Calling upon the United States and China to comply with their obligations under the WTO rules, in the battle declared by US President Donald Trump against unfair Chinese trade practices, the European Commission stressed on Friday 6 April that a reformed and increased openness of the Chinese economy would be of great interest to the EU.
“The EU believes that (trade) measures should always be taken within the WTO framework, which provides numerous tools to effectively deal with trade differences. We call on the relevant parties to ensure WTO compliance of the trade actions”, said a Commission spokesperson, with tempers flaring between Washington and Beijing.
Early on Friday, China’s Ministry for Trade announced that the country was prepared to see things through to the very end, whatever the cost, in a trade war with the United States, following the threat made by Trump on Thursday 5 April of further American customs duty on Chinese products in response to the commercial retaliation measures against the United States announced by Beijing the day before, following the unilateral increase of American customs duty on imports of steel and aluminium on 23 March, and the first set of American customs duty on Chinese products on 3 April.
Trump threatened to slap $100 billion in new customs duties on Chinese imports, pursuant to Section 301 of the Trade Act of 1974, in response to the retaliatory measures announced by Beijing against strategic American products (including soya, automobile and aeronautics) in an amount ($50 billion) equipment to the Americans customs duty announced on Tuesday against 1,300 technology products imported from China.
“We do not want a trade war, but we are not afraid of having one”, the Chinese Ministry for Trade responded on Friday. It has established the list of American products it intends to tax in such a way as to hit the regions that voted for Trump as hard as possible.
On Thursday, moreover, China tabled a complaint to the WTO against the first raft of American measures, calling for consultations with the United States on its customs duties on certain Chinese technology products, under Section 301 to 310 of the 1974 Trade Act (DS 543).
The EU, which is a champion of global free trade and ardent defender of the multilateral trading system governed by the WTO, now finds itself caught up in the crossfire in this trade war triggered by Trump as a means of dealing with the enormous American trade deficit. At one and the same time, it must negotiate hard for its own exemption - still provisional at this stage (until 1 May) - to the American customs duty on imported steel and aluminium, resolve latent transatlantic trade disputes and try to stay on good terms with China, as it is also on the receiving end of its unfair trade practices.
And whilst it is continuing its consultations with the Trump administration to define the operational working methodology for their forthcoming discussions on transatlantic trade (see EUROPE 11994), the Commission called on China on Friday to reform its economy and open it more.
“The EU shares many of the US concerns as regards the functioning of the Chinese economy. There is a need for greater reform and market openness in China, including when it comes to its practices in the field of technology, intellectual property and innovation”, a Commission spokesperson said.
“The EU believes in finding solutions within the World Trade Organisation (WTO) framework and is discussing these issues in a trilateral context with the United States and Japan. That’s why the EU has requested to join consultations as an interested third party on the US dispute settlement case against alleged discriminatory technology licensing practices in China”, he added, stressing that “as a major investor in and exporter of services to China, the EU has a ‘substantial trade interest’ in this matter”.
On 23 March, the US asked the WTO to open consultations with China concerning a number of measures on the protection of intellectual property rights (DS 542).
Macron and Merkel in Washington at the end of April
In the meantime, the Commission is still trying to secure a permanent exemption for the EU to the American customs duty on imports of steel and aluminium, which entered into force on 23 March and from which the EU is temporarily exempted until 1 May (see EUROPE 11988).
In Washington on 21 March, the Commissioner for Trade, Cecilia Malmström, and the American Trade Secretary, Wilbur Ross, opened a dialogue process between the Commission and the Trump administration on ‘matters of common interest’, including the fight against over-capacity in steel and aluminium (see EUROPE 11986, 11990).
In this context, Germany and France are trying to appease tensions with Washington: following separate telephone conversations with Trump on 27 March (see EUROPE 11991), the French President, Emmanuel Macron, and the German Chancellor, Angela Merkel, will be received in turn by the US President, on 24 and 27 April respectively. (Original version in French by Emmanuel Hagry)