US-China trade deal could be challenged by other nations, WTO chief says
- The organisation’s director general Roberto Azevedo says its mechanisms allow other nations to object to a deal if it unfairly hurts them
- WTO also set to rule in dispute – which a source said involves Russia – that could force US to justify why targets of its metal tariffs pose a security threat
A potential trade agreement between the US and China could face challenges from other World Trade Organisation members depending on the details of the pact and whether other nations feel it unfairly hurts them, the group’s chief said.
The US and China appear to have the political will to reach a deal to relieve perhaps the biggest tension in global trade, although things could still fall apart, WTO director general Roberto Azevedo said in an interview in Mexico City on Thursday.
The WTO’s purpose is to allow countries to check actions taken by others if they think that they violate the organisation’s rules, he said.
“I’m sure that if the agreement between the US and China has elements that are questionable, other members will try to get more clarity, they will try to talk about that and they may at the end of the day even challenge that if they want to,” Azevedo said.
“I would be speculating, because I have no clue what the outcome of those conversations is going to be and how they’re going to implement it.”
China and the US claimed progress in talks to end their trade war this week, with President Xi Jinping pushing for a rapid conclusion and President Donald Trump talking up prospects for a “monumental” agreement. Trump said any deal was probably still weeks away.
Drafts of an agreement to end a nearly year-long trade war would give Beijing until 2025 to meet commitments on commodity purchases and allow American companies to wholly own enterprises in China, according to people familiar with the talks.
Those would be binding pledges that could trigger US retaliation if unfulfilled, according to those people, who asked not to be identified because the talks were private.
The WTO earlier this week slashed its global trade growth projection for 2019 to the lowest level in three years, citing the impact of rising commercial tensions and tariffs. World merchandise trade growth will slow to 2.6 per cent this year and 3 per cent next year, after notching 3 per cent in 2018, according to the WTO. In September, the group said trade would increase by 3.9 per cent in 2018 and 3.7 per cent in 2019.
Azevedo said he has been encouraging members to settle such conflicts politically with one another rather than seeking a technical decision through the group’s settlement mechanisms, which he called “a very dangerous development”.
The organisation allows countries to take “any action which it considers necessary for the protection of its essential security interests”, and has become a favourite justification for Trump, who last year imposed tariffs on steel and aluminium imports and has threatened levies on car imports.
The dispute before the WTO involves trade sanctions Russia imposed on Ukraine, according to an official with knowledge of the report who asked not to be named because the process is private.
A WTO ruling on the case could force the US to justify why the European Union, Canada, Mexico and half a dozen other nations that have filed disputes against Trump’s metal tariffs pose a security threat, and put the arbiter of international trade conflicts on a collision course with America.
