Britain joins US in attack on China’s trade subsidies

Britain joins US in attack on China’s trade subsidies

The Telegraph

Russell Lynch

·3 min read  

China map with pound signs
China map with pound signs

Britain will court the new administration in Washington by stepping up its attack on the Chinese state’s warping of global markets with subsidies.

Liz Truss, the Trade Secretary, is to push the case for reform of the global trading system in an address to the virtual Davos summit next week and is bidding to join an international alliance to intensify the pressure on the authoritarian state. The US, European Union and Japan hit out at China’s vast system of subsidies a year ago and have pressed for tougher rules against the trade-distorting practices to be imposed by the World Trade Organisation.

The tripartite group is focused on China’s network of subsidies as well as concerns such as “forced technology transfer”, where foreign firms are compelled to partner with local companies to do business in China and often hand over intellectual property.

Westminster sources said the UK is pushing to join the trio’s working group to challenge China. “The new Biden administration is obviously interested in working with like-minded democracies so this is all part of that push,” a Westminster source said.

Ms Truss said the UK would aim to “tackle pernicious practices and countries who don’t play by the rules”. She added: “We’re looking to work much more closely with key allies like the EU, US and Japan at the WTO to tackle issues like industrial subsidies, and help lead the creation of new rules in areas like digital and data, services and the environment.”

Trade Secretary Liz Truss - Reuters
Trade Secretary Liz Truss – Reuters

The online summit comes ahead of the WTO’s first ministerial conference for three years, likely to be held in December. China’s subsidies and trade practices have been a running sore for years but flared into a full-blown trade war under former president Donald Trump, who slapped the US’s main ­economic rival with hundreds of ­billions of dollars in tariffs.

The WTO, meanwhile, is rudderless after the US vetoed the consensus candidate for director-general, Nigeria’s Ngozi Okonjo-Iweala, while its appellate court for handling disputes has been paralysed by a lack of judges.

Sam Lowe, a senior research fellow at the Centre for European Reform, said joining the tripartite group would be “a good way of building bridges with the US and the EU on trade”.

He said: “It’s good for the UK to try and come to a consensus position on these issues; there’s no point in the UK taking its own approach. If the aim is actually to try and change Chinese behaviour and get new commitments from China in these areas, then you need to present a united front.

“China is compliant for the most part with its WTO obligations. The problem is that the existing set of obligations don’t capture the things that China is doing that other countries perceive to be unfair. That’s what the US wants to upgrade and change.”

The manoeuvres come as the UK seeks the prize of a post-Brexit trade deal with the US. Ms Truss will seek talks with Katherine Tai, the US’s new trade representative, but doubts remain whether the deal can be agreed in time to qualify for Washington’s fast-track process for trade agreements, which expires in July.