EU official warns US could break global trading system

Washington, March 7: EU Trade Commissioner Cecilia Malmstrom warned Thursday that US actions threatened to "break" the global trading system and she urged Washington to cooperate on reforming the rules of commerce instead.

President Donald Trump's aggressive trade policies have targeted friend and rival but he has focused the most attention on China for allegedly unfair practices including forced transfer of American technology, massive subsidies and benefits for state-owned enterprises.

Malmstrom said that, while US concerns about the inability of global trade rules to deal adequately with China were understandable, Washington's actions in the World Trade Organization, including blocking the dispute settlement body, were troublesome.

The EU and the United States "often agree on the diagnosis" about the threats to global trade but "we do not always agree on the cure," she said in a speech at a trade law conference.

"US actions are now threatening to break the system altogether," Malmstrom said.

China "has been taking advantage" of WTO rules, she said, but she urged the United States to join forces to "work together on the solutions."

Tokyo, Brussels and Washington last year jointly announced they would work to reform WTO rules to address unfair trade practices, in particular those blamed on Beijing.

Washington and Brussels have been working for months to launch formal trade talks, following on the agreement in July between Trump and European Commission President Jean-Claude Juncker.

Malmstrom met with US Trade Representative Robert Lighthizer on Wednesday, and said they were "identifying possible outcomes and making progress."

She said the hope was to eliminate all tariffs on industrial goods, which "would be important economically but also rebuild trust between us." The EU was "seriously offended" by US tariffs on steel and aluminum on national security ground.

"We are friends and allies, not a threat. And now we are carefully watching the president's decision on cars and car parts," Malmstrom said.

The US Commerce Department submitted a report to the White House on February 20 but Trump has yet to announce whether car imports also will face tariffs using the national security justification.

Despite Trump's policies aimed at reducing the US trade deficit -- which he likens to the US losing money -- the gap surged last year.

"It is important to remember that a trade balance is not like a bank balance," Malmstrom said.

(AFP/APP)