As Trump rails, U.S. allies take lead in changing trade rules

U.S. President Donald Trump wants to rip up the rulebook for global trade. China is by many accounts abusing it.

As a battle rages between the world’s top economic power and the fast-growing Asian giant striving to take its place, Canada and the European Union are quietly working to update the laws of international commerce, which have not been changed since the internet boom.

The question is how to fix the World Trade Organization, which oversees trade rules and settles disputes as part of a global order the U.S. helped create after World War II to foster peace and get authoritarian countries to open up.

As it stands, the WTO is on track to become powerless by next year if the Trump administration continues to withhold support over its complaints that China breaks the rules.

The fallout could be big: Disputes like an ongoing standoff between plane makers Boeing and Airbus would go unresolved, gumming up the global trading system. Governments could feel empowered to change their trade policies on a whim, creating uncertainty for companies as they try to plan investments and business deals around the world.

Canada hosts ministers from the EU and about 12 other countries in Ottawa on Wednesday and Thursday to discuss reform of the WTO. Canada said it wants a meeting of “likeminded people” - and didn’t invite the United States.

The EU, which is working bilaterally with China, last month floated ideas on how to change the trade body.

“We do believe the time has come for action,” the EU’S ambassador to the WTO, Marc Vanheukelen, told a panel discussion in Geneva this month. “We now need to put proposals on the table, and start negotiating.”

The U.S. has largely self-exiled itself in the process. After plopping down its complaints on issues like state subsidies for Chinese companies or a lack of transparency from Beijing on China’s domestic rules for business, it’s sitting back as others work on a compromise.

“I know the EU has their paper, Canada and others are working on proposals,” Dennis Shea, the U.S. ambassador to the WTO, said in the panel discussion. “If those proposals come to Geneva, we will certainly take a look at them.”