EU considering taking China to WTO over IP practices

A protester dressed in an outfit covered with Chinese signs hits with a steel hammer a shield wrapped in European union flag during an European steel workers protest against China's dumping price in Brussels, Belgium, 9 November 2016. [Stephanie Lecocq/EPA]

The European Commission is “closely examining” the option of filing complaints against China before the World Trade Organisation for their rules and practices on intellectual property, a spokesperson told EURACTIV on Wednesday (4 April).

The official added that the EU “defends the need for greater reform, transparency and openness in China based on market forces, including when it comes to excessive state intervention, overcapacity and practices in the field of technology, intellectual property and innovation.”

European companies have restricted access to the Chinese market and must enter into joint ventures with local companies to operate in the country, thus facilitating access to their know-how.

Commission says proposal to block Chinese takeovers is 'worth discussing'

The European Commission welcomed Germany, France and Italy’s proposal to halt China’s buyouts in Europe in some cases given the “limited access” to the Chinese market.

Meanwhile, the openness Chinese firms enjoy in Europe has led them to increase their buyouts to record levels over the past years, especially in Germany. Businessmen and politicians in are concerned about China’s access to IP through more than 120 acquisitions and equity investment operations in the country since 2016.

The Commission wants to avoid confrontation with Beijing. However, the dialogue with the Chinese authorities to level the playing field via an EU-China comprehensive agreement on investment is progressing at a snail’s pace.

Against this backdrop, the executive is prepared to step up its response against China. The institution is gathering evidence and looking at legal arguments to build up a case before the WTO.

However, officials explained that its filing would not be imminent.

Washington, Beijing flexing muscles in trade dispute

The temperature is rising between the United States and China but the simmering confrontation has not yet boiled over into a trade war, since the tit-for-tat countermeasures so far have been confined to a few specific products.

The Commission’s ongoing investigation is likely to add to the US offensive against China over the stealing of technology and innovation.

US President Donald Trump announced this week 25% tariffs on a list of 1,300 Chinese imports, mainly electronic components and chemicals, as a response to China’s IP practices. The estimated economic impact of the tariffs is $50 billion.

His administration said that Chinese policies had “coerced American companies into transferring their technology and intellectual property to domestic Chinese enterprises.”

China reacted by threatening with $50 billion worth of tariffs over a list of 106 products, including soy, cars and certain types of planes.

Within the WTO

For its part, the EU is keen to signal that it would not follow Trump’s rulebook and impose punitive tariffs outside the multilateral framework.

“The EU believes that the measures should always be taken within the WTO framework, which provides numerous tools to effectively deal with trade differences”, a spokesperson said.

The official commented that the executive would analyse the measures announced by the US, but added that the EU “does not support measures that would run counter to WTO law”.

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The EU is discussing China’s practices on IP and investment with Japan and US in the WTO.

Chinese Ambassador to the EU, Zhang Ming, contacted the Commission president’s team on Wednesday to explain the country’s response to the US tariffs.

The dispute over technology and IP adds a new front to the global trade tensions triggered by Trump’s decision to impose tariffs on imports of steel and aluminium to protect the US steel sector.

The EU was temporarily excluded while Brussels and Washington try to solve “issues of mutual concern” in trade. But Europe insisted that the root of the problem lies in the steel overcapacity fueled by China’s subsidies.

Juncker casts doubt on resolving tariff dispute with Trump by 1 May deadline

The EU is unlikely to secure permanent exemption from US steel and aluminium tariffs by the time President Trump’s stopgap reprieve from the measures expires on 1 May, Commission chief Jean-Claude Juncker said Friday.

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