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World Trade Organisation (WTO)

Trump says he will pull US out of World Trade Organisation ‘if they don’t shape up’

US president said last month America has been treated ‘very badly’ by the organisation for many years and the trade body needs to ‘change their ways’

PUBLISHED : Friday, 31 August, 2018, 5:03am
UPDATED : Friday, 31 August, 2018, 5:25pm

US President Donald Trump said he would pull out of the World Trade Organisation if it does not treat America better, targeting a cornerstone of the international trading system.

“If they don’t shape up, I would withdraw from the WTO,” Trump said on Thursday, adding that the agreement establishing the body “was the single worst trade deal ever made”.

A US withdrawal from the WTO might even be more significant for the global economy than Trump’s growing trade war with China, undermining the post-second world war system that the US helped build.

Trump said last month that the US was at a big disadvantage after being treated “very badly” by the WTO for many years and the Geneva-based body needs to “change their ways”.

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US Trade Representative Robert Lighthizer has said allowing China into the WTO in 2001 was a mistake. He has long called for the US to take a more aggressive approach to the WTO, arguing that it was incapable of dealing with a non-market economy such as China.

Lighthizer has accused the WTO dispute-settlement system of interfering with US sovereignty, particularly on anti-dumping cases. The US has been blocking the appointment of judges to the WTO’s appeals body, raising the possibility that it could cease to function in the coming years.

On Thursday, Trump said at the WTO “we rarely won a lawsuit except for last year”.

“In the last year, we’re starting to win a lot,” he added. “You know why? Because they know if we don’t, I’m out of there.”

For all of his complaints about the WTO, Trump’s administration has continued to file cases against other members. Earlier this week it launched a case against Russian duties on US products that it argues are illegal.

Countries that take complaints to the WTO tend to win. But WTO data shows that the US does slightly better than the WTO average in cases it brings and that are brought against it, said Simon Lester, a trade analyst at the Cato Institute.

Of the 54 cases brought by the US over the life of the WTO, Washington won at least one finding in its favour in 49, or 91 per cent, Lester said. Of the 80 cases brought against it, a WTO panel ruled against it in at least one aspect in 69 cases, or 86 per cent of the time.

The Trump administration has taken his complaints a step further by arguing that the WTO’s dispute settlement system is broken and in need of a major overhaul.