United States President, Donald Trump, is pursuing a “reset” of the World Trade Organisation (WTO) which he believes has treated American interests unfairly, US Trade Representative Robert Lighthizer said Wednesday.
In the latest US attack on the global trade referee, Lighthizer said: “I think the WTO is a mess.”
“I think the WTO has failed America and has failed the international trading system,” Trump told lawmakers in a hearing, adding that the United States “is not treated fairly.”
After paralyzing the WTO’s dispute settlement body to force reforms of the system Trump considers unfair to US interests, Lighthizer said Washington now plans to target tariff policy and special treatment of developing nations, among them China, the main US rival.
The US also will pursue a “phase two” trade deal with China and seek to “rebalance” the relationship with the European Union, where American businesses operate at a disadvantage, Lighthizer said in prepared testimony on Trump’s trade agenda to House and Senate committees.
The next step on China following the “phase one” deal signed early this year — that resolved a two-year long tariff battle — “will focus on issues of overcapacity, subsidization, disciplines on China’s state-owned enterprises, and cyber theft.”
But within the WTO, Washington wants to change the “‘special and differential treatment’ for developing countries,” he said, a designation that applies to China.
The WTO is in the process of selecting a new leader for the organization after Roberto Azevedo’s surprise announcement that he would step down a year early, on August 31.
Asked what he wanted to see in a new WTO chief, Lighthizer said a key factor is to have someone who wants “fundamental reform,” and understands that “an extremely large state run economy” like China cannot be disciplined under current global trade rules.
“So I look for someone who understands the nature of the problem of free economies dealing with China,” he added.
Tensions with Beijing have skyrocketed over the coronavirus pandemic, and US Secretary of State Mike Pompeo was due to meet a top Chinese official in Hawaii on Wednesday, although the US government had not confirmed news reports of the meeting.
– Tariff reform –
In his attack on the WTO’s dispute resolution procedures, which has seen 155 complaints filed against the United States, Lighthizer said the system “has effectively treated one of the world’s freest and most open economies — with an enormous trade deficit — as the world’s greatest trade abuser.”
But the United States, which has filed 124 complaints against other countries, has won more cases than it has lost, including 20-0 against China and winning the biggest case ever against the EU in the longstanding dispute over subsidies for Airbus.
Even so, Washington will “seek a broader reset at the WTO,” Lighthizer said, where “outdated tariff determinations are locked in place that no longer reflect members’ policy choices and economic conditions.”
He said the rules mean that “many countries with large and developed economies maintain very high bound tariff rates, far above those levied by the United States.”
Commerce Secretary Wilbur Ross said Trump’s ultimate goal is to reduce tariffs.
“The president has always had the idea that tariffs should be reciprocal,” he told Fox Business. “His real purpose, though, is to bring them down everywhere.”