EU and China announce WTO reform

European Council president Donald Tusk has called for reform of the World Trade Organization, including new rules on industrial subsidies and intellectual property rights, as Europe tries to form a common front with China against Washington’s trade tariffs.

Tusk said the EU and China had agreed to further develop their strategic partnership after "a fruitful meeting" on Monday morning with Chinese Premier Li Keqiang, according to a statement issued by the EU.

"We need new rules in the field of industrial subsidies, intellectual property and forced technology transfers, reduction of trade costs, as well as a new approach to development and more effective dispute settlement," Yahoo cited Tusk as saying.

"The aim of this reform should be to strengthen the WTO as an institution and to ensure a level playing field," the European Council president  stressed.

The EU and China agreed to set up a working group to overhaul the WTO in late June, and issues such as industrial subsidies, mandatory technology transfers and market access barriers – the concerns about China shared by the EU and the US – are expected to be raised under that framework.

A professor of the Department of Russian Foreign Policy in the National Security Faculty at RANEPA, Alexander Mikhailenko, speaking to Vestnik Kavkaza, noted that the problem is that the countries have a different understanding of the WTO rules. "Earlier, when the General Agreement on Tariffs and Trade was in effect, there was a simple rule that cheap and high-quality products should not be prevented from being sold, producers could freely sell such goods regardless of state borders, but now it's different. The US demanded a so-called appropriate pricing. The US position on the problem is simple: if there is a trade balance deficit with a particular country, then this country is bad. That is, one must assume that there is no equal criteria to the WTO reform at the moment," he said.

The expert drew attention to the fact that Europe and China announced a joint intention to reform the WTO because of trade wars with the United States. "The European Union is siding with China against the US now. Both of them have submitted a request to the WTO due to the duties imposed by the Americans. And it should be understood that, in addition to the desire of the countries to settle a trade dispute with Washington, there is a whole series of new issues that should be discussed at the level of the entire organization, for example, e-commerce," Alexander Mikhailenko stressed.

In general, the WTO reform will not be a one-stage event. "Applying a single measure - to put the Americans in their place - will not be a true reform of the organization. Reforming is a continuous improvement of the organization's activities, and a consensus of the WTO member countries is required. If consensus is achieved (but it is not yet visible), then the change in the forms and methods of regulating the world trade will be quite real, especially if two such big players as China and the EU sincerely commit themselves to the issue. That is, we should need to wait for Brussels and Beijing to agree on a solution, and if it happens, a significant step will be made in the development of the WTO," the professor of the Department of Russian Foreign Policy in the National Security Faculty at RANEPA said.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, drew attention to the inability of the modern WTO to influence its members to comply with common rules. "There is, for example, duty-free trade in aluminum, but the US impose additional duties on Russia, China, certain EU countries, but metal from Canada and Mexico still can be imported duty-free - and all these countries are WTO members, that is, there is selectivity in the World Trade Organization, which is prohibited," he said.

"If you look at Russia's position in the WTO in such a situation, it turns out that our global efforts to join the organization did not justify itself. The WTO does not work for the goals that our country faces - it is useful when a country exists in the competitive environment and trades with all countries. But we are banned from trading with many countries because of sanctions, as a result, the goals of the state do not coincide with the goals of companies operating in the national economy. As a result, it turns out that the WTO is good for individual corporations, and inefficient fro the country as a whole," Yuri Yudenkov added.