BOFIT Viikkokatsaus / BOFIT Weekly 2020/04

Just ahead of the signing of the “Phase 1” US-China trade pact, the US, EU and Japan issued a joint statement calling for action on WTO rules on industrial subsidies, forced technology transfers and other market-distorting issues. In the view of the three trading superpowers, the current list of subsidies prohibited under WTO rules is insufficient to curb subsidy practices in some jurisdictions that distort markets and trade.

The joint statement calls for extending the list of prohibited state subsidies, improvements in national subsidy reporting requirements, revision of subsidy calculation methods and other refinements. Although China was not named in the statement, the proposed changes seemed particularly applicable to China. As the US has been highly critical of the WTO, it will be interesting to see whether any actual progress on the rule changes called for in the statement is achieved.