China defends WTO’s most-favoured nation principle after US, EU challenge rule

China has defended the World Trade Organization’s non-discrimination principle after the United States and the European Union recently proposed reforms that could weaken it – though analysts say the rule would likely remain despite deepening divisions within the global trading system.

Beijing called for “most-favoured nation treatment” to remain the “bedrock” of the WTO, in a new position paper on reforming the international body. The rule mandates that any trade advantage granted to one country be extended to all others.

The document is the first of its kind that China has submitted to the WTO since the trade body launched a formal self-review in 2022, the Ministry of Commerce announced on Thursday.

Blatant violations of the most-favoured nation rule were “eroding the foundation of the rules-based multilateral trading system”, the paper said, warning that they raised the risk of a return to a system that favours the powerful and marginalises smaller economies.

The non-discrimination principle has faced mounting pressure since the US breached it to impose sweeping tariffs on almost all its trading partners last year. Beijing’s defence of the rule followed submissions by Washington and Brussels calling for it to be revisited.

“China considers the most-favoured nation principle a way to ensure equal treatment and to prevent discriminatory practices,” said Liang Yan, an economics professor at Willamette University in the US.

“But the US and EU challenge the most-favoured nation [principle] to reserve more room for discretionary treatments based on national security concerns and de-risking strategies.”

South China Morning Post