November 16, 2018 / 9:35 AM / 7 months ago

EU's Malmstrom urges China to help reform WTO or risk U.S. exit

PARIS (Reuters) - China must make concessions in negotiating reform of the World Trade Organization or risk seeing the United States turning its back on the current system, European Trade Commissioner Cecilia Malmstrom told a conference in Paris on Friday.

FILE PHOTO: European Trade Commissioner Cecilia Malmstrom attends an interview with Reuters in Geneva, Switzerland June 4, 2018. REUTERS/Denis Balibouse

“China has won a lot from the WTO system, and we call on China to show leadership and to engage with us to reform and to update the system, to create a level playing field. Because otherwise the U.S. will create a level playing field outside the system,” Malmstrom said.

The WTO has overseen international trade since 1995, allowing its members to challenge each others’ trade practices and obliging them to be transparent about their policies and to keep tariffs and subsidies within agreed levels.

But with very little reform since its creation, it has failed to evolve to reflect the economic rise of China, creating friction with the United States which says China is cheating by giving state firms illicit subsidies and stealing technology.

Beijing’s top diplomat Wang Yi has said China supports reforms to the WTO to make it fairer and more effective.

But U.S. President Donald Trump has threatened to quit the WTO if it doesn’t “shape up”, and Washington has blocked judicial appointments at the WTO, causing a crisis that risks paralyzing the system of trade dispute settlement and the WTO more broadly.

Malmstrom said the disputes system was on a slippery slope.

“One false step here could quickly lead to collapse of the whole rules-based system,” she said.

“Without it, it would be anarchy, there would be no order, and we would all be losers. And the poorest countries would be the biggest losers. And we would lose a system that has been used to ensure stability for generations.”

Speaking at a conference in Paris on “A WTO for the 21st Century”, she said the problems could not be resolved within the WTO, but required political momentum by the G7 and G20 groups of countries

The EU has put forward a WTO reform proposal and plans to take it to the G20 meeting in Buenos Aires in two weeks’ time, she said.

“This is the time to walk the talk, to really start engaging.”

Reporting by Tom Miles and Leigh Thomas. Editing by Patrick Johnston

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