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China Issues are Focus of U.S., EU, Japan Talks

Monday, May 27, 2019
Sandler, Travis & Rosenberg Trade Report

China trade issues were the primary topic of conversation at a May 23 meeting in Paris of trade ministers from the U.S., the European Union, and Japan, according to a joint statement issued after the meeting. Other topics included World Trade Organization reform, export finance, and e-commerce. The dialogue was the latest to be held as part of a trilateral initiative launched in December 2017 to enhance cooperation on trade issues.

Non-market-oriented policies and practices – Since January U.S. Trade Representative Robert Lighthizer, EU Trade Commissioner Cecilia Malmström, and Japanese Minister of Economy, Trade, and Industry Hiroshige Seko have intensified their exchange of information about the non-market-oriented policies and practices of third countries (e.g., China) that “lead to severe overcapacity, create unfair competitive conditions for their workers and businesses, hinder the development and use of innovative technologies, and undermine the proper functioning of international trade.”

Both the EU and the U.S. are continuing to treat China as a non-market economy in antidumping and countervailing duty proceedings, and Beijing has filed WTO cases against both for doing so. The ministers reiterated a commitment to continue working together in these cases to “maintain the effectiveness of existing WTO disciplines in this area.”

The three ministers also suggested that they may increase their utilization of enforcement and rulemaking to address growing concerns that third parties are developing state enterprises into national champions and directing them to dominate global markets and that these enterprises enjoy non-market advantages and engage in domestic behavior that result in distortions having a negative effect on farmers, workers, and enterprises in the U.S., the EU, and Japan.

Industrial subsidies – With a goal of initiating WTO negotiations to strengthen disciplines on industrial subsidies and state-owned enterprises, the three partners will (a) work to finalize text-based work on “increasing transparency, identifying harmful subsidies that merit stricter treatment and ensuring that appropriate benchmarks can be used” and (b) increase outreach to key WTO members on the need to strengthen industrial subsidies rules to address market distortions.

Forced technology transfers – Relevant authorities have been deepening cooperation on investment review mechanisms, including through the sharing of best practices on risk analysis and mitigation methods. However, no progress was reported on the issues of enforcement, the development of new rules, or export controls.

WTO reform – The three partners submitted to the WTO Council for Trade in Goods in April a revised proposal on WTO member compliance with transparency and notification obligations and are working to achieve an agreement on this issue “at the earliest possible timing.” The ministers again called on advanced WTO members claiming developing country status to “undertake full commitments in ongoing and future WTO negotiations” rather than continuing to seek special and differential treatment and noted that some have indicated their intent to do so.

Export finance – The ministers called on the International Working Group on Export Credits to accelerate its work with a view to reaching consensus on new international export finance disciplines by 2020.

E-commerce – No progress was reported on the three economies’ push for the timely initiation of WTO negotiations toward a high-standard agreement on trade-related aspects of electronic commerce.

For more information on these negotiations, please contact Nicole Bivens Collinson at (202) 730-4956.

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