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Is the WTO being turned into a toothless tiger?

Trade commissioners and many others are worried that very soon the World Trade Organization (WTO) will be unable to rule on any international disputes at all.

Commissioners are worried the WTO may soon be unable to rule on international decisions.
(Photo: nytimes.com)

In the past two years, Washington has opposed the appointment of the WTO panellists who hear the appeals in its trade disputes.

News analysts noted that only three members are left on the seven-member body, the minimum needed to hear a case, and two members’ terms will expire on Tuesday December 10, 2019. 

With the US administration opposing new appointees, official resolution for international trade disputes will not be possible for now, it appears.

“If the rules governing international trade can no longer be enforced, we’d have the law of the jungle.”

– European Trade Commissioner, Phil Hogan in the New York Times

Analysts said Monday that they foresee the effective absence of the WTO as a referee will pave the way for a free for all in international trade and make way for what might be an “outbreak of tit-for-tat tariff wars” as the New York Times puts it.

The New York Times is lamenting “the demise of the World Trade Organization itself, since the system for settling disputes has long been its most effective part.”

The publication quoted Phil Hogan European Trade Commissioner as noting in recent times, “If the rules governing international trade can no longer be enforced, we’d have the law of the jungle.”

President Donald Trump has ensured that the United States has been going its own way with ad hoc tariffs and levies.

President Donald Trump, who many view as the architect of the problem, has ensured that the United States has been going its own way with ad hoc tariffs and levies.

The WTO was founded in 1995 by officials on both sides of the Atlantic over 20 years ago as a way to open up global markets, write trade agreements among its members and settle disputes. 

News analysts note that it was the entry of China with its more than one billion consumers which contributed to the disaffection of some members and the problem.

The TWO was formed more than two decades ago to open up global markets and settle trade agreements and disputes.

China, they note has used a mix of private enterprise and State support to assume a global trade position with which others find it difficult to compete.

Meanwhile, however, as 2019 nears its end, China’s exports in November shrank for the fourth month in a row, a result of the ongoing Sino-US trade war as manufacturers face increasing pressure.

The trade dispute between China and the US has been going on for a year and a half.

The trade dispute between China and the US is now 17 months old.

Overseas shipments from China continue to fall month on month in 2019. China’s trade surplus for November stood at $38.73 billion, compared with an expected $46.30 billion surplus.

What’s next for the US and China?

Analysts note that while Beijing and Washington are set to negotiate a first phase trade deal this month, the dispute over details is continuing.

Furthermore, a US House bill targeting China’s camps for ethnic Muslim minorities  and other bills supporting protesters in Hong Kong have rubbed Chinese officials the wrong way, weakening the possibility of a deal.

A  December 15 deadline might usher in a new round of US tariffs on some US $156 billion of China’s remaining exports to the United States, unless trade talks avert this.

Trump has asked that China commit to minimum purchases of specifific US goods, among other concessions.

Meanwhile, China may also implement counter measures if the US tariffs are implemented.

Trump wants China commit to specific minimum purchases of US agricultural produce, make concessions on intellectual property rights, address currency issues and  gain access to China’s financial services markets.

Using customs data, Reuters calculates that China’s trade surplus with the United States for November stood at $24.60 billion, easing from the previous month’s surplus of $26.45 billion.

The news source said that while factory activity has been moving at the fastest pace seen in three years, falling profits and prices indicate continuing impediments to growth.

– By Makhulu