US President Donald Trump said he could withdraw the US from the World Trade Organisation (WTO). In response, WTO Director-General WTO Director-General Roberto Azevedo commented that the threats of the US President are nothing new and will not reflect new concerns for the organisation.
However, Trump words are categorical – he says global trade is unfair to the United States and accuses the WTO of allowing this to happen.
The instant response to Donald Trump’s speech was that such decision has the potential to undermine one of the foundations of the modern global economy in which Washington participates. Only that’s not true. No country in the world depends only on trade based entirely on WTO guidelines – after all they are not ‘rules’ because the penalties for breaching them are almost symbolical. Practically each country also has trade agreements covering a large part of its trade relations, usually with neighbouring countries, to minimise tariff and customs barriers with its largest trading partners.
The United States is a basic example of this. In its entire anti-commercial rhetoric, Trump does not propose to withdraw the North American Free Trade Agreement (NAFTA) with the neighbouring Canada and Mexico. On the contrary, he seeks to renegotiate NAFTA in order to make it more favourable to the US.
It is important to realise that the WTO, like the United Nations, is de facto a weak international agency dependent on funding and support from its biggest members. Respectively these are the United States and China. At present both are trying to change the international (liberal) trade system, which has been set up slowly step by step in the past decades, to meet new realities and globalisation.
Trump’s position has also triggered a serious debate in Britain. In the country the supporters of the idea that UK should be a part of the EU announced that the possible break-up of the WTO will leave Britain without an international commercial alternative after Brexit.
At the moment, Britain belongs to the most powerful multilateral trading organisation in the world – the European Union. According to some, London should not leave the EU until there is at least as good commercial protection. At the final of the WTO crisis, it is becoming increasingly clear that this is just not possible – and that is why there should be a new vote in Britain about its place in the EU.
