G7 trade ministers agree to develop collective action on ‘harmful industrial subsidies’

WUHAN, CHINA - APRIL 12:(CHINA OUT) Workers transport boxes of masks at Yangluo container port on the Yangtze River on April 12, 2020 in Wuhan, Hubei Province, China. The mega-city in central China, lifted outbound travel restrictions from April 8 after almost 11 weeks of lockdown to stem the spread of COVID-19. The cargos piled up at ports due to the COVID-19 pandemic have also been shipping away since the water ports in Wuhan resumed operation. (Photo by Getty Images)

KATHMANDU: Top trade officials from the world’s leading democracies on Wednesday took aim at China in a joint statement pledging collective action to address “harmful industrial subsidies” and other market-distorting practices.

The trade ministers also echoed President Joe Biden’s goal to “build back better” from the Covid-19 pandemic and underscored their commitment to make progress this year on WTO reform and other trade areas, including climate, the digital economy and creating more opportunities for women.

The G7 includes the U.S., Germany, the U.K., France, Canada, Italy and Japan. The joint statement did not mention China by name, but concern about the country’s trade practices was evident in a section on industrial subsidies. China’s generous support for its domestic companies is a major sore spot for Western economies.

“Trade ministers will discuss the impact market-distorting practices, such as harmful industrial subsidies, including those causing excess capacity in some sectors, are having on our economies and chart a way to address these collectively,” the joint statement said.

Tariff tensions unaddressed: There was no mention of the tariffs that former President Donald Trump imposed on steel and aluminum imports from several G7 member countries. That remains a major point of friction between the U.S. and the EU. But since many blame subsidies by China and other governments for global overcapacity in those two sectors, joint action on that front might provide a path toward tariff relief.

Seeking common ground on climate: With an eye toward the U.N. climate change conference that will be held in November, the ministers said they would “deepen discussions on the nexus between trade and climate and the environment with a focus on identifying opportunities for collaboration and facilitating sustainable supply chains.”

They avoided mention of the EU’s plan to impose a carbon border tax as part of its goal to reduce greenhouse gas emissions to zero by 2050, a potentially controversial move depending on how it is implemented.

In another environmental area, they committed to reach “a meaningful conclusion” this year in long-running WTO talks aimed at reducing subsidies that lead to overfishing.

Vaccine cooperation encouraged: Most, if not all, of the G7 members oppose proposal at the WTO by India and South Africa to waive intellectual property protections on Covid-19 vaccines so manufacturers around the world can scale up production.

The statement was silent on that issue, but the ministers said they would “encourage cooperation among governments, manufacturers, and other industry players to identify policies which support ramped-up production and distribution of vaccines.”

They also agreed to discuss ways “to support trade in health products and increased supply chain resilience.” But the statement did not raise the possibility of banning export restrictions on those goods or removing current tariffs.

Divisions remain on digital trade: The statement also glossed over deep differences over how to handle privacy and national security concerns associated with the rapid growth of digital data flows across borders. It did pledge to develop a “set of high-level principles” this year to guide the G7 approach to digital trade.

Side deals seen as part of WTO reform: The trade ministers embraced the idea of WTO reform allowing negotiation of more “plurilateral” agreements among willing members in areas such as e-commerce, given the difficulty of reaching agreement among all 164 members. South Africa and India strongly oppose that concept.

Promising empowerment for women: The ministers “underlined the importance of advancing women’s economic empowerment through trade, particularly to support the Covid-19 recovery.” They also promised further attention to the issue.

What’s next: The G7 trade ministers will meet again in May, ahead of the leaders summit hosted by the U.K. in June.

Text: Politico.com 


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Thursday April 1, 2021, 12:30:50 PM |

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