The EU and the WTO Brussels, 1 July 2014

On 1 and 3 July the WTO will hold its 5th Trade Policy Review (TPR) of China. As one of the four largest WTO members from a trade perspective (the others are the EU, the US and Japan), China is subject to this multilateral peer-review exercise every two years.

In its contribution to the review, the EU praised China's impressive economic development and underlined that China's WTO membership had contributed to making it the global economic power it is today. The EU called on China, however, to improve its business environment by providing greater transparency and by abiding by its WTO obligations to notify the Geneva-based organisation of any trade measures it took. The EU singled out the problem of subsidies and the need for China to create a level playing field for all firms, regardless of their ownership structure or origin.

The EU said it hoped that China, as a supporter of the multilateral trading system, would play an active role in making sure WTO Members agree by December 2014 on a work programme to conclude the DDA, as decided by Ministers in Bali.

The EU also hoped China's declared intention to work for an early conclusion of the ongoing talks among some WTO members for an information technology agreement (ITA) would quickly translate into a mutually agreeable solution.

The EU stressed that China's major influence in world trade and on the global economy brought with it increased responsibilities towards the WTO and its members. The EU said it expected real improvements in several areas already addressed in the last TPR, but where there had still not been sufficient progress.

• Transparency – China has still not complied all with the commitments it made on transparency when it joined the WTO, such as publishing all laws, translating them into English, and consulting properly with stakeholders.
• Notifying other WTO members of new laws – China is not doing enough to notify the relevant WTO bodies when it adopts new measures, such as support for domestic companies, subsidies, rules on animal and plant health and hygiene, and technical barriers to trade. Insufficient reporting and notification ahead of draft legislation are a particular problem.
• Laws are not applied consistently across the country. Greater transparency could help.
• State interference in the economy distorts competition. The WTO's report refers to the opaque way China's State Owned Entities operate and to the numerous incentives from which they benefit.
• Lack of transparency of and coordination between China's agencies and institutions in charge of complex technical areas, such as rules on animal and plant health and hygiene.
• Intellectual Property Rights - serious problems in protection and enforcement, despite China's efforts so far.
• Access to justice - the importance of continuing reforms so foreign companies have better access to China's courts.
• Opening up to investment - the importance of opening up China's economy and reforming it to attract Foreign Direct Investment (FDI). One fifth of FDI stocks in China come from the EU, but these represent just 6% of the EU annual FDI outflows. This is an improvement on 2012, but still below potential.

China's TPR discussions are based on a report by the WTO Secretariat and a report by the Government of China. WTO members have also presented a number of technical questions to China in advance of the meeting. China replies to these in writing by the first day of the review – 1 July.