A sign of the WTO on its headquarters in Geneva Photo: VCG

China has called on the EU to comply with WTO rules and to delete or substantially amend the provisions in the draft revision of the Cybersecurity Act concerning the identification of "countries of cybersecurity concern," "non-technical risks," "high-risk suppliers," and related prohibitive and restrictive measures. China also urged the EU to revise the proposed Industrial Accelerator Act to eliminate discriminatory measures against specific countries. This appeal was made at the WTO's second annual meeting of the Council for Trade in Services in Geneva, Switzerland on Thursday, the Xinhua News Agency reported on Friday.

China is willing to maintain constructive dialogue with the EU and will closely monitor the bloc's legislative process, according to Xinhua.

At the WTO meeting, China proactively set the agenda by raising grave concerns over the EU's draft revision of the Cybersecurity Act and the Industrial Accelerator Act. China pointed out that the relevant provisions violate WTO rules and once implemented, would severely undermine the authority and effectiveness of multilateral trade rules. China urged the EU to amend or adjust them as soon as possible. 

The EU's draft revision of the Cybersecurity Act, under the pretext of safeguarding "cybersecurity," requires the identification of "countries of cybersecurity concern" based on "non-technical risks," which are highly unreasonable and arbitrary factors. EU regulatory authorities could thereby classify relevant enterprises as "high-risk suppliers" and, through mandatory "one-size-fits-all" measures, arbitrarily and systematically exclude enterprises from specific countries from entering the EU market, per the Xinhua report. 

The measures stipulated in the Cybersecurity Act 2 draft have a wide scope of impact, are highly discriminatory. Their significant negative effects on trade restrictions amount to disguised industrial protection measures, violating the General Agreement on Trade in Services (GATS), other rules, as well as the EU's commitments to the WTO.

The Chinese delegation also noted that the EU's Industrial Accelerator Act imposes unreasonable restrictive requirements on foreign investment in four major emerging strategic industries within the EU: batteries, electric vehicles, photovoltaics, and key raw materials. The act forcefully imposes numerous restrictive clauses on specific foreign investments, including technology transfer, equity caps, local content requirements, and local employee ratio mandates, according to Xinhua. 

Besides, this act affects services related to manufacturing, violates fundamental principles of a market economy such as commercial voluntariness and fair competition, constitutes investment barriers and institutional discrimination, and seriously contradicts WTO rules including the GATS, said Chinese delegation.

The Chinese move to raise grave concerns came as Brussels has recently been preparing or rolling out a series of trade and industrial instruments, which industry insiders describe as increasingly discriminatory and exclusionary.

Reuters reported on May 29 that the European Commission was weighing stronger trade and industrial measures toward China after claiming that current EU-China trade and investment relations were "not sustainable," with specific measures not expected to be announced until the third quarter of this year.

A Chinese analyst said the representation by Chinese trade representatives at the WTO platform reflects the China's serious and earnest approach to China-EU economic and trade relations, with the aim of maintaining their stable and healthy development.

"China has demonstrated a sincere willingness for rational communication and enhanced cooperation, expressing a commitment to resolving issues through mechanism-based and constructive consultations, and is trying to avoid falling into purely argumentative or non-constructive confrontations," Jian Junbo, director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, told the Global Times on Friday.

EU's relevant practices are inconsistent with international rules and are illegal. Regarding the Cybersecurity Act 2, the designation of highly sensitive countries or regions could be based on purely political judgments, lacking technical standards and norms, Jian said. "These provisions constitute political interference in economic and trade relations, which goes against WTO rules."

Meanwhile, the equity caps and controlling rights restrictions in the investment sector mentioned in the Industrial Accelerator Act, violating the principle of national treatment, and directly contravenes WTO rules, Jian said, noting that China's explicit raising of these concerns at the relevant WTO meeting is highly appropriate.

On May 30, in response to questions regarding a recent meeting by the European Commission to discuss its relationship with China, a spokesperson for China's Ministry of Commerce (MOFCOM) said that the communication channels between China and the EU remain smooth, and both sides are exploring the establishment of a trade and investment consultation mechanism and will hold relevant dialogues.

The spokesperson expressed hopes that the EU will work in the same direction as China to jointly implement the consensus reached by the leaders of the two sides, properly resolve differences and frictions through dialogue and consultation, and promote the stable and healthy development of China-EU economic and trade relations.

Should the EU side unilaterally introduce new trade instruments and adopt discriminatory restrictions, China will take resolute countermeasures and effective actions to safeguard its own interests, the MOFCOM spokesperson said.

Global Times