Info Service on WTO and Trade Issues (Apr18/11)
16 April 2018
Third World Network
DG Azevedo ambivalent on US trade war threats, AB blockage
Published in SUNS # 8662 dated 16 April 2018
Geneva, 13 Apr (D. Ravi Kanth) - The World Trade Organization Director-General,
Roberto Azevedo, said on Thursday that the escalating threats of a
trade war between the United States and China are not factored into
it s "positive" forecast of 4.4% growth in global merchandise
trade in volume terms this year as compared to around 4.7% last year.
Releasing the WTO's annual forecast of global trade, Azevedo twice
said that the latest estimates "do not factor in the possibility
of a dramatic escalation of trade restrictions."
In a series of ambivalent responses to questions from reporters about
the threats of trade war, the need for re- balancing the US trade
deficit, the alleged illegality of US Special 301 actions, and US
stance on other issues, Azevedo offered a nuanced defense of Washington's
actions both outside and inside the WTO, particularly on the dispute
Azevedo did not once mention the source for the "trade restrictions"
or name the member/members responsible for these actions.
It remains to be seen whether the WTO in its upcoming Trade Monitoring
Repo rt will mention the unilateral trade restrictions such as US
Section 232 actions on steel and aluminum (claiming national security),
and the proposed Special 3 01 measures of levy of additional tariffs
of $50 billion on Chinese products because of Beijing's alleged violation
of intellectual property rights.
Asked to comment on the trade war between the US and China, Azevedo
said "technically I would say NO, we are not there yet."
"Still a number of measures have been announced and not implemented
[and] there are conversations and dialogues ongoing between these
players you mentioned."
Asked to comment on the pronouncements made by Peter Navarro, who
is one of the key advisors to President Donald Trump on global trade,
for "rebalancing" the country's trade deficit, Azevedo said:
"It is their call and their view, an d they are entitled to have
Azevedo went on to add: "I think we live in an interconnected
world; about two-thirds of the global economy is connected to value
chains. Trade is somehow connected to global value chains; the previous
perception of what a trade surplus and deficit means and the need
to look at them with different lenses is simplistic. We have to see
the nature of trade surplus and deficits and I'm sure they a re doing
About the alleged illegality of retaliatory measures over US planned
tariff levies under the US Special 301 trade law, which have already
been ruled against b y a dispute panel (DS152) at the WTO, Azevedo
said that it is for members to decide.
He went on to praise the US for "engaging" in all issues
at the WTO, including in raising trade disputes at the Dispute Settlement
Body. Azevedo added that the US has some concerns on the dispute settlement
mechanism, emphasizing the need to address them.
But Azevedo did not utter a word about the "systemic" crisis
that is being faced at the Appellate Body due to the repeated blocking
by the US of a process for filling three vacant positions on the AB.
The director-general also remained silent at the press conference
on US President Donald Trump's statement that the WTO is a "catastrophe".
Nor did he say a word about the US President's tweet on the special
benefits availed by China as a developing country.
President Trump, who is the head of the world's largest economy and
the country that played a central role in creating the multilateral
trade architecture, particularly the GATT (General Agreement on Tariffs
and Trade) in 1948 and the WTO in 1995, said on 6 April: "China,
which is a great economic power, is considered a developing nation
within the World Trade Organization. They therefore get tremendous
perks and advantages, especially over the US. Does anybody think this
is fair. We were badly represented. The WTO is unfair to US."
Denying an opportunity to a reporter to ask questions on President
Trump's tirade against the WTO, while selectively allowing other reporters
of their choice, the WTO director-general failed to provide a "credible"
account of what is happening because of trade restrictive measures
adopted by the US.
Azevedo, who remains silent on such damaging/disparaging tweets from
the US President, however wants to hold consultations to address the
He said that "we need to address the US concerns on the Dispute
Settlement Body" but did not mention the "systemic"
crisis arising from the US decision to block the launch of a process
to fill the vacancies on the 7-member AB.
Even the trade figures issued by the WTO are subject to several caveats.
In 2019, the growth in global trade is expected to moderate to 4%
which is "below th e average rate of 4.8% since 1990 but still
firmly above the post-crisis (financial crisis of 2008) average of
3%," the WTO claimed in a press release.
But merchandise trade volume growth has to be taken with a caveat
as it may have been inflated due to the persistent weakness of trade
over previous two years that provided a lower base, the WTO admitted.
In value terms, the global trade in exports notched a growth of 10.7%
for merchandise exports and 7.4% for commercial services exports last
The ratio of trade growth to GDP growth or "elasticity of trade
with respect to income" - which remained at 1.5 times faster
than world real GDP at market exchange rates for world merchandise
trade volumes - has now rebounded from 0.8 in 2016 to 1.5 in 2017.
Last year, the exports and imports of developed countries grew by
3.5% and 3.1% respectively, while developing countries recorded export
growth of 5.7% and import growth of 7.2%.
Major economies in Asia contributed significantly to buoyant growth
in merchandise trade by consuming more imports than their exports
to other countries.
The value of global exports of merchandise goods stood around US$17.2
trill ion last year while the value of imports remained around US$17.5
The US for whom the growing trade deficit is the core priority, recorded
a deficit of more than US$800 billion (imports-exports: $2409 billion
- $1547 billion).
The Trump administration, particularly its controversial advisor on
trade, Peter Navarro, has repeatedly demanded "rebalancing"
of the deficit with China.
China recorded a surplus of US$421 billion (exports of US$2263 billion
- imports of US$1842 billion) in goods.
The European Union and Japan notched a surplus of US$26 billion while
India (exports of US$298 billion - imports of US$447 billion) remained
however the biggest trade deficit country for goods among developing
countries with a total deficit of around US$149 billion.
For global commercial services, the US recorded a surplus of US$246
billion last year while China recorded a deficit of US$238 billion.
India notched a modest surplus in commercial services of US$29 billion.
In sum, the more the WTO's director-general defends the US despite
the "systemic" crisis it is causing to the multilateral
trading system in general, and the WTO in particular, the more he
is aggravating the "systemic" crisis at the WTO.