U.S. allies looking to update trade rules
WTO could become powerless if Trump’s threats play out
GENEVA — 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 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 Canada will host ministers from about 12 countries this week to discuss WTO reform. The U.S. was not invited. 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 will host 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 such as 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.”
Reform will be a tall order: The WTO works by consensus, and all 164 members will have to agree.
In the line of U.S. fire is the WTO Appellate Body, considered by some as the Geneva-based organization’s crown jewel. Washington has blocked appointments to what should normally be a seven-member panel. Last month, the expi- ration of a term that went unfilled left it at the minimum three.
Its backlog of about a dozen cases is overloaded and growing. And the clock is ticking. Another term expiration looms in December next year, which would halt its work altogether.
The U.S.’s main complaint is that China was allowed into the WTOin 2001 on the assumption it would fulfill certain promises, such as opening up its economy to foreign companies. But China has remained closed in many ways, arguing it is still a developing economy. For example, it asks foreign companies to set up joint ventures with local partners if they want to operate in China. And the U.S. alleges China requires companies to part with intellectual property as a price of accessing its market.
Shea also says the appellate body has strayed from its original mandate by adding new powers and not meeting deadlines for cases.
Trump calls the WTO “unfair” and has threatened to withdraw the United States.
China insists it obeys the rules and notes its companies are paying 14 times more in intellectual property royalties to overseas owners than before it joined the WTO.