According to Kyodo News Agency, trade ministers of Japan, the US and the EU agreed on Tuesday to co-sponsor a proposal to reform the World Trade Organization (WTO) as part of an effort against Chinese industrial subsidies.
WTO reform has attracted wide attention, especially since the US government under President Donald Trump started advocating unilateralism. It relates to whether multilateral trade mechanism can continue functioning effectively and whether global trade and economy will continue to develop strongly on the basis of rules. Many WTO members have been talking about a reform plan.
Most WTO members including China advocate a constructive way to reform: Whatever reform is undertaken for WTO, its general principle that international trade should be built on the basis of multilateral trade mechanism must be maintained. Other basic regulations such as non-discrimination rules – the most favoured nation and national treatment – also need to be maintained. And the differentiation and inclusiveness of the WTO have to stay.
By contrast, the US government goes for subversive reform. It doesn’t acknowledge non-discrimination rules and demands American interest be put first. For instance, while the US can restrict its trade partners’ amount of exports to the country, it won’t let it happen the other way around.
Washington doesn’t admit differentiation and inclusiveness. It wants reciprocity, denying the fact that WTO members vary in their development level and stage. It would feel being treated unfairly unless emerging and developing countries all take the same levels of tariff as the US does. The US also believes that tariffs and non-tariffs measures can be decided unilaterally and puts American domestic law above WTO regulations.
Although the EU and Japan generally support constructive WTO reform, they are afraid that Washington will say no. If the two sides narrow down WTO reform to simply the functions of recognition and handling government subsidies, it actually eyes China. If Brussels and Tokyo want to see the US stay in WTO in this way, they are making an opportunistic compromise.
Subsidy is not the key issue in WTO reform, neither did China try to challenge WTO rules with subsidies. In fact, the subsidy issue can be included in the discussions on updating rules. WTO reform shouldn’t be narrowed to being directed at a certain member, missing the whole picture of reform.
In terms of maintaining multilateral rules and opposing unilateralism and protectionism, China’s stance is largely consistent with that of the EU and Japan, but there are still differences. China believes that developing countries cannot undertake tariff concession in the same way as developed ones, and the principle of consultation and consensus is subject to adjustment, but should not be changed.