In a document (Job/MA/81), the seven countries had underscored the
need for "international standardization" by taking into
account several different dimensions for facilitating trade.
The EU had also made several other proposals for addressing the non-tariff
barriers. The US, however, blocked any negotiations, saying that it
would not engage until negotiations on tariffs were concluded.
Against this backdrop, the USTR's statement to the FT about an "early
harvest" on technical barriers to trade with the EU is puzzling.
It is not clear what else was discussed during the bilateral meeting
between the EU and the US, as the two sides remained coy about other
major issues, particularly China, which is prompting the two sides
to close their ranks.
The EU along with Canada are spearheading efforts to bring fundamental
changes to rules at the World Trade Organization in a manner that
would please the US.
The US President Donald Trump and the USTR had repeatedly called for
comprehensive reforms in the WTO threatening that Washington would
leave the trade body without substantial changes.
The US, which had put the Doha negotiations to bed, is determined
to bring fundamental changes at the Dispute Settlement Body (DSB)
by doing away with the Appellate Body and by pursuing plurilateral
negotiations on a limited number of issues, especially electronic
The EU and the US are on board on changes to rules concerning the
monitoring function and enhanced role for the WTO Secretariat in overseeing
the notification and monitoring aspects, for pursuing plurilateral
negotiations on electronic commerce and other issues, for introducing
differentiation to deny special and differential treatment for China,
India, and South Africa among others, and most importantly, for crafting
new rules to address issues concerning China's alleged trade-distorting
In the unofficial non-paper for "modernizing the World Trade
Organization" issued more than two months ago, the EU had set
out the markers for changes to rules at the WTO that are in line with
the US priorities.
For example, the EU called for making "the WTO more relevant
and adaptive to a changing world" on grounds that "the accession
of China in the WTO and its [Beijing's] failure to converge towards
the market economy model has revealed gaps in the WTO rulebook that
needs to be addressed now."
"These gaps [arising from China's accession]," according
to the EU, "relate mostly to the way a government exercises its
powers to either give preferential treatment to its domestic operators,
i.e., through subsidies or skewed regulatory practices and policies
or to obtain the competitive advantages of foreign operators for its
own use (i.e., through forced technology transfer or failure to protect
"The EU should therefore work to develop new rules to address
current gaps in the rulebook with regard to level playing field issues
such as subsidies and state-owned enterprises; investment market access;
regulatory barriers to services and investment, including rules on
technology transfer," the EU's non-paper had explicitly argued.
The USTR had raised the same concerns about China well before Brussels
mustered courage to highlight them at the WTO and outside. Clearly,
there is a convergence between the US and the EU in forging a common
front against China for crafting new disciplines on subsidies, state-owned
enterprises, and regulatory issues.
For the past several months, the EU along with the US and Japan were
busy forging a common front as part of a "trilateral" process
against China for bringing new disciplines on industrial subsidies,
state-owned enterprises, and intellectual property.
The alliance with the EU has also become important for the US which
is finding it difficult to make a significant dent in its trade war
"The Trump administration has been seeking to temper its trade
fights with its strategic allies in recent weeks, including the negotiation
of a deal to reform NAFTA (North American Free Trade Agreement) with
Mexico and Canada, in an effort to focus on its escalating trade dispute
with Beijing," according to the Financial Times on 10 September.
The EU and the US are also on the same wavelength when it comes to
pursuing "differentiation" that would allow a new approach
"to development and special and differential treatment based
on a case-by-case, needs driven analysis," and "encourage
developing country members to move toward undertaking greater commitments."
It is only on the dispute settlement function of the WTO that the
EU and the US differ significantly at this juncture.
The US is determined to terminate the Appellate Body after blocking
the second term for the AB member Shree Baboo Chekitan Servansing.
Washington wants to revert to the pre-WTO phase of negotiating panel
findings instead of resolving before the highest adjudicating body.
In its non-paper, Brussels emphasized: "The EU should put forward
a comprehensive proposal to address the concerns raised by the WTO
member [the US] blocking the Appellate Body appointments to the extent
that they have merit, while preserving and further strengthening the
main features and principles of the WTO dispute settlement system.
This proposal will - in a first stage, and i n order to unblock the
appointments - aim at improving the efficiency of procedures, at creating
conditions for a better interaction between the Appellate Body and
the WTO members while at the same time strengthening the independence
of the Appellate Body. In a second stage, substantive issues concerning
the application of WTO rules would be addressed."
Prior to the EU-US bilateral meeting on Monday, the WTO director-general
Roberto Azevedo had dispatched his chef de cabinet Tim Yeend to Brussels
to share the WTO Secretariat's proposals for reform, according to
a report in Politico on 5 September.
It is safe to conclude that there is a new bonhomie between the US
and the EU for ganging up against China and for preparing the ground
for fundamental reforms that would deny special and differential treatment
to several countries of the Global South.