The global trade environment remains fraught with risks but the US — the original proponent of the World Trade Organization (WTO) that has now become its most vocal critic — supports the multilateral trading body even though it wants reforms in it, WTO director general Roberto Azevedo said on Monday.
The WTO chief, however, expressed concerns over the US blocking the appointment of appellate body members, which, unless resolved fast, would cripple the international trading body’s dispute settlement prowess.
Although the WTO chief didn’t elaborate on the specific reforms sought by the US, Azevedo’s statement on the sidelines of a mini-ministerial in New Delhi suggests the world’s largest economy under Donald Trump is unlikely to insist on dismantling the WTO, though it has criticised rule-based, multilateral trading system the body represents.
The mini-ministerial comes at a time when the US has waged a trade war in steel and aluminium by raising tariff for its imports, while promising to take more such protectionist measures.
Importantly, the ambivalence of the US policy was apparent when it dragged India to the WTO over the latter’s export subsidies earlier this month, even though it has been flaying the WTO’s role as the global trade arbitrator. The US claimed India’s export subsidies, worth around $7 billion a year, “harm American workers by creating an uneven playing field on which they must compete”.
In fact, the US was instrumental in causing a stalemate at the Buenos Aires ministerial in December last year where its Trade Representative Robert Lighthizer said the WTO was increasingly becoming a litigation-centered organisation, losing its essential focus on negotiation, apart from going soft on fast-growing and wealthy developing countries. The EU, China, India and most others, however, had called on all members to shore up to further bolster the multilateral trading framework.
“We are facing many challenges in the WTO and outside. Trade environment globally is very risky at this point of time. We will try to have an open and honest conversation at the informal WTO meeting here,” Azevedo told reporters.
“The US has been very clear that it supports the WTO. The US sees some conversations that is happening at WTO now as very welcome and they support that. At the same time US has been saying that they have some concerns the way that WTO functions and maintains that the world has changed significantly since the WTO’s inception in 1995. US wants some upgrades and reforms (in WTO). The conversations with US are ongoing,” he said.
The director general said whatever comes out of New Delhi will be “useful to the conversations that we will be having in Geneva and to move forward on all the items”. He also added: “We have the dispute settlement system which is compromised by a blockage in the appointment of appellate body members.”
The US has repeatedly blocked a selection process to fill three vacancies at the highest adjudication entity for trade disputes at the WTO, the Appellate Body. Analysts have warned that failure to resolve the deadlock could render the Appellate Body meaningfully non-functional by as early as December 2019.
The US is learnt to be insisting on going back to the GATT (General Agreement on Tariffs and Trade) 1947 system, under which rulings were based on negotiations and were non-binding.
Azevedo said the outcome of the meeting here will be “useful to the conversations that we will be having in Geneva to try and move forward on all the items.” “We have very significant challenges before us. We have the dispute settlement system compromised by a blockage in the appointment of appellate members and this will be the focus of conversations in New Delhi,” he added.
The WTO chief would also meet Prime Minister Narendra Modi and other ministers.
The commerce ministry has stated that the meeting will provide an opportunity to engage in free and frank discussions with the hope that it will lead to political guidance on some major issues.
