The European Union is China’s biggest trading partner in the world. Despite the negotiations between EU and China for an Investment Agreement in 2013 and China’s agreement to reform and liberalize its economy in 2001 when it joined WTO, China’s policies still discriminate against foreign companies. The EU will launch legal proceedings against China over unfair technology transfers in the World Trade Organization.
The EU’s case came after Brussels threatened to retaliate against Donald Trump’s decision on imposing “illegal” trade tariffs on steel and aluminum exports into the U.S, raising prospects of a global trade war.
The US President had announced his plans that angered the country’s principal allies. However, later on, Trump offered the EU, Mexico, and Canada an exemption. In response, Brussels had already gone to the WTO to seek consultation on Trump’s decision that they deemed “illegal.”
The EU struck back in the US a day after Trump announced his intention. The EU brought a similar request to the WTO when it also targeted China by launching legal proceedings that undermines the intellectual property rights of European companies. The case aims specific provisions under Chinese regulations, TIER and JV Regulation.
In a press release, the European Commission reported that European companies importing in China are forced to grant ownership or usage rights of their technology to domestic entities. Moreover, the EU industries are stripped of their rights to negotiate market-based terms in technology transfer agreements freely.
China’s actions are against WTO rules and disciplines, in particular under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).
“This is against international rules that we have all agreed upon in the WTO. If the main players don’t stick to the rulebook, the whole system might collapse,” EU Trade Commissioner Cecilia Malmstrom said in a statement. “We are expecting everyone to play by the rules. We are challenging the US and China, and we are not choosing any sides.”