China Demands Inclusive World Trade Organization Reform Process

China demanded that the World Trade Organization (WTO) protect the interests of developing countries in deciding on appropriate reforms of the institution, a week ahead of the G20 summit meeting in Buenos Aires, Argentina.

“The majority of [WTO] members, especially developing countries, should be able to participate in the reform process, rather than have a small group of members decide on the reforms,” said Wang Shouwen, Chinese vice minister of Commerce, at a press conference on WTO reforms (link in Chinese).

One of the most urgent issues is to avoid the breakdown of the WTO’s Appellate Body under its Dispute Settlement Body, which rules on trade policy disagreements between WTO members, by resolving the deadlock in appointing new members of the appeal body, Wang said. The United States blocked the reappointment of a WTO appellate judge in September, leaving only three judges to serve on the appeal body, the minimal number required for it to function.

The move to block the judge’s reappointment is not only a disagreement between the U.S. and China, but “a disagreement between the U.S. and all the other members of the WTO,” Wang said.

The Chinese call for more inclusiveness in the reform process came after the Trump administration suggested that removing China from WTO might be appropriate under current rules. White House economic adviser Kevin Hassett said in a BBC interview Wednesday that there could be a case for removing China from the WTO as the country has “misbehaved” in trade. “The question is whether [China’s bad trade practices] can fixed through bilateral negotiation, by reform of the WTO or even, by removing China from the WTO,” he said.

Wang said some WTO members are complaining about other members legitimately compensating their state-owned enterprises while limiting technology exchanges. These countries are protecting their dominant position by limiting the development of other counties, Wang added.

The Office of the U.S. Trade Representative updated its report on China’s trade practices Wednesday, accusing China of supporting cybercrime, illegally obtaining information from U.S. companies and forcing technology transfers, implying exchanges of technology between the worlds’ two largest economies may see further restrictions.

Wang also said WTO reform should resolve issues that developed countries have caused by over-subsidizing agricultural products — a practice which he said has distorted the international agriculture products market.

Expectations that WTO reform will be discussed by the G-20 summit have grown after there was no joint communique from the Asia-Pacific Economic Cooperation group’s annual gathering, which concluded on Tuesday. A dispute over language on trade was reportedly the reason why the group could not agree on a statement.

In July, China and the European Union announced that they would set up a joint vice-ministerial level working group on WTO reforms. A meeting of G-20 trade ministers released a joint statement in September that the group should increase communication about WTO reform so that the body could meet future challenges on global trade.

A previous version of this story mistook the WTO’s Appellate Body for its Dispute Settlement Body.

Contact reporter Liu Jiefei (jiefeiliu@caixin.com)