Planning to do the impossible – US plants to evict China from the WTO

Planning to do the impossible – US plants to evict China from the WTO

The trade war between United States and China started with placing sanctions and ultimately the standoff left businesses in both countries infuriated, there was no word from either of the countries until one of the top economic advisers in the Trump administration has rumoured that there might be a case where they would consider “evicting China” from the World Trade Organisation (WTO).

In an interview Kevin Hassett chairman of the president’s Council of Economic Advisers said China had “misbehaved” as a member of the WTO and has also claimed that the US had been failed by the organisation.

But Mr Hassett also appreciated Trump’s efforts and called the President’s hardball strategy on international trade to be working.

On the WTO, President Trump’s administration has taken an approach that many others see as disruptive.

It poses a significant challenge to the WTO’s ability to settle disputes between member countries about alleged breaches of its rules.

A key element in the WTO disputes system is a body which considers appeals against initial rulings by dispute panels. The US has obstructed new appointments when members’ terms expire and that is making it increasingly difficult for the body to function.

Dr Hassett said that the WTO needs to be better able to deal with countries that don’t obey the rules and are willing to lose at the WTO because the penalties are so low and that in the course of five to six years US has been really hurt by the organisation and that usually wins any case they present to WTO, but this time around they have suffered.

Dr Hassett continued to say that “We never really envisioned that a country would enter the WTO and then behave the way that China has. It’s a new thing for the WTO to have a member that is misbehaving so much.”

Dr Hassett argued that this situation needs to be fixed either with WTO reforming its self, through bilateral negotiation or Byblos completely removing China from WTO.

The US doesn’t have an official policy to remove China, though it is the least preferred, of three options that Dr Hassett listed, he expressed it as a question: “Should we pursue evicting China from the WTO?”

Though it may not be possible at all it’s a startling suggestion to hear from a senior figure in the US administration.

Dr.Hassett believes that Trump is trying to create a barrier-free trade with every country on earth, while critics think that President Trump is trying to invoke protectionism since he started running the office. In his first two years he has imposed tariffs – import taxes – on steel and aluminium and on a swathe of goods from China. He pulled the US out of one trade agreement, the Transpacific Partnership, and embarked on the renegotiation of another, the North American Free Trade Agreement, (NAFTA), which concluded earlier this year.

President Trump states that his predecessors such as Obama, Clinton’s and the Bushes wanted to improve on lowering the barriers to trade but had failed to accomplish that.

He pointed to the replacement for NAFTA and said the US is in negotiations with virtually all its trading partners now. “That’s an enormous amount of progress”.

Dr.Hasset stated that the new tariffs aren’t bad for Americans. Another former economic adviser to President Trump, Gary Cohn, has described them as a tax on consumers. Hassett said that the tarriffs are designed to cause minimum harm at home and put maximum pressure on China and has said that this has been very effective as it has led the Chinese to come to the table.

For now everyone is eager to know the discussion President Trump and President Xi would have when they meet at the forthcoming G20 summit.