In an Oval Office interview this week, as the Guardian reported, President Trump vowed to withdraw from the World Trade Organization (WTO), if it doesn’t “shape up,” calling the agreement establishing the body “the single worst trade deal ever made.”
While the POTUS does not shy away from hyperbole, especially in his protectionist trade rhetoric, his threats were taken seriously by Roberto Azevedo, the WTO’s director general, who suggested in an interview with Bloomberg that the economy would descend into chaos, if the U.S. was to withdraw from the organization.
“The scenarios are not going to be good for anyone. The U.S. is about 11 percent of global trade. So leaving the organization would be a blow to the organization. But it would be a blow to the U.S. as well.”
U.S. exiting the agreement would not only impact global economy, it would also leave American businesses vulnerable to tariffs, and discrimination, considering WTO members would no longer be obliged to play by the rules.
“That is the worst thing that could happen for an economy as globally connected as the American economy,” Roberto Azevedo said.
While global economic growth remains strong, Azevedo said, protectionism continues to cause turbulence, threatening to rise across the world, with Trump tariffs producing a domino effect of sorts, effectively forcing other countries to respond with retaliatory measures. Recent tit-for-tat tariffs between China, and the U.S. are, according to WTO head, sounding “a number of alarms,” since protectionist measures continue to spread rapidly.
But, the picture is not all bleak. According to Azevedo, as Trump’s comments could kick-start conversations on how to “overhaul” the World Trade Organization.
While the world’s two biggest economies continue to impose tariffs on billions worth of each others’ imports, the China-U.S. trade war has started the conversation about intellectual property theft – China has, according to Market Watch, been accused of stealing between $ 225 and $ 600 billion worth of intellectual property by the Commission on the Theft of American Intellectual Property – and a number of WTO members share official Washington’s sentiment.
However, the United States is, according to Azevedo, not being treated unfairly, as President Trump often suggests. In fact, “the reality is that the U.S. has brought more dispute cases than anybody else,” head of WTO concluded for Bloomberg.
The World Trade Organization, or WTO, was established in 1995 with the goal of regulating international trade. As Fortune noted, the body currently has 164 member countries. This represents 95 percent of all global trade, and 98 percent of the global GDP.