WTO head warns US exit would mean chaos for American businesses

WASHINGTON • The head of the World Trade Organisation (WTO) has responded to US President Donald Trump’s threat to leave the institution by warning such a move would cause chaos for US companies operating around the world.

In an Oval Office interview with Bloomberg last Thursday, Trump warned that he would withdraw from the WTO “if they don’t shape up”. The president also called the 1990s agreement establishing the body “the single worst trade deal ever made”.

Roberto Azevedo (picture), the WTO’s DG, told Bloomberg last Friday that he was already working with the US and other members to address some common complaints. But he warned that a US exit from the WTO would have chaotic consequences for the global economy and the US itself.

“The scenarios are not going to be good for anyone,” he said. “The US is about 11% of global trade. So leaving the organisation would be a blow to the organisation. And it would be a blow to the US as well.”

In particular, he said, such a move would leave US businesses vulnerable to commercial discrimination and new tariffs around the world if non-US members were no longer bound by the WTO’s rules.

“That is the worst thing that could happen for an economy as globally connected as the American economy,” Azevedo said.

Global growth remains strong, he said. But even before the latest round of US and Chinese tit-for-tat tariffs, the WTO was concerned over rising protectionism in the world and Azevedo said “a number of alarms” are sounding.

Worse, protectionist measures “are spreading very, very quickly,” he said, with the US expected to move as soon as this week to impose tariffs on an additional US$200 billion (RM822 billion) in imports from China. The world’s two-biggest economies have already levied duties on US$100 billion worth of each others’ products since July as talks failed to resolve US concerns over China’s trading practices.

Azevedo said he was in discussions with the US and other members about the need for reforms at the WTO and in global trading rules. “I suppose that is consistent with ‘shape up’,” he said, citing Trump’s comments.

In particular, a number of members other than the US shared Washington’s concerns about issues related to China. Among those were shortcomings in global trading rules related to industrial subsidies, the conduct of state-owned enterprises and the theft of intellectual property.

He pointed to July’s Rose Garden agreement between Trump and the European Commission President JeanClaude Juncker, which included a commitment to work together and with other countries on WTO reforms.

Also underway are conversations between the US, European Union (EU) and Japan over their common complaints about China, as well as discussions between the EU and China over both their bilateral trading relationship and how to reform the rules-based trading system.

“All this is I suppose the beginning or the seeds of the kind of conversation that we need over how to overhaul the WTO,” Azevedo said.

Among Trump’s main complaints about the WTO is that it the US is treated unfairly by its dispute system and loses many of the cases.

Azevedo rejected that complaint, however, saying: “The US is being treated exactly the same way as every other WTO member.”

As the largest economy in the world “the reality is that the US has brought more dispute cases than anybody else” and been a target of more than any other member, Azevedo said.

Like most members, the US had won more than 90% of the cases it had initiated, he said, and lost most of the cases brought against it.—Bloomberg