Will Trump exit WTO? GUEST OPINION
United States was chief architect of present international trading regime in mid-1940s
It is not earth-shattering news to learn that a lot of rumour and speculation envelops the U.S. presidency of Donald Trump. The latest piece of idle gossip is that Trump wants the U.S. to withdraw from the World Trade Organization (WTO).
Some media reports are suggesting that the Trump administration has already drafted a bill that would sever America’s commitment to the organization. Apparently, it is titled the “United States Fair and Reciprocal Tariff Act” and would basically give the president the authority to ignore WTO trade rules and decisions.
Sources have quoted an angry Trump as saying: “The WTO is designed by the rest of the world to screw the United States.”
Up to this point, he has mostly played an obstructionist role within the organization — effectively blocking new members from assuming their chairs on the WTO’s “activist” Appellate Body panels. But it is clear in Trump’s mind that the WTO is biased against America (and favours China) and seeks to disadvantage the United States (all the while neutralizing American power) when it comes to global trade and investment.
The imperial president apparently doesn’t like the fact that the world trade body often rules against U.S. trade remedy practices. Nor does Trump like the wider rules-based system of international commerce that the WTO stands for. He would prefer that the predominant economic player in the world — the United States — should be allowed to dominate the global economy . . .”
Moreover, the WTO runs counter to Trump’s “America First” proclivities, his obsession with “reciprocity” (as defined by the U.S.) and that it doesn’t fit nicely into his narrow-minded transactional approach to politics. That is, the only good WTO is one with no teeth, no rules and regulations and no interest in taking on the U.S.
It should also be said that the Donald has no use for a global trade regime that is open and liberal in orientation. Instead, he favours a more nativist, protectionist and mercantilist view of international trade flows
Of course, his disenchantment with the global institution will only be heightened by the most recent WTO ruling in Canada’s favour. And he will surely be enraged when he reads that the trade body overwhelmingly dismissed the U.S. legal case for imposing countervailing duties against imports of Canadian glossy, super-calendared paper (including from Nova Scotia’s Port Hawkesbury Paper LP).
But a U.S. departure from the WTO, and a potentially further unravelling of the international economic order, would have profound implications for its 164 member states.
As a country, very much dependent upon global trade for its economic livelihood — not to mention the protections that a rules-based system offer a small power like Canada — a WTO minus the U.S. would be very bad news indeed.
There would be no telling how far Trump would go if he was unshackled from the constraints of the current international trading system. And there is little doubt that Canada, which exports over 75 per cent of what it makes to the U.S., would be extremely vulnerable to American trade harassment. Essentially, Canada would be left with no way to seek redress to restrictive U.S. trade practices — other than the NAFTA (via trade panels, by the way, that Trump is now insisting be terminated).
This is all puzzling because the United States was the chief architect of the present international trading regime in the mid-1940s (then known as the Bretton Woods system). Emerging from the post- WWII period was a commitment championed and led by the U.S. to create the General Agreement on Tariffs and Trade or GATT (the forerunner of the WTO).
There are some, therefore, in the Trump administration who disagree strongly with any notion of the U.S. walking away from the WTO. But in Trump’s little world, we shouldn’t rule it out completely. The one thing that we do know for sure is that a U.S. departure would be a major blow to multilateralism, international cooperation and open markets.
All that we can do at the moment is hope that cooler heads prevail inside the Trump White House and the U.S. Congress (which would have to approve any withdrawal). But I’m afraid that cooler heads seem to be in very short supply in Washington these days.