Ex-WTO chief: 'No such thing as a trade war between EU and China'

Pascal Lamy, the former Director-General of the World Trade Organization (WTO), has insisted "there have always been trade frictions" between China and the European Union and called on both sides to see the "bigger picture" on the exchange of tariffs.

Heavy EU tariffs on Chinese electric cars are set to come into force by the end of October, with European countries split on Brussels' plans. China have responded by putting into effect tougher restrictions on the import of brandy from Europe.

But Lamy says "calm" discussions between the parties have been positive and that the WTO can help find a resolution which suits both sides, avoiding a trade "war".

"I believe it's always good to talk and I'm happy they did it with this relatively calm tone, which contrasts with what we see in the media who jump immediately in a trade war between EU and China," he told CGTN. "There is no such thing as a trade war between EU and China, there are trade frictions that have to be handled according to the WTO rules.

"The reality is not a trade war. There are trade friction and always been trade friction. There will always be trade frictions. We have WTO and a dispute settlement system that works."

Lamy urged the EU and China to take the "very simple" step of going to a WTO judge to decide on a way forward.

He feels EVs is the greater problem to be solved but urged both sides not to become preoccupied with side issues.

He added: "If in these two cases, the EU is unhappy and China is unhappy, the solution is very simple. You go to the WTO judge who will adjudicate this case. That's the short-term answer.

"If you look at the big picture, that is bigger for cars and EVs than it is for cognac or whatever, or alcohol, which is not a big economic thing. It matters but it's not as big as cars.

"I think the car issue is a holistic issue that needs to be seen by both sides. The big question for China is do we export to the EU or do we invest into the EU? And the big question for EU is, do we believe that an integration of value chains between China and Europe in electric vehicles is the way to go, or do we behave like the U.S. who believe that car production has to be decoupled between the US and China?

"I hope at the level of the highest authorities on both sides, they don't spend their time looking at the small picture. They have to look at the big picture. The big picture is there's a big future for electric vehicle production trade. It's good to fight against carbon emissions."

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