The Strategist

Trump lashes out at WTO

11/23/2018 - 13:49

The World Trade Organization dared run counter to Washington. Retaliation, for sure, will not keep it waiting.

World Trade Organization
World Trade Organization
For almost two years of Donald Trump’s stay at the White House, everyone has become accustomed to the style of his leadership - if America doesn’t like something in the work of an international organization, then it just leaves it. The next candidate is now the WTO. Washington has not complained about the main trade organization of the planet, considering it unnecessary. Yet now, after it announced start of checking legality of the steel and aluminum tariffs introduced by the US, the latter will most likely announce its withdrawal. It is not surprising that Washington has already officially declared that a rash decision of the WTO could negatively affect legitimacy of this organization, whose headquarters is located in Geneva.

The WTO launched an investigation on the basis of statements by a number of countries applied in the organization, including the European Union and China, who asked to verify the legitimacy of steel and aluminum tariffs. Recall, the US government explained their introduction with the threat to US national security. Brussels and Beijing believes that tariffs do not help strengthen US national security, according to Washington, and promote America’s economic interests, which violates the rules of the World Trade Organization.

The Americans did not take long to response. On Wednesday at a meeting of the WTO committee that examines complaints and where the start of the audit was announced, the US delegation stated that any test of issues related to American security “would undermine legitimacy of the WTO dispute resolution system and even question feasibility of the organization as a whole".

The American representatives said that the WTO does not have the authority to consider issues related to national security. Therefore, it had to simply respond that it could not consider the complaint because it was not in its jurisdiction.

The WTO has long been trying to stay away from the “showdowns” associated with the American tariffs for steel and aluminum, because this, as stated by the organization’s director, Roberto Carvalho de Azevêdo, is a purely political issue. The WTO understands that everyone will criticize any decision. If the World Trade Organization doesn’t see any violations in the American tariffs for steel and aluminum and decides in favor of the United States, this decision will surely become a dangerous precedent for its 164 members. Indeed, it is difficult to resist the temptation to take advantage of the threat to national security to introduce protectionist tariffs and duties in order to achieve economic benefits. In this case, the WTO will have day and night to check legality of introduction of tariffs by members of the organization.

If the WTO decides against Washington, then President Donald Trump will gladly use it as an excuse, and, as mentioned above, will leave the organization.

Introducing steel and aluminum tariffs, which were a major shock to the global economy, Washington cited the rare national security exception used in the WTO as an explanation. It allows members of the organization to resort to any measures and actions that they consider necessary to protect their national security.

Commenting on the WTO’s decision, Washington also attacked the “hypocrisy” of Canada, China, the EU and Mexico, as well as India, Russia and Turkey, which responded by introducing similar duties on American goods and products. Americans consider retaliatory tariffs to be revenge, not a defend of their national security, as was the case with the United States itself. Response rates cover US goods and products for more than $ 25 billion.

By the way, a number of well-known experts rightly believe that the United States is not right, because nuclear materials, weapons, etc., are subject to the exception of national security, but aluminum has never been. The outcome of the commission’s work is clear, which is why Washington is so resisting the investigation.

A commission of three experts must decide in 2019 or 2020. The United States may interfere with the investigation by refusing to approve the composition of the commission. If the experts are not approved by December 2019, the investigation will not take place.