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Global trade would be 'anarchic' if WTO not saved, EU commissioner says


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Global trade would be 'anarchic' if WTO not saved, EU commissioner says

Cross-border businesses will have to deal with heightened instability and unfair trading practices unless the World Trade Organization is saved, according to the European Commissioner for Trade Cecilia Malmström.

Malmström has been in Washington, D.C., meeting her U.S. and Japanese counterparts, and used a Jan. 10 speech at a think tank to press the U.S. to help reform the WTO rather than pursue a unilateral trade agenda, bypassing the organization and potentially leading to its demise.

SNL Image

Trade ministers gather in Washington to continue discussions on the future of multilateral trade (from left: Hiroshige Seko, Cecilia Malmström and Robert Lighthizer).

Source: Associated Press

"Without the WTO, there are no rules. International trade without the WTO would be anarchic. Countries would be bullied, companies would fall victim to unfair practices — there would be no reliability, no stability," Malmström said at the Atlantic Council.

Following a meeting between Malmström, U.S. Trade Representative Robert Lighthizer and Japanese Minister of Economy, Trade and Industry Hiroshige Seko on Jan. 9, a joint statement said the ministers "confirmed their commitment to continue working together to maintain the effectiveness of existing WTO disciplines, including through ongoing WTO disputes."

But under Donald Trump's presidency, the U.S. has been increasingly skeptical about the benefits of multilateralism and vetoed appointments to the WTO's appellate body — the branch in place to oversee appeals of the WTO's ruling on disputes between members. The court now has just three sitting judges out of the seven mandated, the minimum required, and two of the three end their terms in December.

Trump complaints

Trump has been vociferous in his complaints about WTO rulings going against the U.S. and has preferred to address trade disputes, most notably with China, through bilateral actions.

Malmström said she agreed that China needs to be brought to heel over unfair trading practices, citing forced technology transfers and state subsidies, but argued that the WTO is the best venue for dealing with such issues.

"The U.S. is currently trying to tackle these issues through unilateral action. We understand and share the frustration with the current status quo, but we believe that only multilateral solutions can provide a sustainable response," she said.

The EU launched a WTO action in June 2018 challenging forced technology transfers, petitioning for China to stop practices that force European companies to reveal sensitive technology in order to operate in the country.

Malmström conceded that the organization requires reform, such as updating the rule book — "in 2018 we are still using the rules of 1995" — improving transparency and resolution of trade tensions at an early stage.

"If we are going to save it, we need to act — and fast," she said, broadening the point to include all multilateral organizations. "Global institutions like the WTO, the IMF and the UN are central to making sure that we have a rules-based international order, and that we defend democracy and openness," she said.

The EU had its own recent run-in with the U.S. as Trump has made reducing bilateral trade deficits a defining feature of his presidency. As a result, the EU is subject to U.S. tariffs on steel and its automotive industry is threatened by an ongoing U.S. investigation that could result in quotas and increasing tariffs.

Malmström said some progress had been made on this front. "We are identifying possible outcomes and making progress — like buying more liquefied natural gas, buying more soya beans, and also in our discussions on regulatory cooperation in some areas," she said.