U.S. President Donald Trump, right, shakes hands with Justin Trudeau, Canada’s prime minister, during a meeting in the Oval Office of the White House in Washington, D.C., U.S. (Photographer: Kevin Dietsch/Pool via Bloomberg)

Canada Unveils Plan to Bolster WTO in Face of U.S. Protectionism

(Bloomberg) -- The Canadian government released a new blueprint Tuesday to reinforce the World Trade Organization and buffer it from President Donald Trump’s ‘America First’ attacks on the Geneva-based trade body.

The proposal, called “Strengthening and Modernizing the WTO,” seeks to forge an alliance of like-minded countries to “restore confidence in the multilateral trading system and discourage protectionist measures and countermeasures,” according to a copy of the eight-page document obtained by Bloomberg.

The effort is one of several initiatives aimed at shoring up the WTO as it confronts an array of crises that could ultimately sideline the organization’s role as the arbiter of global trade. Trump has threatened to withdraw from the WTO, repeatedly attacked the organization as being biased against U.S. interests and is slowly strangling the dispute settlement system, which mediates trade disputes that affect some of the world’s largest companies.

Trade ministers from the European Union and a dozen other WTO members are expected to discuss the proposal next month when they meet in Ottawa from Oct. 24-25.

“We know that the WTO is not perfect, but we know it’s good and we seek to make it better,” Canadian Trade Minister Jim Carr said at Council on Foreign Relations event in New York on Tuesday. “So we’ve invited these like-minded nations from all over the world to see if we can’t come up with a consensus for reform that we will then roll out for other members of the WTO.”

Efficiency, Effectiveness

The Canadian paper focuses on three specific areas for reforming the WTO:

  • Improve the efficiency and effectiveness of the monitoring function;
  • Safeguard and strengthen the dispute settlement system; and
  • Lay the foundation for modernizing the substantive trade rules.

The Canadian paper addresses the WTO’s dispute settlement system and looks at ways to improve the organization’s ability to monitor international trade practices. It also seeks to modernize the WTO’s rules to address 21st century trade practices involving digital trade, international investment, domestic regulations, state-owned enterprises, industrial subsidies and trade secrets.

Since 2017 the Trump administration has refused to appoint and reappoint members to the appellate body, which has the final say in upholding, modifying, or reversing WTO rulings. If the U.S. continues its hold, the body will be paralyzed by late 2019 because it will lack the three panelists required to sign off on rulings.

The office of the U.S. Trade Representative didn’t immediately reply to a request for comment and it’s not clear if the Trump administration would support the Canadian effort.

Despite the paper’s overall ambition, it acknowledges that the WTO’s 164 members are unlikely to forge new binding multilateral agreements or significant institutional changes in the near term.

As a result, “longer term deliberation” will be required to make substantial improvements to the WTO and formally update its 23-year-old rule book, the Canadian proposal said.

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