Jan 17, 2020 17:38 UTC
  • EU warns of WTO challenge if US-China deal harms businesses

The European Union (EU) has warned that if a trade agreement recently signed by the United States and China creates “distortions” in the market, it will challenge the deal at the World Trade Organization (WTO).

Nicolas Chapuis, the EU’s ambassador to China, said on Friday that the EU would monitor the implementation of the US-China trade agreement to ensure it did not harm the bloc’s companies.

“In our opinion, quantitative targets are not WTO-compatible if they lead to trade distortions,” Chapuis said. “If it were to be the case, we will go to the WTO to settle this matter.”

He also said that during a meeting at the Chinese Foreign Ministry, he had been given “formal assurances that in absolutely no way would European businesses be affected by the US-China deal.”

On Wednesday, US President Donald Trump signed the so-called Phase One trade agreement with China’s Vice Premier Liu He.

The deal had been announced in December 2019, as part of a bid to end the months-long trade war between the world’s two largest economies, which has roiled markets and hit global growth.

The agreement includes pledges from China to import an additional 200 billion dollars’ worth of US products over two years, above the levels purchased in 2017, including an additional 32 billion dollars in agricultural goods. It also includes pledges to improve protections of US intellectual property.

The US has pledged to slash in half tariffs of 15 percent that were imposed on about 120 billion dollars’ worth of Chinese consumer goods, such as clothing, in September.

But tariffs on hundreds of billions of dollars in goods remain in place, on two-thirds of the over 500 billion dollars in imports from China.

Trump initiated the trade war on China last year. The two countries have since imposed billions of dollars’ worth of tariffs on each other’s goods.

The partial de-escalation in the trade tensions was welcomed by financial markets.