President Donald Trump has said he will pull out of the World Trade Organisation (WTO) if it doesn’t treat the US better, targeting a cornerstone of the international trading system.
“If they don’t shape up, I would withdraw from the WTO,” Trump said on Thursday in an Oval Office interview with Bloomberg News. Trump said the agreement establishing the body was “the single worst trade deal ever made”.
A US withdrawal from the WTO potentially would be far more significant for the global economy than even Trump’s growing trade war with China, undermining the post-World War II system that the US helped build.
Trump said last month that the US was at a big disadvantage from being treated “very badly” by the WTO for many years and that the Geneva-based body needed to “change their ways”.
US Trade Representative Robert Lighthizer has said allowing China into the WTO in 2001 was a mistake. He has long called for the US to take a more aggressive approach to the WTO, arguing that it was incapable of dealing with a non-market economy such as China.
Lighthizer has accused the WTO dispute-settlement system of interfering with US sovereignty, particularly on anti-dumping cases. The US has been blocking the appointment of judges to the WTO’s appeals body, raising the possibility that it could cease to function in the coming years.
‘We rarely won a lawsuit’
In the Oval Office interview, Trump said at the WTO “we rarely won a lawsuit except for last year”.
“In the last year, we’re starting to win a lot,” he added. “You know why? Because they know if we don’t, I’m out of there.”
For all of his complaints about the WTO, Trump’s administration has continued to file cases against other members. Earlier this week it launched a case against Russian duties on US products that it argues are illegal.
Countries that bring complaints to the WTO tend to prevail and defendants in trade disputes lose.
But WTO data also shows that the US does slightly better than the WTO average in both cases it brings and that are brought against it, said Simon Lester, a trade analyst at the Cato Institute, a Washington policy group that favours more open international trade.
Of the 54 cases brought by the US over the life of the WTO, Washington won at least one finding in its favour in 49, or 91%, Lester said. Of the 80 cases brought against it, a WTO panel had ruled against it in at least one aspect in 69 cases, or 86% of the time.
The Trump administration has taken his complaints a step further by arguing that the WTO’s dispute settlement system is broken and in need of a major overhaul.
The EU has been leading an effort to propose reforms to try and defuse the conflict. Officials from the EU and Japan visited Washington last week to discuss potential changes as well as joint efforts to take on China at the WTO. But change at the organisation may not come easy.
“Now it’s true that the threat by the US to withdraw is really serious, that will concentrate minds, and then things could happen,” Alan Winters, a professor of economics at the University of Sussex, said in a Bloomberg interview. “But the WTO is in for a very large shock if it actually has to agree a new set of rules.”
Since World War II, successive US presidents have led efforts to establish and strengthen global trading rules, arguing that they would bring stability to the world economy.
The WTO was created in 1994 as part of a US-led effort by major economies to create a forum for resolving trade disputes.
Boeing Shares Continue To Slide As Countries Ground 737 MAX Planes
Boeing shares have continued to slide on Tuesday as a growing list of countries move to ground the aircraft manufacturer’s 737 MAX model jets after the crash of an Ethiopian Airlines flight on Sunday killing a hundred fifty-seven persons.
Boeing’s stock price has fallen nearly twelve percent since the accident, erasing roughly twenty-eight billion dollars in value amid concerns the accident could have links to last October’s crash of a 737 MAX 8 operated by Indonesia’s Lion Air. A hundred eighty-nine persons died in that one.
Although experts warn that it’s too early to know what caused the Ethiopian Airlines crash, both crashes occurred shortly after takeoff. Experts say, that suggests a possible connection.
Bloomberg reports the Boeing 737 is the best selling aircraft in history. The MAX is its newest version, with more fuel-efficient engines. It is also generates almost one-third of the airline maker’s operating profit.
SA Banks Stop Supply Of US Dollars To Zimbabwe
South African banks have stopped supplying Zimbabwe with U.S Dollar notes saying they want to avoid risk. They cite Zimbabwe`s loss of a hundred correspondent banking relationships in the past few years because of the country`s high risk rating.
South African banks have been the major sources of U.S dollars for Zimbabwe since 2009.
Zimbabwe Reserve Bank Director, William Wanimanzi says the development is a result of the country`s failure to follow proper dollarization procedures, signs of which he said are now catching up with the country`s fragile economy. He said the country is not officially dollarized because it does not have an agreement with the United States government to use its currency. He says this will make it difficult to take in cash into the economy.
Zimbabwe Central Bank Abandons Quasi Dollar
Zimbabwe Central Bank has abandoned the quasi dollar it introduced in 2016. The peg of one Zimbabwe dollar to one US dollar has not worked as the black market rate has been in the range of three and a half to four Zimbabwe dollars to one U.S. dollar.
Economists say this move could lead to jitters in countries that hold the peg, including Saudi Arabia and Hong Kong.
Zimbabwe has long been dealing with currency instability that in 2009, it introduced the US dollar, euro, and the South African rand as legal tenders it thought would stem the wild round of hyper-inflation.
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