China, EU agree to set up group on trade rules

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China and the EU agreed to launch a group that will work to update global trade rules and preserve support for international trade amid US threats of import controls.
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China and the European Union agreed yesterday to launch a group that will work to update global trade rules to address technology policy, subsidies and other emerging irritants, and preserve support for international trade amid US threats of import controls.

Actions such as US President Donald Trump’s unilateral tariff hikes show World Trade Organization rules need to keep pace with changes in business, said European Commission Vice President Jyrki Katainen.

The WTO “provides the basic infrastructure for rules-based trade and rules-based world order; China and the EU both support this approach,” said Katainen, noting the two sides would form a working group to modernize the organization.

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

The high-level economic meetings in Beijing came as both the EU and China face rising trade tensions with the United States.

He said Europe is not siding with China but is taking action to protect the global system of regulating free trade. He said the EU wants other governments to join the WTO group.

Chinese Vice Premier Liu He told an audience of European and Chinese officials: “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.”

“Unilateralism and trade protectionism is on the rise, and tensions have appeared in the economic relations between major economies,” Liu said. “The two sides committed to defend the multilateral trading system that is centred on the WTO and based on rules.”

Trump has threatened to impose tariffs of 10 percent to 25 percent on up to US$450 billion of Chinese goods. Beijing responded to Washington’s first round of hikes on US$34 billion of imports by raising duties on US soybeans, whiskey and other products.

Companies worry the US-Chinese dispute could chill global trade and economic growth if other governments respond by raising their own import barriers. Even before Trump took office, economists were warning countries were tightening import restrictions and taking steps to favor their companies over foreign rivals.

US officials complain the WTO, the Geneva-based arbiter of trade rules, requires an overhaul because it is bureaucratic, rigid and slow to adapt to changing business conditions.

China agreed to narrow its trade surplus with the US by purchasing more American goods but scrapped that after Trump went ahead two weeks ago with a tariff hike on US$34 billion of imports.

Beijing also has cut import duties on autos and some consumer goods and promised to remove limits on foreign ownership in its auto, insurance and finance industries.

China has promised visiting European leaders including Germany’s Chancellor Angela Merkel in May to open industries wider to their companies.

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