Time to get tough with China on global trade, UK tells G7 allies

By William James

LONDON (Reuters) -Britain will on Wednesday push G7 allies to get tough on China over "pernicious practices" that undermine the international trading system, calling for an overhaul of outdated and ineffective World Trade Organization rules.

Trade minister Liz Truss will host her G7 counterparts and the new head of the WTO, using Britain's platform as current president of the group of rich countries to promote post-Brexit Britain as a leading free trade advocate.

"This is the time to get tough on China and their behaviour in the global trading system, but also modernise the WTO. In many ways it's stuck in the 1990s," she told the Financial Times in an interview.

Since leaving the European Union and pinning its economic future on global trade, Britain has stepped up criticism of China's trade practices.

"People cannot believe in free trade if it is not fair," Truss said in a statement before the meeting.

"Public trust has been corroded by pernicious practices, from the use of forced labour to environmental degradation and the stealing of intellectual property."

China, a WTO member since 2001, denies that it steals intellectual property, unfairly hurts the environment or improperly trades goods made with forced labour.

Wider relations between London and Beijing have soured in recent months, with tit-for-tat sanctions over China's human rights record and a bitter row over reforms to the governance of former British colony Hong Kong.

Britain and other WTO members argue that China benefits from exceptions to the rules which were made decades ago and no longer reflect its status as an economic superpower.

"The WTO was established when China was 10% the size of the U.S. economy," Truss told the FT. "It is ludicrous that it is still self-designating as a developing country — and those rules need to change."

Other G7 allies, including U.S. President Joe Biden, agree on the need to reform the WTO and to address China's rising global influence. The problem is finding a solution that all sides agree on.

Echoing the fear of many Western nations that they will lose their grip on control of the post World War Two international order to China, Truss said that unless WTO can be reformed, countries will find other frameworks to trade within.

A strategic review of British foreign policy this month focused on the need to gain more influence in the Indo-Pacific to balance against China, describing its authoritarian leadership and economic might as the biggest state-based threat to Britain's economic security.

The ministers will be joined on the call by recently-elected WTO chief Ngozi Okonjo-Iweala, who inherited an organisation that has struggled to enforce and modernise its rule book.

China has expressed confidence in her leadership and also said it wants reforms and a more effective trading system.

(Reporting by William JamesEditing by Elizabeth Piper, Peter Graff, William Maclean)