U.S., EU and Japan Unite Against Excess Capacity and Other Distortive Trade Practices

The U.S., EU and Japan issued a joint statement at the 11th Ministerial of the World Trade Organization in Buenos Aires, pledging trilateral cooperation to combat a number of unfair market distorting and protectionist practices by third countries, including severe excess capacity, government-financed support, market-distorting subsidies, state owned enterprises, forced technology transfer, and local content requirements and preferences.

Though not mentioned by name, China was the widely-interpreted intended target of the message. All three countries are bearing the brunt of flooded steel and aluminum fueled by overcapacity in Chinese markets, and the U.S. and EU are denying China’s demand for market economy treatment based on numerous existing market distortion of the kind described in the joint statement. Many of these practices were also the focus of negotiations under the Trans-Pacific Partnership, which the U.S. exited earlier in the year, and which also was aimed at shaping Chinese trade behavior.

The trio agreed to enhance efforts in the WTO and other appropriate forums to eliminate these practices, which they described as serious concerns for the proper functioning of international trade, the creation of innovative technologies and the sustainable growth of the global economy.” The coordinated statement was an otherwise positive message coming from a Ministerial marked with measured ambitions and low expectations from participating member countries, who also were critical of perceived lack of U.S. leadership at the WTO.