GENEVA — The World Trade Organization, under mounting pressure from U.S. President Donald Trump’s administration to justify its global rules and even its own existence, is taking a pragmatic and welcoming approach to calls for significant changes in how it operates from among the world’s 20 largest economies.
As the only global international organization that deals with the rules of trade between nations, the WTO has come under withering attacks from Trump’s administration, which has been threatening to pull the United States out of the 164-nation body.
The Group of 20 leading economies — including Brazil, China, the European Union, Germany, India, Russia and the United States — said at a meeting in Argentina last week it had “stepped up our dialogue on current international trade developments, recognizing the urgent need to discuss current events in international trade and ways to improve the WTO to face current and future challenges.”
Ministers offered no specifics on what the G20 might propose, but the WTO’s Director-General Roberto Azevêdo said nonetheless that he welcomed their efforts to improve the world trade body’s functions and relevance.
“Very pleased to see
#G20 Trade Minsters agreeing to discuss ways to improve the #WTO to face current and future challenges,”Azevêdo said on Twitter.
— Roberto Azevêdo (@WTODGAZEVEDO) September 14, 2018
The Trump effect
Trump told Bloomberg News in an Oval Office interview in late August that the WTO must start treating the United States better or he would have the U.S. withdraw from it. The international organization, which is not part of the United Nations system, aims to be a forum for governments to negotiate trade agreements, but it has been used far more commonly to settle trade disputes.
By undermining the global rules of trade, a U.S. withdrawal from the WTO would eclipse even previous American pullouts from international organizations such as the U.N. Human Rights Council, the U.N.’s cultural and educational agency, UNESCO, and the 2015 Paris Agreement on climate change, and it could wreak even greater havoc on the global economy the longer that Trump’s trade war with China continues.
The WTO was established at the start of 1995 to serve as a crucial part of the U.S.-led international order, by operating a system of trade rules and providing a place for governments to try to sort out their trade issues.
Representatives of G20 nations will meet in November to discuss the prospect of WTO reforms at a technical level. Trade ministers said in a joint statement they had “discussed what the G20 can do to address the current situation in a collaborative manner” and encouraged all members to propose ideas.
The ministers said they also welcomed help from other international organizations. “The fact that we are talking about the reform of the World Trade Organization means that we all agree that we need to have an organization that allows us to establish rules and allows us to work within the framework of international trade,” Argentina’s Foreign Minister Jorge Faurie told a news conference.
Yes and clear that we need to work together to reform and strengthen the WTO. The multilateral system is key for global trade but we need to update the rule book.
— Cecilia Malmström (@MalmstromEU) September 14, 2018
Measures to prevent backsliding
The E.U. also considers the WTO to be dysfunctional, but it has not unleashed crippling tactics like those of the Trump administration to block the reappointment of judges to WTO’s dispute resolution panel. “The E.U., along with many partners, wishes to see political support from the G20 to strengthen the WTO’s negotiating, monitoring and dispute settlement functions,” the European Commission said in a statement.
In July, a panel of independent experts warned that the WTO could become irrelevant if the trade wars sparked by Trump’s administration cause wider “backsliding” towards trade protectionism among major economies. The experts, organized by German private foundation Bertelsmann Stiftung, advised Azevêdo that a shakeup is needed, because sticking to business as usual will lead to the WTO’s “gradual demise.”
Their report recommended that 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.