Chinese Officials Say China is Serious About Negotiating on Industrial Subsidies
Twenty years after China joined the World Trade Organization, the U.S. is focused on the market distortions and domestic consequences caused by China's export-led growth, even as exports are a smaller and smaller proportion of China's GDP.
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Wendy Cutler, vice president of the Asia Society Policy Institute and a longtime negotiator in the Office of the U.S. Trade Representative, asked former vice minister Long Yongtu if China is willing to negotiate on state-owned enterprises, subsidies, digital trade and the environment at the WTO.
Long did not respond directly, but said, "We are prepared to be part of [the Comprehensive and Progressive Agreement for Trans-Pacific Partnership], which you negotiated." He said that trade agreement has "many serious, high-level and high-quality rules in industrial subsidies, environmental [issues], state-owned enterprises. That means we have to accept all those rules you have negotiated and reached in CPTPP." He said he hopes that the U.S. will come into the TPP some day, and if China and the U.S. are both in it, "it can be the most important free trade agreement in the world." Long spoke at a Washington International Trade Association webinar about China's accession to the WTO.
Cutler also asked Zhang Xiangchen, a deputy director of the WTO and former ambassador leading China's delegation to the WTO, about how willing China would be to negotiate over SOEs or subsidies. Zhang said it is an important development that Chinese President Xi Jinping said China is open to such negotiations.
"I believe the existing WTO rules are not sufficient to address industrial subsidies. We need new rules. However, the industrial subsidies are very complex in nature." He said that those negotiations should happen at the WTO, and be based on objective economic analysis. He cited an academic paper that said that the U.S., China and the European Union each account for about a third of world subsidies. "I don’t think the trilateral approach between the U.S., EU and Japan can solve the issue because this issue is a global and horizontal issue." He added, "The problem of the trilateral approach is to start from the legal disciplines to try to define which subsidy is harmful and which is not. I don’t think there will be a way out for that."
Zhang praised the U.S. for joining the consensus to pick a new director-general at the WTO, and for speaking up for the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver on COVID-19 vaccines, but said that since the initial announcement, the U.S. has been too passive in TRIPS negotiations. And, he added, "on fisheries, the U.S. should play a more active role in bringing the negotiations to a conclusion."