Lighthizer Meets with EU, Japan Counterparts on Joint Activity on China, WTO

Government Relations, Section 232, Trade and Tariffs

By Ryan Ong, National Association of Manufacturers

On September 25, on the sidelines of the United Nations General Assembly in New York, USTR Robert Lighthizer met with his counterparts from the European Union (Cecilia Malmström, European Commissioner for Trade) and Japan (Hiroshige Seko, Minister of Economy, Trade and Industry of Japan). The three parties discussed a range of issues that do not explicitly cite, but are clearly directed at, Chinese policies and practices, releasing a joint statement that lays out common principles on areas such as common opposition to non-market-oriented policies in third countries, approaches to subsidies and state-owned entities, technology transfer, digital trade, and World Trade Organization (WTO) reform.  The statement indicates follow-up joint action in a number of areas:

  • Information sharing and discussion of enforcement/rule-making: In a clear pointer to China, the three ministers tapped staff for extended discussions on identifying and sharing information on potential non-market-oriented policies and practices, as well as to “deepen discussions” on enforcement and rule-making to address these issues. Similar language on boosting possible enforcement and rule-making (unspecified whether at the national or the multilateral level) were also included in statements on specific issues, such as forced technology transfer.  The three sides also discussed ways of boosting information exchange and best practices on investment screening, in ways that relate to the recent U.S. passage of the Foreign Investment Risk Review Modernization Act (FIRRMA) and Export Control Reform Act (ECRA).
  • Joint work to improve WTO disciplines: The ministers discussed multiple aspects of WTO reform and strengthening, including:
    • Concrete plans to co-sponsor a proposal on transparency and notification – aimed at combating domestic industrial subsidies – at the next meeting of the WTO Council on Trade in Goods (currently slated for November 2018);
    • A possible future joint proposal on promoting best practices and increased efficiencies across WTO committees;
    • Reaffirmation of joint work to “maintain the effectiveness of existing WTO disciplines,” with each side working internally through the end of 2018 with a goal of launching negotiations on more effective subsidy rules;
    • Deeper discussions on ways to strengthen rules on industrial subsidies and state-owned enterprises (SOEs), with specific discussion on ways to address behaviors such as state-owned bank lending, preferential input pricing, and subsidies that boost industrial overcapacity – though that discussion did not have a specific timeline or next steps;
  • Broader cooperation and engagement on other issues, including joint work to advance the timely launch of negotiations of a new agreement on digital trade, cooperation to advance market distorting measures in forums ranging such as the G7, G20, OECD, Global Forum on Steal Excess Capacity, Governments/Authorities Meeting on Semiconductors, and the International Working Group on Export Credits.