EU, China Summit Ends With No Agreement on Trade

By Laurence Norman and Emre Peker Features Dow Jones Newswires

The European Union and China failed to resolve some sharp differences on trade at a leaders' summit on Friday, with disagreements on steel overcapacity continuing to tarnish relations.

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The trade differences undercut what was supposed to be a joint show of force in defense of international rules and agreements following U.S. President Donald Trump's decision on Thursday to pull out of the Paris climate accord.

European Council President Donald Tusk said both sides agreed the U.S. decision on the Paris deal was "a big mistake." Chinese Premier Li Keqiang didn't directly raise the issue but said China's partnership with the EU was "useful to counter the uncertainties in the world."

However differences over trade pushed the summit well past its scheduled finishing time. In the end, the two sides were unable to agree on a planned joint statement because they couldn't agree the trade language.

Over the past few years, the EU has slapped anti-dumping duties on a range of Chinese steel exports, heightening a growing conflict in which each side accuses the other of unfair trade practices.

The EU's moves come amid a global steel glut. Major producers, including China, are trying to sell their products at low prices, undercutting European firms. China claims the EU measures breach World Trade Organization rules.

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In a press conference that officials acknowledged was long delayed by differences over the trade language in a joint EU-China statement, European Commission President Jean-Claude Juncker said the discussions had narrowed differences on steel overcapacity.

"But we are not yet there," he said.

Mr. Li said it was important the EU abided by its obligations to give China market economy status, which would impact Europe's ability to apply antidumping tariffs.

"This will send a signal to the society and the market that we both abide by international rules and uphold multilateralism," he said.

However, he signaled some flexibility on the Chinese side, saying "if there are problems with the rules themselves, the parties can work together to improve the rules."

China filed challenges at the WTO in December against the EU and the U.S., charging its Western trading partners with breaching the pact's rules by levying antidumping measures that don't apply to China. A grace period for China, which enabled European and American authorities to level measures applicable to countries that aren't market economies, expired 15 years after it joined the WTO in 2001.

The EU is revising its antidumping measures, partially in an effort to overcome the Chinese challenge, by nixing its market-economy designations in favor of an approach focused on market distortion.

Mr. Li arrived in Brussels Thursday night from Berlin and held an informal dinner with EU leaders. The summit took place on Friday.

Among other issues the two sides discussed were the tensions over North Korea's nuclear program.

Mr. Tusk said the EU and China share a common interest in the de-escalation of tensions in the Korean Peninsula and called for North Korea to end its nuclear and ballistic missile tests.

"We count on China's continued support to achieve these objectives," he said.

The Trump administration has been pressing China to increase the economic pressure on its ally over the tests, including by tightening control of business between Chinese companies and North Korea.

Mr. Li said China was "vigorously" implementing United Nations Security Council resolutions imposing sanctions on North Korea. He said if there is backing for new sanctions at the Security Council, where China wields a veto, China "will act accordingly."

"Ultimately the issue will be resolved through dialogue and negotiations, " he said.

Write to Laurence Norman at laurence.norman@wsj.com and Emre Peker at emre.peker@wsj.com

(END) Dow Jones Newswires

June 02, 2017 12:01 ET (16:01 GMT)