This issue provides a concise overview of international trade activities these past weeks. We have summarized the current key points regarding U.S.-EU trade, the present status of the Comprehensive Strategic Agreement (CAI) between the EU and China. Further, we provide a short summary of the European Commission's recent publication on reforming the World Trade Organization.
U.S.-EU Trade Relations
U.S. Statement on Global Steel and Aluminum Excess Capacity
European Commission Executive Vice President Valdis Dombrovskis, USTR Katherine Tai, and US Secretary of Commerce Gina Raimondo, joined to discuss a possible strategy to ensure the protection of their respective steel and aluminum industries and elaborate trade measures to tackle the challenges such industries are facing. These challenges include foremost addressing global steel overcapacity, the protection of the workers in the industry, promotion of high standards, and holding trade-distorting players accountable, such as China. Both parties agreed on the essential transatlantic partnership and announced the target of materializing a strategy of action to end the disputes under section 232 of the WTO by the end of 2021.
Further, both parties have agreed on a joint effort to not let further changes impair bilateral trade. As of most recent, both parties have agreed to push back tariff hikes. This includes negotiations to suspend U.S. tariffs on European steel and aluminum exports and EU countermeasures. As part of this, the EU is suspending the tightening of its countermeasures scheduled for June 2021. This is possible for the next six months, under EU law. The U.S., however, will maintain its tariffs of 25% on steel and 10% on aluminum.
Activity of the Biden administration, such as the provisional waiver on sanctions behind Nord Stream 2, has marked gestures towards more transatlantic cooperation. The new administration is seeing room for cooperation with traditional alliances to pursue a tougher stance on China.
EU-China Comprehensive Agreement on Investment provisionally suspended
With a considerable majority of 599 MEP’s, the motion to suspend the ratification process of the Comprehensive Agreement on Investment (CAI) between China and the European Union was passed. One main reason for this development is the introduction of Chinese retaliatory sanctions, even directly against members of the European Parliament.
This development is part of larger backlash on China due to the occurrence of human rights violations against Uighurs in the Xinjiang province and the sanctions imposed by the EU on China for the first time in 30 years. As of recent, a senior Chinese diplomat has expressed discouragement for the politicization from the EU side in stalling the trade agreement.
Reform of the World Trade Organization | Publication by the European Commission
Last month, the European Commission published a short summary on a possible pathway to reform the World Trade Organization.
Following points below summarize the main priorities of the publication to pursue a sustained reform and the modernization of the WTO rules:
- First and foremost: restore the dispute settlement system
- Establish new rules on digital trade, services, and investment
- Establish new rules to avoid distortion due to state intervention in the economy
- Address imbalances between members’ market access commitments
- Integrate the contribution of agriculture
- Reinforce the monitoring functions of the WTO
- Expand stakeholder engagement from business and civil society
You can find the complete publication here.