US and EU team up against China in blasting world trading system

US trade representative Robert Lighthizer says World Trade Organisation is not equipped to deal with what his country sees as China’s mercantilist tactics

PUBLISHED : Tuesday, 12 December, 2017, 1:19pm
UPDATED : Tuesday, 12 December, 2017, 11:08pm

The United States and Europe have said the world trading system is failing to live up to expectations, even as China defended the existing order and urged countries to forge ahead with globalisation.

As trade ministers from around the world gathered for meetings of the World Trade Organisation in Buenos Aires, the top US trade negotiator said the WTO was focused too much on refereeing legal complaints, which distracted from its core mission of expanding commerce.

“We are concerned that the WTO is losing its essential focus and becoming a litigation-focused organisation,” US trade representative Robert Lighthizer said in a speech on Monday at the biennial meeting, which runs until Wednesday.

US, EU and Japan to join forces on Chinese trade practices and excess industrial capacity: source

Under President Donald Trump, the US has stepped up criticism of the Geneva-based organisation, which was founded in 1995 to promote open trade. While the 164-member body is meant to be a forum for countries to negotiate how to reduce trade barriers, talks on a global trade deal have stalled. The US has been blocking appointments to the WTO’s appeals panel, a move the organisation said is undermining its ability to handle disputes.

“Too often members seem to believe they can get concessions through lawsuits that they can never get at the negotiating table,” Lighthizer said.

China airs ‘strong dissatisfaction’ over US statement to WTO

With the US questioning the WTO’s usefulness, trade ministers meeting this week in Argentina are expected to make only moderate progress at cutting trade barriers. European Union Trade Commissioner Cecilia Malmstrom reiterated that concern on Monday, adding that the WTO was not living up to its potential.

“We need to break down the logjam that’s prevented this organisation from playing the part it should in global trade,” she said. “The problems are many but essentially they boil down to one fundamental issue: an inability to discuss issues of concern to members and to agree on a suitable way forward. This problem is systemic and it is beginning to jeopardise the whole organisation.”

EU, US lack awareness of WTO trade rules, China says

Lighthizer has said before that the WTO was not equipped to deal with what his country saw as China’s mercantilist tactics. The US has joined the EU in rejecting China’s claim that, under the terms of its accession to the WTO, it should have graduated last year to market economy status, which would offer greater protection from anti-dumping duties.

“It is impossible to negotiate new rules when many of the current rules are not being followed,” Lighthizer said, adding that the US was leading talks on how to improve the “sad performance” of many members.

He also questioned why rich countries were claiming developing country status at the WTO, which gives them special treatment.

“We need to clarify our understanding of development within the WTO,” he said, adding that some members were “intentionally circumventing their obligations”.

US business groups claim WTO rules cannot stop unfair Chinese trade tactics

Speaking after Lighthizer on Monday, China’s Commerce Minister Zhong Shan defended the WTO’s role in facilitating global trade, which is set to grow faster than the global economy this year for the first time since 2014.

“We don’t believe there’s any other institution that can promote trade like the WTO, so we must push ahead with globalisation to make the world open, inclusive, equitable,” he said.