GENEVA — U.S. President Donald Trump is threatening to pull the United States out of the World Trade Organization, an independent colossus that underpins trade rules among nations.
It is the latest example of Trump’s enmity for multilateralism.
Trump told Bloomberg News in an Oval Office interview that the 164-nation WTO, which aims to be a forum for governments to negotiate trade agreements but has been used far more commonly to settle trade disputes, must start treating the United States better.
“If they don’t shape up, I would withdraw from the WTO,” Trump was quoted as saying by Bloomberg News, going a step further than his comments last month that America is treated “very badly” by the WTO and must change its ways.
Because of the wide repercussions for the global economy, a U.S. withdrawal from the WTO would eclipse even the Trump administration’s previous decisions to withdraw from the United Nations Human Rights Council, the U.N. cultural and educational agency known as UNESCO and the 2015 Paris Agreement to address climate change.
The Geneva-based WTO, which is not part of the U.N. system, was established at the start of 1995 to serve as a crucial part of the U.S.-led international order to uphold a global system of trade rules and provide a place where governments could try to sort out their trade problems.
— Bloomberg (@business) August 30, 2018
Credibility on the line
In July, a panel of independent experts warned the WTO could become irrelevant if the trade wars sparked by Trump’s administration causes wider “backsliding” towards trade protectionism among major economies.
The German private foundation Bertelsmann Stiftung reported to WTO Director-General Roberto Azevêdo that a shakeup is needed because sticking to business as usual will lead to the WTO’s “gradual demise.”
“These issues are high on the agenda for the international community today — and so the ideas provided in this report are very timely,” Azevêdo said in response to that report.
The panel’s report recommended the 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.
“This includes preventing backsliding by WTO members towards unilateral use of protectionist trade policies and ensuring that disputes are resolved effectively and efficiently,” it said.
In March, U.S. Trade Representative Robert Lighthizer said that one of the main pillars of Trump’s trade agenda is reforming the WTO, which he has accused of meddling with U.S. sovereignty.
Pillar 5 of @POTUS' trade agenda is reforming the World Trade Organization. The U.S. stands ready to work with all WTO members who share our goal of using the organization to achieve results that increase trade and the wealth of citizens around the globe. pic.twitter.com/v7CjWBhsHU
— USTR (@USTradeRep) March 9, 2018
A step beyond trade wars
An exit from the only global international organization dealing with the rules of trade between nations would deepen the Trump administration’s hard-line stance against some of the most important organizations and agreements created since World War II to promote world trade.
Trump has already directed a U.S. pullout from the Trans-Pacific Partnership, Obama’s major trade deal with 11 Pacific Rim nations, and planned a rewrite of the North American Free Trade Agreement.
The harmful effects of the trade war between the United States and China, and the trade tensions between the United States and other major trading partners, are a big worry for leaders of international organizations involved with global trade and investment.
That is because the disruptions in global trading would end the world’s recovery from the 2008 global financial crisis, which would have the net effect of punishing developing countries and the poorest people, say top officials at global trade organizations.
Trade wars sparked by Trump’s tariffs against many of America’s most important trading partners also will undermine the work of international organizations trying to lift the world’s poorest out of poverty.
International trade — seen by anti-globalists as a tool of capitalist exploitation — is widely considered a help in opening borders and modern exchanges, and promoting global development, jobs and markets.