World trade order in a wobble

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World Trade

MNA Business Desk: The frustration of Roberto Azevedo was evident when, as director general of the World Trade Organisation (WTO), he summed up the results of a three-day ministerial conference in Buenos Aires in the past week. There were simply none.

The delegates of more than 160 countries from around the globe failed to reach any new agreements in the face of stinging US criticism of the WTO and vetoes from other countries. At the end, they were not even able to agree on a joint communique, reported news agency.

And a further blow could strike in the coming week when Republican US lawmakers aim to pass sweeping changes to the tax code which may introduce protectionist measures critics say are at odds with WTO rules.

“In retrospect, 2017 could mark the beginning of the end of the rules-based free trade order and the system unraveling,” said Andre Sapir, senior fellow at the Brussels-based think tank Bruegel. He called it a “big worry”.

US president Donald Trump, propelled to power by his election promise to put “America First” and protect U.S. workers against what he views as unfair trade practices from China and others, has weakened the WTO as a forum to settle disputes.

In the past months, Washington has blocked the appointment of several WTO appeals judges, a move which could paralyze the body’s dispute settlement system for years to come.

“The new US administration does not want to work within multilateral frameworks. It wants bilateral deals,” Sapir said.

As a critic, he says, “This would lead to a system in which the stronger ones outplay the smaller ones, it would be the law of the jungle.”

This apparent change of course in Washington is puzzling for free trade advocates who argue that the United States for decades supported and benefited from multilateral decision-making and rules-based arbitration enshrined in the World Trade Organigation statutes.