The OECD on Wednesday (30.5.2018) urged countries to avoid "an escalation" of trade tensions for fear that they could "significantly" affect global growth, while the French president called for reforming the World Trade Organization (WTO) and advocated a new multilateralism.
This warning from the Paris-based organization comes two days before the expiration of the temporary exemption from paying new tariffs on aluminum and steel that the United States granted to some countries such as those of the European Union, Mexico, Canada, Brazil and Argentina..
"A continued escalation of trade tensions could significantly impact economic growth," warned the Organisation for Economic Co-operation and Development (OECD), which predicts global growth of around 4%, the average for the decades prior to the crisis.
"First and foremost, we must avoid an escalation of trade tensions," said the organization's acting chief economist, Alvaro Pereira, without naming any specific country, in a context in which the United States could apply tariffs of 25% on steel and 10% on imported aluminum starting Friday.
If this move is confirmed, Washington's trading partners, starting with the European Union, could take retaliatory measures.
The United States announced Tuesday that preparations for possible trade sanctions against China were continuing, despite the administration's recent announcement of a truce in the trade war.
The OECD, which is holding its annual meeting in Paris until tomorrow under the theme "Reforming multilateralism", is also concerned about the rise in oil prices and interest rates for "highly indebted" countries, groups and households.
The day at the OECD was marked by calls from European countries for multilateralism, in the face of a US administration that appears to be advocating only its own commercial interests.
French president calls for WTO reform
This was the case of French President Emmanuel Macron, who said that "It is time" to reform the WTO. "A trade war is always a lost war for everyone. For our industries, our farmers, our consumers," he said.
According to the French president, "only a refounded WTO can offer us this framework," and he proposed negotiations involving the United States, the European Union, China and Japan, which would then be extended to the G20 and OECD countries.
Global growth according to the OECD
The OECD also presented its global growth forecasts on Wednesday, revised slightly year-on-year with a 3,8% expected this year, compared to its forecast of 3,9% in March, leaving its forecast for next year unchanged (3,9%).
For the economy of United States, which is experiencing one of the longest growth cycles in its history, the OECD now forecasts an increase in Gross Domestic Product (GDP) of 2,9% this year and 2,8% next year, unchanged from its previous forecasts in March.
In its report, the OECD also assesses the economies of some non-member countries, such as Argentina, marked by the recent peso crisis, which the organization attributes to a context of "decline in confidence and capital flight." For 2018, the report forecasts growth of 2% in 2018 and 2,6% in 2019.
In the case of Brazil, The report points to growth of 2% in 2018 and 2,8% in a context of "solid investment growth", reflecting, according to the organization, "recent reform efforts, including in financial markets."
Source: AFP
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