EU should join forces with Africa on WTO reform to counter China’s market distortions — IW report

The European Union should work together with African countries to reform the World Trade Organization’s (WTO) subsidy rules as a way to tackle the global distortions of China’s state capitalism, the German Economic Institute (IW) argues in a new report.
The research report entitled ‘Reforming WTO’s Subsidy Rules: a New Opportunity to Tackle the Global Distortions of China’s State Capitalism’ was published ahead of an EU-China summit that takes place in Beijing on Thursday and Friday (7-8 December). The IW, which is financed by prominent German business associations and carries weight among Berlin policymakers, addresses in the report the issue of unfair competition that is expected to top the agenda, three months after the European Commission launched an anti-subsidy probe into Chinese electric vehicles.
Reform is also expected to be a key topic at the WTO’s upcoming 13th ministerial conference (MC13) in February next year, although it requires a full consensus to make any substantive changes. The WTO’s Africa Negotiating Group has proposed reforming current subsidy rules to better support developing countries. The IW argues in its report that the EU should take up and support the African Group’s proposal, as it should also expand this initiative to tighten subsidy rules on the world’s top trading countries. Such a joint EU-African initiative could pressure China to accept reform with the aim of countering Chinese market distortions and diplomatic influence, which would help limit the growing global subsidy race, according to the IW report.