US President Donald Trump said he would pull out of the WTO if it does not treat the US better, targeting a cornerstone of the international trading system.
“If they don’t shape up, I would withdraw from the WTO,” Trump said on Thursday in an Oval Office interview with Bloomberg News.
The agreement establishing the body “was the single worst trade deal ever made,” Trump said.
Photo: AFP
A US withdrawal from the WTO would potentially be far more significant for the global economy than even Trump’s growing trade war with China, undermining the post-World War II system that the US helped build.
Trump last month said that the US is at a big disadvantage from being treated “very badly” by the WTO for many years and that the Geneva, Switzerland-based body needs to “change their ways.”
US Trade Representative Robert Lighthizer has said allowing China into the WTO in 2001 was a mistake.
He has long called for the US to take a more aggressive approach to the WTO, saying that it was incapable of dealing with a non-market economy such as China.
Lighthizer has said that the WTO dispute settlement system interferes with US sovereignty, particularly on anti-dumping cases.
The US has been blocking the appointment of judges to the WTO’s appeals body, raising the possibility that it could cease to function in the next few years.
In the interview, Trump said that at the WTO, “we rarely won a lawsuit, except for last year.”
“In the last year, we’re starting to win a lot,” he said. “You know why? Because they know if we don’t, I’m out of there.”
For all of his complaints about the WTO, Trump’s administration has continued to file cases against other members. Earlier this week it launched a case against Russian duties on US products that it has said are illegal.
Countries that file complaints with the WTO tend to prevail and defendants in trade disputes lose.
However, WTO data showed that the US does slightly better than the WTO average in both cases it files and that are filed against it, said Simon Lester, a trade analyst at the Cato Institute, a Washington policy group that favors more open international trade.
Of the 54 cases filed by the US over the life of the WTO, Washington won at least one finding in its favor in 49, or 91 percent, he said.
Of the 80 cases filed against the US, a WTO panel had ruled against it in at least one aspect in 69 cases, or 86 percent of the time, he added.
The Trump administration has taken his complaints a step further by arguing that the WTO’s dispute settlement system is broken and in need of a major overhaul.
The EU has been leading an effort to propose reforms to try and defuse the conflict.
Officials from the EU and Japan last week visited Washington to discuss potential changes, as well as joint efforts to take on China at the WTO.
However, change at the organization might not come easy.
“Now, it’s true that the threat by the US to withdraw is really serious, that will concentrate minds, and then things could happen,” University of Sussex economics professor Alan Winters said in a Bloomberg interview. “But the WTO is in for a very large shock if it actually has to agree a new set of rules.”
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