Info Service on WTO and Trade Issues (Jun18/06)
4 June 2018
Third World Network
US refuses to discuss trade and investment at OECD
Published in SUNS #8693 dated 4 June 2018
Paris, 1 Jun (D. Ravi Kanth) - The United States on Thursday (31 May)
struck a body blow to the Organization for Economic Cooperation and
Development (OECD) that it had created in 1961 by refusing to engage
in the discussion on "international trade and investment for
strong and inclusive growth," sever al participants present at
the OECD meeting told SUNS.
"The US, which had played a central role in creating the OECD
from the Mars hall Plan, did not even take the floor on a vital issue
confronting the global trading system," said a deputy trade minister
from a OECD member-country.
The ministerial participants at the meeting, including the EU trade
commissioner and Japan's trade minister, expressed concern over the
conspicuous silence of the US at the OECD ministerial meeting's important
thematic session on global trade.
But all the participants at the meeting pressed for global solutions
and strengthening the multilateral trade framework, and an immediate
resolution to the impasse at the Appellate Body (AB) of the WTO's
dispute settlement system.
The OECD's Secretary-General Jose Angel Gurria admitted that the US
did not speak at the meeting on issues concerning trade and investment
along with some other countries.
Gurria said the US decision to impose additional duties on steel and
aluminum are regrettable but the OECD will continue to work on the
substantial issues such as the overcapacity in the steel sectors and
other initiatives, including in the digital economy.
Ministers and senior trade officials said the US did not engage in
any substantive discussions at the meeting, including the joint concluding
More important, the US blocked the OECD's final concluding statement
because it could not agree on the need to keep the multilateral trading
system open and to resist protectionism.
Gurria said the US joined discussions on all other issues barring
the issue s on trade and climate change.
The United States Trade Representative Ambassador Robert Lighthizer
also ignored concerns raised by the European Union and Japan at a
trilateral meeting on Washington's additional duties on steel and
aluminum as well as investigations into autos and automotive parts
under Section 232 provisions.
At a brief meeting of the three countries on the margins of the annual
Organization for Economic Cooperation and Development (OECD) ministerial
meeting, the European Union's trade commissioner Ms Cecilia Malmstrom
and Japan's trade minister Hiroshige Seko expressed sharp concern
over the additional duty of 25% on steel and 10% on aluminum as well
as the investigations into autos and automotive parts, said senior
trade officials from the EU and Jap an, preferring anonymity.
In response, the US Trade Representative Ambassador Lighthizer defended
the additional duties on steel and aluminum, maintaining that the
actions were launched by the US Commerce Secretary Wilbur Ross.
Ambassador Lighthizer remained evasive on the specific concerns raised
by the EU and Japan, officials from the two countries said.
The three countries, however, issued a strong statement on "the
non-market-oriented policies of third countries and discussed actions
being taken and possible measures that could be undertaken in the
Without naming China, the three countries "confirmed their shared
objective to address non market-oriented policies and practices that
lead to severe overcapacity, create unfair competitive conditions
for our workers and businesses, hinder the development and use of
innovative technologies, and undermine the proper functioning of international
trade, including where existing rules are not effective," according
to one of the officials familiar with the Trilateral discussions.
The US, the EU and Japan insisted that "market-oriented conditions
are fundamental to a fair, mutually advantageous global trading system
and discussed various elements or indications that signal that non-market
oriented policies and practices exist for businesses and industries."
The three countries said they "concurred on the need to deepen
and accelerate discussions regarding possible new rules on industrial
subsidies and SOEs [state-owned enterprises] so as to promote a more
level playing field for o ur workers and businesses."
Further, they elaborated on their joint scoping paper "defining
the basis f or the development of stronger rules on industrial subsidies
"On that basis, they agreed to deepen that work, and expressed
their intent ion to begin their respective internal steps before the
end of 2018 with the aim of initiating a negotiation soon thereafter.
The Ministers emphasized the need to ensure the participation of key
trading partners in these future negotiations," the three ministers
said in their joint statement.
On technology transfer, the US, the EU and Japan said that "no
country should require or pressure technology transfer from foreign
companies to domestic companies, including, for example, through the
use of joint venture requirements, foreign equity limitations, administrative
review and licensing processes, or other means."
The three members of the Trilateral commission "agreed to deepen
cooperation and exchange of information, including with other like-minded
partners, to find effective means to address trade-distorting policies
of third countries, including harmful forced technology transfer policies
and practices, and where appropriate, to pursue dispute settlement
proceedings at the WTO."
They also said "non-compliance by some governments with their
WTO transparency obligations is a priority in the work for improving
the effectiveness and efficiency of the WTO monitoring function. They
agreed to continue cooperation in the WTO to achieve full implementation
of existing WTO rules ."
Despite the trilateral meeting in the morning, tensions between the
three came into the open by evening at the OECD ministerial meeting
when the EU announced that it will press ahead with a trade dispute
against the United States at the World Trade Organization in a tit-for-tat
measure against the United States' decision to impose additional duties
of 25% on steel and 10% on aluminium from the EU.
The EU's trade commissioner Cecilia Malmstrom described the US decision
for imposing additional duties on steel and aluminum permanently as
a "bad day for world trade."
"We did everything to avoid this outcome," she said, suggesting
that "the very last couple of months I have spoken at numerous
occasions with the US Secretary of Commerce."
"I have argued for the EU and the US to engage in a positive
transatlantic trade agenda, and for the EU to be fully, permanently
and unconditionally exempted from these tariffs," she said.
"This is also what EU leaders have asked for," Commissioner
Malmstrom said, suggesting that "throughout these talks, the
US has sought to use the threat of trade restrictions as leverage
to obtain concessions from the EU."
"This is not the way we do business, and certainly not between
longstanding partners, friends and allies. Now that we have clarity,
the EU's response will be proportionate and in accordance with WTO
rules," she maintained.
"We will now trigger a dispute settlement case at the WTO, since
these US measures clearly go against agreed international rules."
The EU will initiate a safeguard dispute, and impose immediate retaliatory
measures to the tune of several billions of dollars as part of the
"rebalancing measures and take any necessary steps to protect
the EU market from trade diversion caused by these US restrictions."
The EU has already published a list of tariffs for more than one billion
dollars on a range of American goods on May 18.
The EU's list of targeted American products include additional duties
of 10 %, 25%, 35%, and 50% on selected products originating from the
The EU's list of targeted American products include sweet corn, maize,
semi-milled rice of different categories, orange juice, cranberry,
Bourbon whiskey, tobacco, T-shirts, flat rolled iron and stainless
steel products among others.
The EU intends to impose US$1.6 billion of additional duties because
of the US additional duties on steel and aluminium.