November 27, 2018 / 1:42 PM / 19 days ago

EU trade chief urges U.S. to join talks on WTO reform

BRUSSELS (Reuters) - The European Union called on Washington on Tuesday to start talking over ways of reforming the World Trade Organization to prevent a paralysis of the international body.

European Trade Commissioner Cecilia Malmstrom attends an interview with Reuters in Geneva, Switzerland June 4, 2018. REUTERS/Denis Balibouse - RC1E163C7000

The EU published proposals on Monday for reform of dispute settlement at the WTO that it has agreed with China, India and other countries, hoping to overcome U.S. objections voiced by President Donald Trump that have thrown the WTO into crisis.

EU Trade Commissioner Cecilia Malmstrom said the bloc and Japan had tried in vain to introduce the topic in trilateral talks with the United States.

“Lots of countries in the world are backing this. So please come, sit down and talk to us. That they haven’t done so far. Will that happen? Who knows,” Malmstrom told reporters on the sidelines of a trade conference in Brussels.

The WTO is scrambling to develop a plan for the biggest reform in its almost 24-year history after Trump brought the world’s top trade court to the brink of collapse by blocking appointments of its judges and threatening a U.S. withdrawal.

The EU is caught between the competing interests of the United States and China, currently engaged in a multi-billion dollar tariff conflict.

Its trilateral talks with Japan and the United States have focused on a joint desire to change WTO rules to clamp down on market distortions, such as subsidies for state-owned firms and forced technology transfer, with China the clear target.

“If we don’t reform this in the WTO - and we do not expect China to just sign on the dotted line here and agree, but to engage - there will be others setting a level playing field outside the WTO and I’m not sure that is beneficial for China or the rest of the world,” Malmstrom said.

Washington, said Malmstrom, was at least taking part in discussion on this aspect of WTO reform.

“It is constructive. They are not pretending. I think they think it’s meaningful,” she said, adding that trying to force China to change through a trade war with massive tariffs would not work.

Malmstrom expressed hope that the G20 summit in Argentina on Friday and Saturday, when Trump and Chinese President Xi Jinping are to meet, would ease global trade tensions.

“It would be good for the whole world if they de-escalated a little bit,” she said.

“Then somehow it will have to be, possibly not in Buenos Aires but at some time, they will have to negotiate some way forward and we might not like those results, but I can’t speculate on that.”

Reporting by Philip Blenkinsop; Editing by Richard Balmforth

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