G-7 Trade Ministers Focus on SOEs, Forced Tech Transfer, WTO Reform

Trade ministers from Japan, the U.S., the EU, the U.K., France, Canada, Germany and Italy said they will work to reach an agreement on World Trade Organization reform "with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024." The binding appellate level of dispute settlement at the WTO has been defunct since late 2019, because the U.S. blocked all appointments to the appellate body.

In a 10-page joint statement after a meeting of trade ministers in Japan Oct. 28 and 29, the leaders said the WTO should "create a dedicated space for discussions on the interface between trade and state intervention in industrial sectors."

The statement does not mention China by name, though it refers disapprovingly to recent export controls on "critical minerals," which could include recent Chinese restrictions on exports of graphite (see 2310230050 and 2310200030) and gallium and germanium (see 2307050018 and 2310030035). It also mentions China's restrictions on Japanese seafood imports (see 2308220022 and 2309150050).

On oversubsidization, they wrote: "We reaffirm our shared concerns regarding a wide and evolving range of non-market policies and practices, notably when they are an integral part of comprehensive strategies to pursue global market dominance and unfairly target market share so as to create strategic dependencies and systemic vulnerabilities. These include pervasive, opaque and trade-distortive industrial subsidies, market distortive practices of state-owned enterprises (SOEs), and all forms of forced technology transfer. We recognize that addressing nonmarket policies and practices can also be an integral aspect in enhancing economic resilience and thereby economic security.

"We express our renewed concerns on forced technology transfers, which are fundamentally unfair and inconsistent with an international trading system based on market principles. We are aware that such measures take various forms, both explicit and informal and opaque, including compulsory joint venture requirements, ostensibly voluntary industry guidelines or standards, regulations that require disclosure of source code and other confidential business information, as well as local production and local content requirements that include direct or indirect requirements to transfer technology in exchange for market access."

The group also said they need to work more on building "resilient and reliable supply chains for critical goods such as critical minerals, semiconductors, and batteries."