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article imageEU, China vow to uphold global trade order despite divisions

By Ryan MCMORROW (AFP)     Jun 25, 2018 in Politics

The European Union and China pledged on Monday to strengthen a rules-based international trading system amid US protectionism, although the EU highlighted its concerns about Beijing's own restrictive market practices.

Officials on both sides pledged to strengthen the World Trade Organization, announcing a plan to cooperate on updating the body which has come under blistering criticism from US President Donald Trump.

The WTO "provides the basic infrastructure for rules-based trade and rules-based world order; China and the EU both support this approach," said European Commission Vice President Jyrki Katainen, noting the two sides would form a working group to modernise the organisation.

State subsidies to industry and forced technology transfer should be taken up by the WTO, Katainen said, adding that the EU shared Washington's concerns about Chinese practices in these areas.

"The two issues together are some reasons why the US has taken unilateral action," said Katainen.

The high-level economic meetings in Beijing came as both the EU and China face rising trade tensions with the United States. Brussels and Beijing recently announced new tariffs on US goods in retaliation for moves by the Trump administration.

"Both sides agreed to resolutely oppose unilateralism and protectionism and prevent such practices from impacting the world economy and even dragging the world economy into recession," said Chinese Vice Premier Liu He, responsible for shepherding the world's second largest economy.

Liu had led China's three rounds of trade talks with the US, negotiations that have broken down over the Trump administration's pledge to move forward with tariffs despite an agreement in May to put the duties on hold.

"Unilateralism and trade protectionism is on the rise and tensions have appeared in the economic relations between major economies," Liu told an audience of European and Chinese officials.

Even as the two sides see some common ground on combating the US moves, there are deep divisions between them. EU companies and officials harbour concerns about Beijing's policies that are shared by their counterparts in Washington.

"Industrial subsidy issues" and the "role of state-owned enterprises" should be included in an updated "toolbox of the WTO to be better suitable to the current world", said Katainen.

Even as China is booming, European investment is falling, Katainen said. "There must be something which is not quite right."

Brussels has preached multilateralism to resolve disputes while Washington has opted for unilateral action to counter Beijing.

"We need more than just talk, we need to demonstrate adherence to international trading rules," said Katainen, proposing reforms to develop new rules for a "global level playing field".

Beijing's industrial policies such as the "Made in China 2025" project, which is designed to transform China from a maker of sports shoes and denims into high-tech goods, is a major concern in Washington and stands at the heart of proposed new US tariffs on China.

"The two sides committed to defend the multilateral trading system that is centred on the WTO and based on rules," said Liu, acknowledging the need to maintain fair market access.

Katainen called on Liu to go further in removing market access barriers for companies and preventing overcapacity in high-tech sectors "covered by the Made in China 2025 strategy". He demanded that all companies enjoy equal treatment.

Brussels and Beijing are working on an investment treaty to level the playing field between the EU and China, Katainen said.

"Our citizens are asking for reciprocity," he added.

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