Info Service on WTO and Trade Issues (Mar18/08)
12 March 2018
Third World Network
DG warns on trade wars, but silent on Trump denigration of WTO
Published in SUNS #8638 dated 9 March 2018
Geneva, 8 Mar (D. Ravi Kanth) - The World Trade Organization (WTO)
remained understandably concerned Wednesday about the United States
President Donald Trump's proposed safeguard actions on steel and aluminum
citing dubious national security considerations, but remained conspicuously
silent over his remarks that the WTO is "a catastrophe"
and "the World Trade Organization makes it impossible for us
to do good business."
On 26 February, President Trump, in unsolicited remarks before the
global broadcasting channels, had said "We lose the cases, we
don't have the judges, we have a minority of judges."
Trump also lashed out at India for imposing 50% tariffs on Harley
Subsequently, the US President ratcheted-up his safeguard campaign
threatening that he is not bothered by "trade wars." He
said "trade wars are good and easy to win."
In a veiled attack on Trump's invocation of the "trade war"
threat, the WTO director-general Roberto Azevedo, without referring
to the US President or the proposed safeguard actions on steel and
aluminum, said: "In light of recent announcements on trade policy
measures, it is clear that we now see a much higher and real risk
of triggering an escalation of trade barriers across the globe."
Azevedo did not mention by whom and which country or countries the
trade policy measures were announced, though it is common knowledge
that there is the only country, the United States, which is resorting
to the unilateral trade measures.
"Once we start down this path, it will be difficult to reverse
direction," said Azevedo, using a famous remark by Mahatma Gandhi
that "an eye for an eye will leave us all blind."
(The trade wars threat), Azevedo said, will leave "the world
in deep recession."
Surprisingly, when a president of the world's largest trading nation
is openly abusing the WTO by calling it a "catastrophe"
and that it works against the interests of the US, neither the WTO
director-general nor the Secretariat had any comment or assessment
that the charge was baseless and without evidence.
Asked at a press briefing after the General Council meeting on 7 March
to clarify whether there is any response to Trump's characterization
of the WTO as a "catastrophe", the WTO spokesperson Keith
Rockwell responded: "No comment."
When pointed out that the director-general had chosen to issue a statement
after President Trump's threat of a trade war but not on his damaging
remarks that the WTO is a catastrophe, Rockwell repeatedly said: "no
comment, no comment."
Such is the selective response from the WTO to remarks from the US
President and the repeated US actions to paralyze the WTO's highest
adjudicating body for trade disputes. So far, only one country has
brought the WTO to heel on two fronts - the negotiating and dispute
But, for inexplicable reasons, director-general Azevedo has refrained
from pointing a finger directly at the country which remains a source
of all untoward developments at the WTO.
When the African Group decided to block the Trade Facilitation protocol
in early 2014, Azevedo had travelled several times to key African
countries and exerted pressure through the US to give up their opposition
to ratifying the protocol, pointed out an African trade envoy who
asked not to be quoted.
Why is it that the director-general now remains silent when the US
blocked the reappointment of Korea's Seung Wha Chang for a second
term at the Appellate Body (AB) or when the US has repeatedly blocked
the launch of a selection process for filling three vacancies at the
AB, trade envoys ask.
Yet, Azevedo is ready to subtly up the ante on plurilateral initiatives
for e-commerce, investment facilitation, and disciplines for micro,
small and medium enterprises even though they were rejected multilaterally
at Buenos Aires more than two months ago.
Even though he continues to operate as the chair of the Doha Trade
Negotiations Committee that was established in 2002, he refuses to
speak about the unresolved Doha issues.
Nonetheless, when the United States President Donald Trump signalled
that "trade wars are good" and "easy to win,"
he revived the memories of the Boston Tea Party of 16 December 1773.
That was primarily a political protest against the Tea Act of 10 May
1773 enacted by the colonial ruler Britain.
The Sons of Liberty in Boston, Massachusetts, which spearheaded the
protest, led in destroying an entire shipment of tea sent by the East
India Company. The retaliation by the native Americans, according
to several historians, led to the American Revolution.
In effect, the Boston Tea Party could be counted/reckoned as one of
the first trade wars in which a measure imposed by the British government
led to an unstoppable retaliatory action on the shores of America.
Prior to this historic event, the Dutch East India Company and the
British East India Company had triggered off many trade wars but the
native populations remained unsuccessful in their retaliatory actions.
Subsequently, the United States, Britain, France, and the Netherlands
among others slapped high import duties for a period of more than
150 years to build their domestic industries until another unilateral
measure called the Smoot-Hawley Tariff of 1930 by the US led to another
bout of tit-for-tat retaliatory measures.
However, several economists have argued that the Smoot-Hawley Tariff
followed by the Reciprocal Tariff Act of 1934 was part of a larger
macroeconomic program of President Franklin D Roosevelt in response
to the Great Depression. Nevertheless, the passage of the Smoot-Hawley
Tariff exacerbated the Great Depression, according to economic historians.
After more than 240 years, the US is now prepared to enter another
trade war this time for rebuilding the domestic steel and aluminum
industries that are currently claimed to be in a death spiral, even
though it is working at 70 percent capacity, and at a profit, according
to US economists and trade law community critical of US announced
[See Paul Krugman's columns in New York Times: A Ranting Old Guy With
Nukes on 5 March; The Macro-economics of Trade War on 3 March; and
Trade War, What Is It Good For? Absolutely Nothing, 3 March. SUNS.
The Trump administration, in an attempt to accomplish its electoral
promises on trade, has invoked section 232 of the Trade Expansion
Act of 1962, which allows the US to impose trade restrictions in the
name of national security. This particular provision, the Trump administration
believes, will enable the Trump Administration to circumvent the core
provisions of the World Trade Organization's Safeguards Agreement.
President Trump announced that he intends to impose a safeguard duty
of 25% on steel and 10% on aluminum in an attempt to protect the domestic
steel and aluminum industries that are allegedly "ripped"
off by imports from China, and even friendly countries like the European
"People have to understand, our country, on trade, has been ripped
off by virtually every country in the world, whether it's friend or
enemy - everybody - China, Russia, and take people that we think are
wonderful, the European Union," President Trump told reporters
on 5 March.
"No, we are not backing down," he said, asserting that he
is not going to spare either Mexico or Canada, which are the major
suppliers of steel and aluminum products.
On Wednesday (7 March), the US administration indicated that the steel
and aluminum safeguard duties will not be imposed on all countries,
particularly Canada and Mexico. Clearly, the US signalled the softening
of positions on the safeguard issue.
However, it is very unclear why countries that believe in "free
trade" would want to retaliate in response to President Trump`s
actions if, from that perspective, higher tariffs harm the country
So, responding to a tariff increase with a similar response on selective
imports would appear to be a self-harming strategy, said an analyst
on globalization, who asked not to be quoted.
"Of course, if the free trade lens is a poor way of understanding
international trade relations things might be different," the
In an article in SUNS (#8419 dated 10 March 2017), it was argued that
the global hegemon is determined to pursue an aggressive version of
the "open door" policy that was first implemented in 1898.
That policy began under the dubious slogan of saving Cuba from the
clutches of the Spanish rule.
Several years after the Cuban war, the American Bureau of Foreign
Commerce of the Department of Commerce said: "The Spanish-American
war was but an incident of a general movement of expansion which had
its roots in the changed environment of an industrial capacity far
beyond our domestic powers of consumption... It was seen to be necessary
for us not only to find foreign purchasers for our goods but to provide
the means of making access to foreign markets easy, economical and
safe," as quoted by the historian Howard Zinn in his book - "A
People's History of the United States,"- page 306.
The long journey of the "open door" policy continued to
manifest under different masks but beneath the surface, there remained
continuity, regardless of the destruction and violence it had caused
in various countries. It wore, for example, a reformist mask since
the setting up of the United Nations, the Bretton Wood institutions
of the International Monetary Fund and World Bank, and followed by
the General Agreement on Tariffs and Trade in January 1948.
During the last seven decades, the United States, the most powerful
nation in history, went on to refine/perfect the "open door"
policy in ways that suited its overall trade/economic interests and
strategic considerations, including its immediate military and trade
priorities, according to several studies by historians and economists.
The creation of the World Trade Organization following the Uruguay
Round of Trade Negotiations in 1995 is an apogee of that onward march
which began almost a century ago. Although the Uruguay Round started
during the reign of the Republican administration in 1986, it was
concluded by the Democratic President at the official level in December
Unsurprisingly, there is always an underlying chain of continuity
in the economic and trade policies followed by the global hegemon
since the late 19th century. The US control over these so-called multilateral
trade institutions is pervasive in almost all aspects. Barring some
minor hiccups here and there, Washington ensured a brutal grip on
decisions taken at the IMF, the World Bank, and the WTO."
Therefore, regardless of the Trump administration's hyper-sensitive
actions which are being severely criticized by many WTO members, the
WTO director-general is yet to directly challenge the US either by
showing the mirror or rallying members for a common stand against
the US postures.
Surprisingly, the director-general is willing to mount an extraordinary
effort for bringing multilaterally-discarded new issues into the WTO
through an open and inclusive framework. But when it comes to the
US, he takes a backseat because of his historic proclivities, according
to several current and former trade envoys, who asked not to be quoted.