The Strategist

Donald Trump announces “outstanding changes” in the WTO

01/23/2020 - 09:15

US President Donald Trump was the main newsmaker on the second day of the World Economic Forum (WEF) in Davos, Switzerland. He announced negotiations on WTO reform, which had come to a standstill primarily because of the position of the US itself. At the same time, he threatened to sharply increase duties on the import of European cars into the country if the US and the EU fail to reach a bilateral agreement on trade.

Gage Skidmore
Gage Skidmore
The main international economic news of Davos on January 22 was the announcement of the US president about his readiness to find a way out of the crisis around the World Trade Organization. Donald Trump said that he would soon discuss a plan of "outstanding" changes with the leadership of the WTO. “We will do something, in my opinion, very outstanding. The organization’s leadership will arrive in Washington, perhaps next week, perhaps in a week, and we will begin work on this,” he promised, adding that “the WTO has been very unfair to the United States for many, many years”. The status of emerging economies gives China and India significant WTO benefits that the United States lacks. WTO Director General Roberto Azevedo restrainedly agreed: if the WTO should play a role in the modern global economy, it needs to “change and reform.”

Claims of the head of the USA to the unfair trade conditions of one WTO, however, were not limited. Mr. Trump said that after the conclusion of the first phase of the trade agreement with China, the United States will insist on changing the terms of trade with the European Union. He pointed out that the union “enjoyed an advantage in relations with the United States for many years,” and promised to increase duties on car imports to 25% if a compromise is not reached in negotiations with the EU.

Recall that in 2018 the parties agreed to start negotiations on a new trade agreement between the US and the EU, but since then the specifics have not appeared in them. Head of the European Commission, Ursula von der Leyen, expressed hope that the EU and the US would be able to resolve the issue of car duties. Another piece of news was continuation of Mr. Trump's speech on the first day of the Davos Forum, which was devoted mainly to the successes of the American economy. In an interview with Fox News, Donald Trump announced a tax cut for the middle class in the US over the next three months, but didn’t reveal the details.

It should be noted that in relation to the WTO, it is the United States that impedes the selection of new judges for its appeals body. This already stopped its work in December when the mandate of the next judge expired (a panel of at least three judges must be assembled to consider the claim). Earlier consolidated proposals for the reform of the organization were put forward by the EU, China and a dozen countries. In particular, it was proposed to increase the number of judges and eliminate the need to interpret the rules of internal regulation of the organization’s members.