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EU to call for help from G20 leaders in reforming WTO

BRUSSELS (Reuters) - European Union leaders will this week urge the G20 to help reform the World Trade Organization in order to preserve a rules-based system which is under threat from an escalating trade war between China and the United States.

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Leaders of the world’s 20 biggest economies, including four EU countries, are due to meet in the Japanese city of Osaka on June 28-29, with tackling climate change and free and fair global trade topping the agenda.

European Council President Donald Tusk and the head of the executive European Commission Jean-Claude Juncker have written to the EU’s 28 leaders saying that they will push in Osaka to continue the WTO reform agreed by the G20 last year.

“We should ... provide steer to this process by recognizing that a balanced reform should cover the three functions of the World Trade Organisation: monitoring, negotiating, and dispute settlement,” the senior EU figures said in their letter.

“It is our view that Leaders should refer to certain aspects such as the work on transparency and subsidies, e-commerce and the reinforcement of the dispute settlement function, as a matter of urgency, to ensure that the two-stage binding third-party adjudication system remains efficient,” they added.

China and the United States have already imposed tariffs of up to 25% on hundreds of billions of dollars of each other’s goods in a trade war that has lasted nearly a year.

Relations between Washington and Beijing have spiraled downward since talks collapsed in May, when the United States accused China of reneging on pledges to reform its economy.

The U.S. and the EU are concerned about Chinese state subsidies which give Chinese exporters an unfair advantage and about the need to transfer technologies for companies that want to be active in China.

But the EU is also worried that the United States has taken unilateral action against Beijing, instead of going through the WTO, which Washington believes is an organization working on outdated rules that do not address modern trade challenges.

U.S. President Donald Trump said on Wednesday that a trade deal with Chinese President Xi Jinping was possible but he is prepared to impose U.S. tariffs on virtually all remaining Chinese imports if the sides continue to disagree.

“International trade and investment are important engines of job creation, growth, development, productivity and innovation. We need to step up non-discriminatory collective efforts to de-escalate trade tensions by addressing their main root causes while acting within the rules-based order,” the EU letter said.

Reporting by Jan Strupczewski; Editing by Alexander Smith