G-7 Countries Agree on Restoration of WTO DSB and Diversification From China
The U.S., Japan, the EU, Canada and the U.K. said that stronger rules are needed to tackle market distortive policies, saying in a statement that with more of these, and "practices to reinforce vulnerabilities," the countries in the G-7 "need to make effective use of existing means while developing new tools as appropriate."
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The group's communique, issued after meetings in Japan on May 20, said they will "coordinate our approach to economic resilience and economic security that is based on diversifying and deepening partnerships and de-risking, not de-coupling."
President Joe Biden, in a press conference at the end of the summit, said: "We’re ... united in our approach to the People’s Republic of China, and the joint statement released yesterday outlines the shared principles we’ve all agreed at the G7 and beyond in dealing with China.
"We’re not looking to decouple from China, we’re looking to de-risk and diversify our relationship with China.
"That means taking steps to diversify our supply chains, and we’re not — so we’re not dependent on any one country for necessary product. It means resisting economic coercion together and countering harmful practices that hurt our workers. It means protecting a narrow set of advanced technologies critical for our national security."
The G-7 statement focused on critical minerals used in the green energy transition. "Our partnerships honor international law, are free and fair, and foster mutually beneficial economic and trade relationships. Drawing lessons from recent incidents of weaponizing energy and other economic dependencies, we stand firmly against such behavior. We will enhance resilient supply chains through partnerships around the world, especially for critical goods such as critical minerals, semiconductors and batteries," it said.
The statement also said "We support open, fair, transparent, secure, diverse, sustainable, traceable, rules- and market-based trade in critical minerals [and] oppose market-distorting practices and monopolistic policies on critical minerals...."
The leaders suggested that China has a comprehensive strategy to create strategic dependencies in the countries it exports to, that it implements with "pervasive, opaque, and harmful industrial subsidies, market distortive practices of state owned enterprises, and all forms of forced technology transfers."
China pushed back forcefully after the statement and communique were issued. A foreign ministry spokesperson said the G-7 is "curbing other countries’ development."
"Let me make it clear that gone are the days when a handful of Western countries can just willfully meddle in other countries’ internal affairs and manipulate global affairs. We urge G7 members to catch up with the trend of the times, focus on addressing the various issues they have at home, stop ganging up to form exclusive blocs, stop containing and bludgeoning other countries, stop creating and stoking bloc confrontation and get back to the right path of dialogue and cooperation."
The G-7 talked both about restoring the World Trade Organization's dispute settlement function -- by 2024 -- and improving the WTO's ability to address market distortions.
In perhaps a veiled critique of some U.S. protectionist measures, the statement said: "We will seek to ensure that our responses to unfair trading practices will not create unnecessary barriers to our partners’ industries and are consistent with our WTO commitments."
The statement also said the countries will work at the WTO "to facilitate and promote trade in environmental goods and services, and technologies." An environmental goods agreement negotiation broke down in Geneva in 2016.
The G-7 countries also said they will develop tools to confront economic coercion, "and call on all countries to refrain from its use, which not only undermines the functioning of and trust in the multilateral trading system, but also infringes upon the international order centered on respect for sovereignty and the rule of law, and ultimately undermines global security and stability." They said they will work at the WTO on ways to confront coercion, and will coordinate ways to support its victims.
China said: "As for 'economic coercion', the massive unilateral sanctions and acts of 'decoupling' and disrupting industrial and supply chains make the US the real coercer that politicizes and weaponizes economic and trade relations. We urge the G7 not to become an accomplice in economic coercion."