U.S., China on the agenda, not at the table for WTO reform talks in Ottawa

By James McCarten   

Industry Government Appellate body Canada China trade US USMCA WTO

The U.S. and China won't be in the room Wednesday when 13 countries, including Canada, gather to discuss how best to bring the WTO into the 21st century.

WASHINGTON—At first glance, it sounds like another dusty, pinstriped political gathering with a yawn-inducing agenda—dispute resolution systems, the appellate body appointment process and plurilateral solutions to the international trade and development nexus.

Fair enough—the existential issues confronting the monolithic World Trade Organization have rarely been the stuff of tabloid headlines.

But this week’s two-day gathering in Ottawa on how best to expedite WTO reform has as much to do with Donald Trump, job-killing global tariff wars and the countless would-be refugees trying to make their way to the United States as it does with plenaries, procurement and intellectual property.

And for once, time is of the essence, says the WTO’s deputy director-general.


“Progress in the WTO has been glacial—and actually, glaciers don’t even stay where they’re supposed to. They’re receding. So glacial progress is not acceptable,” Alan Wolff told a panel discussion this week in Washington.

“This is a sort of a standing broad jump into getting something done, as opposed to a marathon effort.”

Like the rules-based international order it represents, the WTO—an institution long maligned as stodgy and slow-moving—is under siege from the Trump administration, which makes no secret of its contempt for international trade conventions.

The U.S. has openly blocked the appointments of new judges to the WTO’s dispute settlement mechanism, known as the appellate body, a tactic that threatens to paralyze the organization and prevent it from making decisions.

“The impasse of the appointment of the appellate body members threatens to bring the whole dispute settlement system to a halt,” says an eight-page Canadian discussion paper obtained by The Canadian Press.

That’s a big part of the reason why neither the U.S. nor China, the world’s other trade elephant and the primary source of U.S. trade angst, won’t be in the room Wednesday when 13 countries including Canada gather in Ottawa to discuss how best to bring the WTO into the 21st century.

“I think that there are solutions to the U.S.-China middle game—not the endgame, since we don’t know where that ends—of trying to get detente,” Wolff said.

“I think there is a middle ground out there, and it can be found.”

Stephen de Boer, Canada’s ambassador and permanent representative to the WTO, said this week’s summit will focus on three main themes, aimed at seeking out “concrete and tangible ways that the operation and function of the WTO could be improved over the short, medium and long term.”

Those themes: safeguarding and strengthening the dispute settlement system, improving the efficiency and effectiveness of the WTO monitoring function and modernizing trade rules for the 21st century.

Reform will be a “hugely challenging task,” one that’s been long overdue as a growing share of the world’s wealth has moved out of the industrialized West, he said.

“That shift leaves the traditional powers with a dilemma: how shall we behave when we no longer dominate?” de Boer asked.

“This is the difficult truth: as the relative might of the traditional powers invariably declines, now is the time when, more than ever, we must set aside the idea that might is right.”

Enter Trump, who has discovered the power of punitive tariffs—levied in the name of national security—to help extract favourable trade terms at the bargaining table, even after a tentative deal has been reached.

Canada and Mexico continue to feel the impact of Trump’s Section 232 tariffs on steel and aluminum imports despite the fact it’s been three weeks since the three countries finally forged their successor to NAFTA, the newly christened U.S.-Mexico-Canada Agreement.

That’s in part because the president knows the power those tariffs yield, and might be reluctant to relinquish it—which means Trump-style trade action is a reality that isn’t going away any time soon, said Dan Ujczo, an Ohio-based specialist in international trade and partner in the law firm Dickinson-Wright.

Indeed, Trump has already hinted that an eruption in U.S.-bound migrants from South America by way of Mexico is a bigger priority for him than USMCA, suggesting in a tweet this week that the deal could be in jeopardy if Mexico doesn’t keep them away from its northern border.

“The repercussions of all of this are global in scope,” said Ujczo—and Trump might decide to keep the tariffs in place for the time being if he wants to keep wielding them as leverage.

“My instinct is that the U.S. wants to pick a fight at the WTO on these tariffs … (and) the U.S. would be less inclined to resolve this issue with Mexico and Canada for fear of rocking the boat on its position,” he said.

“The broader concern here is that all of this—the WTO, other trade deals, immigration—all are issues that are preventing us from resolving this steel and aluminum issue.”

—With files from Mike Blanchfield in Ottawa


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