Foreign ministers from the Group of 20 major economies agreed World Trade Organization reforms are urgently needed to boost its relevance amid an escalating U.S.-China trade war, Japan’s foreign minister, Toshimitsu Motegi, said on Saturday.
Motegi told a press conference at the end of the G-20 foreign ministers’ meeting hosted in Nagoya, Japan that some of those in attendance argued for revisions to the current multilateral trade system due to unfair trade practices and unilateral measures.
“Participants also shared the urgent need for immediate WTO reform while considering the possible cease of functioning of the WTO appellate body next month at the earliest,” he said, according to a G-20 transcript of his remarks.
U.S. President Donald Trump’s administration has been blocking new appointments to WTO’s appellate body, which functions as the world’s ultimate authority on trade disputes. As a result of the lack of new appointments, the appellate body will cease to function on December 10 unless a solution is found.
The Trump administration’s attempt to dismantle WTO’s dispute-settling arm would further undermine its global system of trading rules for international businesses. In response, the European Union, Canada and other nations have sought to use stopgap measures involving arbitrators to hear trade appeals.
Trump’s unilateral tariffs on China and other major U.S. trading partners, and the retaliatory measures his actions have elicited, are eroding the authority and relevance of the Geneva-based WTO. The 16-month trade war between the world’s two largest economies also has caused major economic damages.
Washington imposed tariffs on more than US$360 billion of Chinese imports. Beijing retaliated with tariffs on US$120 billion of U.S. imports. Chances for a near-term U.S.-China trade deal appear dim. Next month, Trump is set to impose more U.S. tariffs on smartphones, toys and other Chinese items.
“Participants were unanimous in their recognition that we must move forward with WTO reform and the development of a set of international rules for the digital economy with a sense of speed in order to keep pace with the rapidly advancing technological innovations,” said Motegi. “We also confirmed that the G-20 needs to play an active role in this.”
— Dr. S. Jaishankar (@DrSJaishankar) November 23, 2019
The “cornerstone” of global trading
Last year, Trump threatened to pull the United States out of WTO, an independent colossus that underpins international trade rules, as part of his attacks on global governance and multilateralism.
Trump has claimed that the international organization — which is not part of the United Nations system — meddles in U.S. sovereignty. He has said he wants WTO modernized and its rules better enforced. It was set up at the start of 1995 to serve as a crucial part of the U.S.-led international order of trade rules and to help governments try to sort out their trade problems.
A panel of independent experts last year warned WTO could become irrelevant if the trade wars sparked by the Trump administration’s “America First” policies cause wider “backsliding” towards trade protectionism among major economies.
The German private foundation Bertelsmann Stiftung reported to WTO’s director-general, Roberto Azevêdo, that a shakeup is needed because sticking to business as usual will lead to WTO’s “gradual demise.”
The panel’s report recommended that WTO revitalize itself as a forum for trade cooperation and conflict resolution to prevent “further erosion of the WTO’s credibility” in the face of the United States and other nations bypassing the organization by unilaterally declaring tariffs and retaliatory measures.
In Japan, Motegi said G-20 foreign ministers held “lively discussions” on how to do just that by transforming WTO into a more effective forum.
The G-20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union. Foreign ministers from nine other countries also joined the discussions.
However, America’s top diplomat, U.S. Secretary of State Mike Pompeo, did not participate. Instead, U.S. Deputy Secretary of State John Sullivan represented America’s interests, including trade policies.
“The G-20 recognizes,” Motegi concluded, “that the WTO, which is the cornerstone of the multilateral trading system, must be reformed to ensure that it is able to fully deal with the challenges in modern-day global trade precisely at a time when the trust in multilateral frameworks is undermined.”