Ministers smile while listening to a speech during the Ottawa Ministerial for World Trade Organization Reform in Ottawa, Ontario, Canada. (Photographer: David Kawai/Bloomberg)

Trade Chiefs Say WTO No Longer Sustainable and Needs Reform

(Bloomberg) -- A group of trade ministers from around the world voiced their support for strengthening the World Trade Organization at a time when the Trump administration has threatened to pull out of the body if it doesn’t treat the U.S. more fairly.

“The current situation at the WTO is no longer sustainable,” top trade officials from 12 nations and the European Union said in a communique after discussions in Ottawa over how to reform the global body. The U.S. and China were absent from the meeting.

Ministers identified three areas for “urgent consideration,” including negotiation, dispute settlement and the implementation of WTO agreements.

“There was unambiguous recognition that the WTO faces serious challenges, which if not solved, render it an ineffective organization,” New Zealand Trade Minister David Parker said in an interview.

“Rather than standing back, arms folded and looking grumpy about it saying ‘the WTO isn’t working,’ we instead get on with saying ‘how do we make it work, make it work better, make it fit for the future?’" said Australian Trade Minister Simon Birmingham.

The ministers plan to evaluate the progress on their reform agenda in January during the WTO’s annual mini-ministerial meeting in Davos, Switzerland.

U.S., China

The absence of representatives from the world’s largest economies, which are locked in a trade war, loomed large over the meeting and officials acknowledged that the U.S. and China must at some point be involved.

“There can be no meaningful reform of the WTO without the Americans and Chinese,” Canadian Trade Minister Jim Carr said during the press conference on Thursday.

“It was our thinking that as a first step we would bring in a group of nations who are reflective of diversity internationally -- but who share the value and a belief that the rules-based international order is worth preserving and the best way to preserve it is to reform it.”

‘Deeply Concerned’

President Donald Trump has threatened to withdraw from the WTO, repeatedly attacked the organization as being biased against U.S. interests and is slowly strangling the appellate body, which mediates trade disputes that affect some of the world’s largest companies.

“Not one member for one minute” blamed the U.S. for sparking the current crisis at the WTO, Carr said. “This was a positive discussion about where we ought to go from here. There was no blaming, there was no shaming, it was all forward-looking to find points of consensus upon which we can build.”

The meeting’s focus on revamping the global trade body met with a positive reception on Capitol Hill in Washington. “I am pleased that some of our key trading partners appear to be engaged in serious discussion of the concerns the United States has raised for many years about the need for reform, ” Rep. Kevin Brady, chairman of the House Ways and Mean Committee, said in a statement.

Appellate Body Concerns

Carr said he didn’t know when the U.S. and China would ultimately be drawn into the WTO reform discussion.

Members were open to considering alternative means of dispute settlement if the WTO appellate body becomes paralyzed due to U.S. inaction, Carr said.

Over the past year, the U.S. has refused to consider any appellate body appointments because it says the forum’s current members have strayed from their original mandate.

The three judges remaining are the bare minimum required to adjudicate appellate cases. If the U.S. allows the terms of two of the three remaining appellate body members to expire in December 2019, it would essentially paralyze the WTO’s ability to arbitrate trade disputes.

“We are deeply concerned that continued vacancies in the appellate body present a risk to the WTO system as a whole,” the communique said. "We therefore emphasize the urgent need to unblock the appointment of appellate body members."

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