US tries to dictate WTO reform by pullout threat

By Huo Jianguo Source:Global Times Published: 2018/9/9 18:03:39

Illustration: Liu Rui/GT

During a recent interview, US President Donald Trump said that "If they don't shape up, I would withdraw from the WTO." Trump has made similar statements several times before, but his latest remark had tongues wagging. People across the world believe that Trump will eventually make up his mind, although they don't know when.

Many people used to believe that Trump was not serious about threatening to withdraw from the WTO. But now, quite a few have warned that the world should be prepared for all possibilities. Trump's ego has received a boost and he is thus highly likely to make irrational decisions. It's time to discuss the actual possibility of Trump quitting the WTO and the price he must pay for doing so.

WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), which was signed by 23 nations in 1947, aimed at coordinating the reduction of tariffs among the signatory nations, so as to facilitate the trading process. Before it was replaced by the WTO in 1995, eight rounds of tariff negotiations, promoted by the US, were held between 1947 and 1995. The first six rounds were basically around reducing tariffs and the latter two rounds touched upon some rules and arrangements for opening up of trade in services.

After WWII, the US enjoyed absolute competitiveness in manufacturing industry and international trade. Reducing tariffs can help eliminate trade barriers for the US to sell its products worldwide.

With the rapid development of globalization and international trade, more and more countries have joined the international multilateral trading system. However, the continuous expansion of WTO members has posed challenges to US dominance.

The WTO has 164 members. The era of US manipulating or dominating the organization has passed. Today's US is overly emphasizing the "America first" policy while accusing and reminding the WTO to pay more attention to US trade interests. It has also repeatedly called for fundamental reforms of WTO's rules and procedures. Trump's threat to pull the US out of the WTO is blackmail. He wants to warn the organization against opposing US interests. The threat can also be taken as a verbal warning - if the WTO fails to reform according to US will, Washington will abandon it and start forming a new  one.

But if the US does so, it will pay a huge price because that would mean Washington comprehensively giving up its commitments on multiple occasions, tearing up the agreements it once inked in front of the world. Such behavior will seriously affect the dignity and credibility of the US and is totally incompatible with the identity and status of the country. At least, US political elites and establishments will not accept it.

Moreover, if Washington wants to quit from an international organization or institution, the decision must be approved by the US Congress. It is expected that it will not be easy for Trump and he will face challenges.

On withdrawing from the WTO, the country will hurt itself but the organization will be hardly  affected. Without Washington, the WTO will continue operating normally, while the US, which would have divorced the organization, will look bizarre. Reports show that the US is strengthening communication and coordination with the EU and Japan, hoping to reach a consensus with them over WTO reform. That being said, more attention should be paid to WTO's future reforms, instead of a possible US exit.

The author is vice chairman of the China Society for World Trade Organization Studies.

Posted in: VIEWPOINT

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