Business

Japan, U.S., EU propose new WTO subsidy rules

JIJI

Japan, the United States and the European Union on Tuesday proposed expanding a ban on market-distorting subsidies under World Trade Organization rules, a measure apparently targeted at China.

The three economies hope to win support for the proposal from a wide range of WTO members in the buildup to a ministerial meeting of the global trade governing body in June, officials said.

The proposal was agreed to at a meeting of Japanese trade minister Hiroshi Kajiyama, U.S. Trade Representative Robert Lighthizer and European Commissioner for Trade Phil Hogan. “We’ve adjusted our views and agreed that we’ll make something sturdy, not a product of compromise,” Kajiyama told reporters after the meeting.

Hogan said in a statement that what he agreed on with Kajiyama and Lighthizer is “a symbol of a constructive strategic collaboration between three major players in global trade.”

In a joint statement released after the session, the three economies said, without mentioning China, that the existing WTO rules are “insufficient” to tackle market-distorting industrial subsidies in some economies.

The trio called for unconditionally prohibiting unlimited guarantees, subsidies to insolvent or ailing companies without credible restructuring plans and other market-distorting subsidies.

The three economies also said the subsidizing country should demonstrate that there are no serious negative trade or capacity effects from the subsidy in question and provide related information to the WTO.

Industrial subsidies are a key issue in the U.S.-China trade dispute. China refuses to change its subsidy system despite criticism that it blocks foreign companies’ entry into the Chinese market.

The issue will not be resolved with a so-called phase one trade agreement between Washington and Beijing expected to be signed Wednesday.

The United States may want to send a warning to China through the three-way meeting, which preceded the signing. The trilateral meeting was the seventh of its kind, with the first one held in December 2017.