World Trade Organization countries need to condition themselves for a future without the U.S. as a member of the club, Pascal Lamy, former WTO director general, said Feb. 19 in a Reuters report.
Lamy, who is also president emeritus of the Jacques Delors Institute, was one of the speakers at the "Geneva Dialogue: Trade in Crisis — Headwinds or Maelstrom?" held in Geneva Feb. 19. It was organized by the United Nations Conference on Trade and Development.
"If a major power does not want to play by the rules of internationally disciplined trade, the others will have to react," Lamy said.
Lamy presented three possible scenarios. The preferred option for WTO members would be to ask what the problem was and offer to fix it, he said. The second option would be to "make sure the system can work without them," Lamy said.
The Geneva dialogue acknowledged that the multilateral trading system is in crisis and business as usual is not an option. It further noted how the U.S. has undermined the WTO dispute settlement system by blocking the appointment of new judges.
He said the U.S. tactics were likely to lead to two outcomes. The mildest was reform of the WTO's case law to meet Washington's concerns, in particular its disagreements with China's trade practices. The middle path would lead back to the pre-WTO era of weaker trade discipline and less enforcement.
"The third possible scenario is what I call the 'lonesome cowboy', which is either the U.S. quits or the others, in order to resist this U.S. offensive, build a WTO minus the U.S.”
Lamy said that while he sympathized with some of the U.S. complaints about China, President Donald Trump and his advisers had a "medieval" view of trade, which is at odds with the modern reality of global value chains, he said in the Reuters report.