US, EU and Japan to join forces on Chinese trade practices and excess industrial capacity, source reveals

The United States, European Union and Japan are expected to announce a joint effort on Tuesday aimed at confronting China over its excess industrial capacity and other trade practices, a source close to the discussions said.

Trade officials from the two countries and the EU would make a joint statement on the sidelines of the World Trade Organisation ministerial meeting in Buenos Aires, aligning to address the overcapacity issue, the person said on condition of anonymity because talks on the issue were continuing.

It was unclear whether China would be specifically named in the statement.

Washington, Brussels and Tokyo have raised complaints about China’s subsidies to state-owned enterprises, state financing and investment rules that often force foreign firms to transfer strategic technologies. They argue that such distortions have fuelled rampant overcapacity in some industries such as steel and aluminium, which are flooding global markets and forcing lay-offs elsewhere.

The US has sided with the EU in arguing that the WTO should not grant China market economy status, a move that would severely weaken Western trade defences.