Britain says China has damaged trust in global trade system

Britain on Friday said China had contributed to an erosion of trust in the global trade system, offering to work with the European Union, Japan the United States and others to clamp down on what it sees as unfair subsidies for state-owned enterprises.

Trade minister Liz Truss, who is in charge of building Britain’s new trade links around the world following its exit from the European Union, made the comments at a World Economic Forum online panel event titled “Fixing International Trade”.

“Some of the behaviour by China on areas like forced technology transfer, subsidies by state-owned enterprises, and also IP (Intellectual Property) violations have led to some of the mistrust in the global trading system,” she said.

“People can see things are unfair, that if state-owned enterprises are able to subsidise and able to undermine free enterprise economies, then that can destroy trust in trade.”

Relations between Britain and China have cooled in recent years, from London heavily courting Chinese investment in British infrastructure in 2015 to last year banning telecoms firm Huawei from parts of the UK communications network and tightening rules on foreign investment over national security concerns.

Truss also repeated calls for World Trade Organisation (WTO) reform, saying its paralysed dispute resolution system must be upgraded, the blocks to the appointment of a new head must be removed, and trust restored in its procedures.

“Big countries, small countries, need to understand that they are going be treated fairly under the WTO system, and that the rules will be impartially enforced,” she said.

Truss highlighted that the United States, which under former President Donald Trump blocked the appointment of new WTO judges, had indicated a more open attitude to reform under President Joe Biden who took office earlier this month.

The United States said earlier it was committed to “positive, constructive and active engagement” with all WTO members on reform, and is actively considering who to choose at its next chief.

Having quit the EU’s political and economic union and negotiated only a limited free trade agreement in its place, Britain is looking around the world for new markets and seeking to carve out a role for itself as a leading advocate of free trade.

Truss said that her top priority when meeting the Biden administration would be de-escalating existing disputes over steel and aircraft subsidies.

“We shouldn’t been in a position where the UK, the EU and the US have tariffs on each other. We need to work together,” she said.