The departure of World Trade Organisation director-general Roberto Azevêdo offers the US a chance to reshape the global body, analysts say, but European diplomats have warned a transatlantic alliance will be needed to do so.
Azevêdo announced last week that he would leave the WTO in September, a year before his term ends.
Both Democratic and Republican administrations have long accused the WTO of overstepping its mandate by issuing quasi-judicial rulings on trade disputes between members, several of which have criticized U.S. anti-dumping rules.
Stephen Vaughn, a former USTR trade adviser under U.S. Trade Representative Robert Lighthizer who is now at the law firm King & Spalding, said Azevêdo’s departure offered Phil Hogan, the EU trade commissioner, an opportunity to engage Mr. Lighthizer in discussions about global trade rules.
“If we can, it is still possible that we can come to a common understanding of how the WTO should work,” Mr. Vaughn said. “And if so, we can try to build on it.”
While the WTO director-general does not exercise regulatory authority, the U.S. has grown frustrated that its concerns about China, along with criticism of the body's dispute settlement mechanisms, have not been addressed.
“I think Mr. Lighthizer is willing to play hardball,” said Clete Willems, a former Trump administration trade official who now works as a lawyer. “There need to be tough conversations about approach — the organization has become very bureaucratic and not as responsive to members as it should be.”
In a joint statement late last year, a bipartisan group of senators criticized China’s designation as a developing economy, which allows it to meet different trade goals and commitments, and suggested the WTO should do more to ensure Beijing accurately reported the level of state subsidies offered to companies.
More recently, Democratic and Republican lawmakers have argued that the coronavirus pandemic has exposed the threat to U.S. sovereignty posed by having the supply chains of several key U.S. industries based in China. Republican Sen. Josh Hawley earlier this month called for the abolition of the WTO.
Willems said that while he sympathized with those on Capitol Hill who feared the WTO would not fairly enforce trade rules when it came to China, the United States should remain in the organization. “It would be a grave mistake to walk away and cede the global trading system to China. We need to work with Europe on this,” he said.
An EU official said there was “a broad reform agenda to be enacted at the WTO in the coming period of time.”
“Now more than ever, in light of the current Covid-19 crisis, we need a relevant and reformed WTO with strong and active leadership,” the official added.
There are already signs that Brussels wants Azevêdo's replacement to come from an advanced economy.
“We note that a director-general from a developing member held the post for the previous two terms,” the EU official said. “Following an established precedent, it is now time for a new DG to emerge from the developed group of members in the WTO.”
In a note to Mr. Lighthizer sent on April 30, before Mr. Azevêdo’s resignation was announced, Mr. Hogan proposed that the EU and the US “should take the lead in updating the WTO framework for international trade in order to rebalance it to today’s realities.”
“The US senses an opportunity and they need the EU to go somewhere,” said one EU diplomat, noting that “an American director-general is out of the question” but a European replacement for Mr Azevêdo was a more realistic prospect.
Candidates keen to succeed Mr Azevêdo have so far emphasised judicious reform rather than radical change.
The timing of the resignation will give the administration of US President Donald Trump considerable power over the nomination, although the process could stretch into next year if the WTO names an interim director-general.
A US business lobbyist has expressed concern about the power of the United States to influence a multilateral organisation ahead of the November presidential election.
“I don’t think many countries are going to back down from pressure from Bob Lighthizer and the Trump administration right now, particularly when they don’t have to,” he said. “You can drag this out for a while.”
The European Commission declined to comment.
Source: Financial Times
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