On Tuesday 22 May, European Trade Commissioner Cecilia Malmström said that the European Union was working flat out to preserve the multilateral trading system in the face of protectionism and unilateralism, and that it is pushing the USA and China to discuss a potential reform of the WTO rules.
"We are concerned about the multilateral trading system and its future, the problem of making decisions in the WTO and the coming crisis of the appellate body if the USA does not unblock the renewal of arbitrators" (see EUROPE 11971), Malmström summed up, following a discussion with the European trade ministers.
"Trade protectionism and unilateral measures can have very serious effects on global trade. This is why it is important to preserve the WTO. We want to engage with other countries to see how to move forward on the multilateral level – like on fisheries subsidies – or on the plurilateral level when this is not possible", Malmström added.
"We want to bring key partners to the discussion table like the USA and China, and to see how to set new rules and how to have the current rules respected", she said, adding that the future of the WTO would be discussed at an informal ministerial meeting of its member countries, on the sidelines of the OECD ministerial meeting in Paris on 30 May.
"At the EU Council, all the member states are united behind the European Commission and support it in its resolve to reform the WTO", an EU source commented.
"Discussions with the USA and Japan began on the sidelines of the Buenos Aires conference in December 2017 on a reform of the WTO that we could support. There is a gap between the rules established in 1995 and the realities of global trade, with the entry of China in 2001 and the rise of emerging countries that have economic and industrial policies that can be sources of distortion", a French diplomat told EUROPE.
"As regards the WTO's dispute settlement mechanism, we have the feeling, like the Americans, that on the issue of the use of trade defence instruments, it is sometimes biased and imbalanced in certain cases concerning the interpretation of the rules", the source said.
The challenge of a WTO reform is based on the handling of distortions linked to subsidies. These have completely changed in nature: state enterprises can benefit from subsidies to go and buy companies abroad, the same source said.
The issue of the transparency of subsidies and their notification thus arises. "The WTO works for the moment on the street light principle: it only rules on what it sees. The EU notifies its subsidies extremely carefully. For some partners, it is more erratic. Some members have not notified anything since 2004", the source concluded. (Original version in French by Emmanuel Hagry)