TWN Info Service on WTO and Trade Issues (Feb17/03)
6 February 2017
Third World Network

WTO DG silence on Trump assault on MTS causing concern
Published in SUNS #8393 dated 2 February 2017

Geneva, 1 Feb (D. Ravi Kanth) - In the face of a sustained assault on multilateral trade rules, including the WTO, by the new Trump administration, the continued deafening silence of the World Trade Organization director-general Roberto Azevedo remains a serious cause for concern, several trade envoys told SUNS.

At a time when he is seeking a second term and is also the only candidate in the race, members are puzzled as to why Azevedo is choosing to remain silent to defend the organization, which he wants to lead for another four years, from a barrage of steady tirades from the Trump administration denouncing multilateral trade liberalization and the WTO, said a trade envoy, who asked not to be quoted.

"It is unusual for the WTO's DG who is also known as the 'custodian' of global trade rules to remain silent when the multilateral trade order is being torn apart and turned upside down by the Trump administration," the envoy said.

During his last press conference in November last year, Azevedo was asked whether he would comment about the protectionist threat posed by Trump after he was inaugurated as President. The director-general said he would make his assessment based on "facts" and that he would not like to comment on what is going to happen.

But, in more than nine days in office, the Trump administration has left no stone unturned.

On the first full day in office, President Trump signed an executive order for pulling the US out of the 12-country Trans-Pacific Partnership (TPP) agreement. He said his trade deals would be "one-on-one" accords and "that will be better" as they would be easier to enforce. Trump also said that he would punish companies that shut down factories in the US and moved jobs outside by imposing a "very major" border tax.

Explaining Trump's decisions, White House spokesperson Sean Spicer said they "usher in a new era in US trade policy", based on bilateral deals that would take precedence over multilateral agreements. He argued that multilateral deals are not beneficial to US interests because they end up catering to the "lowest common denominator" as was the case with the 12-member TPP that put small countries on the same footing as the US.

Bilateral deals, on the other hand, offer a stronger bargaining position to the world's largest economy and could be more easily updated or renegotiated, he explained.

Subsequently, the tone and tenor of the decisions announced by the Trump administration have become much shriller and vitiating an orderly conduct of global trade relations.

Decisions such as the construction of a wall on the Mexican border, the threat to impose 20% customs duty on all Mexican products if Mexico refused to finance the wall's construction, the decision to re-negotiate NAFTA, and the proposed aggressive reform on H1B visas, that may run counter to the US GATS commitments, to ensure that outsourcing of IT services are increasingly discontinued, and other measures in the offing, point towards a grave quake on the trade-Richter scale.

"These decisions [by the US]," said the trade envoy, "would be tantamount to a definite retreat from multilateral trade liberalization."

During his keynote speech at National Press Club in Washington D. C on 7 October 2016, Azevedo was asked what is his view on TPP and whether it is justified to dismantle the agreement as campaigned by Trump. The director-general said that he would welcome any agreement - whether TPP or other regional agreements - that would contribute to trade liberalization.

Azevedo was consistently supported by the previous Obama administration and was praised for his leadership role in delivering the Trade Facilitation Agreement as well as the outcomes at the Nairobi ministerial meeting during the WTO's tenth ministerial conference. Immediately after the Bali ministerial meeting in December 2013, Azevedo had called on President Obama in his Oval office, according to people familiar with the development.

The former US Trade Representative Ambassador Michael Froman had praised, in his lecture at Geneva's Graduate Institute on 17 October 2016, "Amina Mohamed (Kenya's cabinet secretary) and Roberto Azevedo (WTO's director-general) for shepherding that process" at the WTO's 10th ministerial meeting in Nairobi - "which represented a critical turning point in the history of the WTO".

In a similar vein, Azevedo had warned the British electorate that Brexit is a bad idea before it had happened. He had consistently advised the African countries what they must do to accelerate trade reform and liberalization in their countries.

Azevedo never minced words against threats posed by "protectionism" and tectonic events such as the Brexit. The WTO issues timely reports on the state of play in global trade as well as trade restrictions, including legitimate safeguard measures, imposed by governments.

In the last Trade Monitoring report issued on 10 November 2016, which came two days after Donald Trump was elected as the 45th President of the United States, Azevedo said "the continued introduction of trade-restrictive measures is a real and persistent concern."

"Tangible evidence of G20 progress in eliminating existing measures remains elusive."

"It is clear that the financial crisis has had a long tail and that the world economy remains in a precarious state. Many people are struggling with unemployment or low paying jobs and are concerned about broader changes in the economy. These concerns demand a concerted response from governments and the international community. One step will be for G20 members to deliver on their commitment to refrain from imposing new trade-restrictive measures and roll back existing ones," the director-general maintained.

During his address at an informal trade ministerial meeting hosted by Switzerland on 20 January this year, before the Trump inauguration and taking over a few hours later on that day in Washington DC, Azevedo had said: "Clearly trade is very high on the political agenda at the moment. I recognize the concerns about globalization - and the need to respond. The net positive effect of trade means nothing if you've lost your job. So we need better domestic policies to support people and get them back to work. But attacking trade won't help here. I have heard a lot of talk about protectionism and trade wars this week. That would destroy jobs, not create them. I am urging everyone to show caution and leadership. We must avoid talking ourselves into a crisis.

"Of course there is a lot of uncertainty ahead of us. But my message is: don't be paralysed by that uncertainty. Instead we need to work even harder. Ministers agreed today to increase their engagement throughout 2017. This will be essential to keep strengthening and improving the trading system."

But these remarks from Azevedo are neither here, nor there, as they fail to send a message to the country that is unleashing the attacks against the WTO.

In an interview to the Financial Times, Peter Navarro, the head of a new White House National Trade Council, said unambiguously that the Trump administration wants to unwind and repatriate the international supply chains that are critical for the day-to-day business of the US multinational companies. "It does the American economy no long-term good to only keep the big box factories where we are now assembling 'American' products that are composed primarily of foreign components," he told the FT.

"The unequal treatment of the US income tax system under biased WTO rules is a grossly unfair subsidy to foreigners exporting to the US and a backdoor tariff on American exports to the world that kills American jobs and drives American factories offshore," Navarro said.

Even in the face of such mounting attacks against the WTO from the world's largest economy, the DG prefers to turn a deaf ear, according to a trade envoy from an industrialized country who asked not to be cited.

"But when the boss of the global hegemon attacks the institution he is responsible for upholding, he [Azevedo] has nothing to say," the trade envoy said.