During a busy trade-focused week, the United States, European Union and Japan agreed to propose reform of the World Trade Organization’s trading rules to curb distortive subsidies.
Following a meeting in Washington, trade ministers for the three countries – Japanese Economy, Trade and Industry Minister Kajiyama Hiroshi, U.S. Trade Representative Robert Lighthizer and EU Trade Commissioner Phil Hogan – issued a joint statement that the WTO’s existing trading rules were insufficient to address market distortions resulting from government subsidies. The joint statement was the result of nearly two years of trilateral discussions.
The United States, Japan and EU intend to present the proposals to the WTO. Among the proposals is one that would address subsidies granted to state enterprises. The trade ministers also discussed possible core elements to prevent forced technology transfers, reaffirming that they “are inconsistent with an international trading system based on market principles and undermine growth and development.” And they agreed that the WTO’s current rules are not prescriptive enough on determining “proper benchmarks for subsidies consisting of…goods or services or purchases of goods by a government in situations where the domestic market of the subsidizing member is distorted.”
The three trade ministers also proposed expanding the list of prohibited industrial subsidies, as well as providing notice of various types of subsidies.