Growing concern as president Trump threatens to pull US out of WTO
20 September 2018
A threat to pull out of the World Trade Organisation (WTO) – a body the US helped create – has been made by president Trump.
Talking to Bloomberg News, president Trump said: “If they don’t shape up, I would withdraw from the WTO,” adding that the agreement establishing the body “was the single worst trade deal ever made.”
Many observers feel that, if the US were to withdraw, it would be far more significant for the global economy than Trump’s growing trade war with China and that it reflects a growing conflict between his protectionist trade policies and the open trade system that the WTO oversees.
Trump has also claimed that the U.S. is has been treated “very badly” by the WTO for many years and that the Geneva-based body needs to “change their ways.”
U.S. trade representative, Robert Lighthizer, who has long urged the U.S. to take a more aggressive stance with the WTO, has also said that allowing China into the WTO in 2001 was an error, claiming that the organisation was unable to deal with a non-market economy.
- The U.S. has been blocking the appointment of judges to the WTO’s appeals body, which could paralyse its ability to issue judgments, and Robert Lighthizer has also accused the WTO dispute-settlement system of interfering with U.S. sovereignty, particularly on anti-dumping cases.
In spite of Trump’s comments, the US continues to file cases against other WTO members, most recently against Russian duties on U.S. products that it argues are illegal.
A trade analyst at the Cato Institute, a Washington policy group that supports more open international trade, Simon Lester, says that, in spite of Trump’s claims, WTO data shows that the U.S. does slightly better than the WTO average in cases it brings and those brought against it.
In cases brought by the U.S. since the WTO was created in 1994, Washington enjoyed a 91 per cent success rate while for cases brought against it, a WTO panel had ruled against the US in only 86 per cent of cases.
The Trump administration is also arguing that the WTO’s dispute settlement system needs a major overhaul. The EU has proposed reforms to defuse the conflict but many feel that reforming the WTO will not be straightforward.
An economics professor at Sussex University, Alan Winters, said: “The US threat to withdraw from the WTO is really serious but the WTO is in for a very large shock if it has to agree a new set of rules.”
Since World War II, successive U.S. presidents have led efforts to establish and strengthen global trading rules to bring greater stability to the world economy. The WTO was created as part of a U.S.-led effort by major economies to create a forum for resolving trade disputes.
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