Countries Acting Alone Pose Main Risk to Trade System, WTO Says

  • WTO chief Azevedo says ready to listen to U.S.’ trade concerns
  • Roberto Azevedo speaks in interview at APEC meeting in Hanoi

Roberto Azevedo.

Photographer: Florian Gaertner/Photothek via Getty Images

The biggest risk to the global trade order is one country taking unilateral action that disrespects the system, according to World Trade Organization Director-General Roberto Azevedo.

“This temptation exists whenever you have a very sluggish economy, where you have near-stagnation, the tendency to find solutions looking inward is higher,” Azevedo said in an interview Saturday on the sidelines of the Asia-Pacific Economic Cooperation trade ministers meeting in Hanoi, Vietnam.

Roberto Azevedo at the APEC meeting on May 20.

Photographer: Hoang Dinh NamH/AFP via Getty Images

“And if people do that -- look inward and take unilateral actions disrespecting everything that we have agreed before -- the tendency is to have a domino effect where you do something, somebody else says ‘okay so if you’re doing that I’ll do this,’ and you get into this downward spiral which will be extremely negative.”

Azevedo didn’t refer to a specific country, but President Donald Trump’s administration has vowed to reshape the global trading system, saying it would prioritize U.S. trade laws over WTO rules. During his campaign, Trump called the WTO a “disaster” and threatened to withdraw from it. Since taking office he has pulled the U.S. out of a 12-nation Pacific trade pact and triggered the process to renegotiate the North American Free Trade Agreement.

The WTO chief is meeting the new U.S. Trade Representative Robert Lighthizer at the APEC gathering. Lighthizer was only confirmed in the role earlier this month.

Trade “is a very complex equation,” said Azevedo, a former diplomat who was appointed to a second four-year term in February. “The devil is in the details in a way. We know sometimes what we want to do, but you have to look at all this in a very careful manner.”

Read more: Will Trump Kill the WTO and Spark Trade Chaos?

“They just took office and they are thinking about this very carefully,” Azevedo said of the Trump administration. “Let’s see what those concerns are and how the system can help the U.S. administration address them.”

The WTO is an international body that negotiates, monitors and mediates trade rules among 164 members, including the U.S., China, Russia and the European Union. Established in 1994 and based in Geneva, its goal is to reduce obstacles to international trade.

U.S. Commerce Secretary Wilbur Ross flagged last month a study of alleged violations to existing trade deals and WTO rules. “There has never been a systematic evaluation of what has been the impact of the WTO agreements on the country as an integrated whole,” he said. The U.S. has been a WTO member since 1995.

Ross also criticized the WTO for its “leisurely four-times-a-year meeting schedule” that he said was insufficient to deal with the world’s most pressing trade problems.

‘Lack Trust’

The APEC meeting is being held against the broader backdrop of protectionism in many parts of the world as voters express concern about being left behind, evidenced by the U.K.’s decision to withdraw from the EU.

Vietnam’s Prime Minister Nguyen Xuan Phuc, who in April warned that protectionist policies from the U.S. could hurt his nation’s economy, said in a speech on Saturday that APEC’s role as an economic driver would be at risk if “we lack trust, political determination and coordination to safeguard a peaceful environment, ensure security and safety for investment, and the flow of goods in the region.”

The meeting is being scrutinized for whether it can produce stronger language against protectionism than recent gatherings involving Group of Seven and G-20 finance ministers. Amid a push from the U.S., those statements fell short of an explicit promise to avoid protectionism.

“A lot of it has to do with continuity,” Azevedo said. “I think the new administration is about new methods of doing things, new terms of engagement, and just repeating old language is something they are mindful of, they don’t like it very much.”

The WTO forecasts global trade will grow 2.4 percent this year, up from 1.3 percent in 2016, driven by continued economic expansion in many countries. Still, measures to curtail trade could help undermine growth, it said in a report last month.

“There has been an improvement, but very modest” in global trade, Azevedo said. The WTO expects 2017 to show better growth. “But we’re still below the historical average.”

— With assistance by Nguyen Dieu Tu Uyen, and Luu Van Dat

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