GENEVA: The handsome stone edifice that serves as the headquarters for the World Trade Organization rises like a fortress over Lake Geneva, projecting an air of impregnability. But lately the institution looks vulnerable, sowing worries that global commerce itself may be in jeopardy.
As the
United States accuses China of predatory trading practices while doling out unilateral punishment, the trade organisation tasked with preserving the peace appears marginalised.
The latest indication came on Thursday, when President
Trump effectively bypassed the trading organisation in announcing plans to impose tariffs on as much as $60 billion worth of Chinese imports, from electronics to running shoes. By Friday morning, China was threatening to retaliate with tariffs on some $3 billion worth of imports from the United States.
Diplomats and trade officials said the American action — if followed through would flout
WTO rules, given that the United States would be imposing tariffs without first adjudicating its grievances. Chinese retaliation would similarly deviate from WTO rules.
The WTO fancies itself a
United Nations for global commerce, a place where its 164 member nations convene to hash out clear rules of engagement, seeking to defuse conflict. But as the United States and China, the two largest economies on earth, edge closer to a trade war, the organization established in 1995 to prevent such hostilities appears increasingly impotent.
In an interview on Thursday, just before rump’s announcement of the tariffs on China, the body’s director general, Roberto Azevêdo, expressed concerns that member states were taking matters into their own hands. “These unilateral actions may lead to an escalation of trade-restrictive measures, ending up possibly in some kind of trade war,” Azevêdo said. “I’m significantly concerned.” Trump appeared to acknowledge on Thursday that he was circumventing the rules-based trading system, asserting that the WTO “has actually been a disaster for us.” “It’s been very unfair to us,” he said.
Yet, in a strange bit of cognitive dissonance, the Trump administration at the same time declared plans to seek justice from the body. The United States trade representative, Robert E Lighthizer, said he planned to file a new case at the WTO to try to halt Beijing’s policy of forcing foreign investors to transfer technology to China.
The administration’s China offensive followed its decision to impose tariffs on steel and aluminum imports. On Thursday, the administration significantly diminished the reach of those tariffs, exempting many of its allies — not least, the European Union.
But diplomats in Geneva said the damage to the global trading system went beyond the impact on metals, dealing a blow to the foundations of the WTO.
The Trump administration has justified its steel and aluminum tariffs by claiming that American national security is imperilled by a dependence on imported metals. Trade experts have heaped scorn on that claim, noting that the United States already produces more than two-thirds of the steel it uses.
