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WTO future a concern for global finance chiefs
PARIS, July 18, 2019 (BSS/AFP) – Global finance chiefs meeting in France
have warned that the World Trade Organization’s internal court risks becoming
paralysed by a bitter disputes between member states.
Several countries have for years raised concern over the functioning of the
WTO Dispute Settlement Body’s appellate division — sometimes called the
supreme court of world trade.
But the crisis has reached a breaking point because US President Donald
Trump’s administration, which has been bitterly critical of the WTO in
general, has blocked the nomination of new judges.
If no judges are approved by year’s end, the appellate branch will not have
the quorum required to hear cases.
“The organisation is in a deep crisis. We have to realise that,” said
Cecilia Malmstrom, the European Union trade commissioner during a debate this
week in France on the results of the Bretton Woods agreement 75 years on.
The Bretton Woods Agreement, signed in 1944, established a new
international monetary system and set up the World Bank and the International
Monetary Fund (IMF).
It was quickly accompanied by a global trade deal, which evolved in the
1990s into the WTO, an institution which is supposed to be both the forum for
negotiating further global trade agreements and to enforce those in place.
Trump’s trade office has accused the DSB’s appellate body of overstepping
its authority by issuing excessively broad rulings that trample national
sovereignty.
“If the Appellate Body collapses, which probably it will in December, at
least temporarily, we will have no enforcement” of trade agreements, said
Malmstrom.
“If we have no rules, everybody can do whatever he wants and this would be
be very bad, at least for developing countries,” she warned.
Anne Kreuger, a former IMF deputy managing director, also voiced concern
about the risk of a WTO blockage.
“It’s almost useless,” said Krueger, now an economics professor at the John
Hopkins School of Advanced International Studies.
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“Any new case brought to the WTO now probably could never be appealed, in
which case everybody could do what they want,” she warned as the US and China
are engaged in a trade war launched by Trump, who has accused the WTO of
going too easy on China to the detriment of US business.
– WTO reform –
One example came on cue Tuesday as the WTO found in favour of Beijing
regarding a seven-year anti-dumping dispute, prompting a stern US response
accusing China of market distortion.
“The WTO appellate report undermines WTO rules, making them less effective
to counteract Chinese SOE (state-owned enterprises) subsidies that are
harming US workers and businesses and distorting markets worldwide,” read an
Office of the United States Trade Representative statement.
“The United States is determined to take all necessary steps to ensure a
level playing field so that China and its SOEs stop injuring US workers and
businesses,” the USTR vowed after the Appellate Body found for Beijing.
With the United States in particular criticising the WTO, French President
Emmanuel Macron last year urged that the body be reformed.
Bank of France governor Francois Villeroy de Galhau called Tuesday for a
fresh multilateral approach to “improve how the WTO functions”.
But Washington has, so far, refused to back any of the reform proposals
submitted by other members.
Malmstrom also called on China and the United States to help reform the
body.
“I think we can fix it, but it requires very strong leadership,” she said.
In the meantime, the EU was building a “circle of friends with other
countries that believe that trade is a good thing,” she said, mentioning in
particular Canada, Japan, South Korea and the Mercosur countries that include
Argentina, Brazil, Paraguay and Uruguay.
BSS/AFP/HR/1020