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Finance and economics The Economist December 9th 2017 69
Also in this section
70 China at the WTO
70 Trade in Africa
73 Buttonwood: Market exuberance
74 Venezuela and oil prices
74 Hedge funds and AI
75 Contraception and girls’ education
75 Marijuana and banking in California
76 Shareholder litigation in Europe
77 Free exchange: Paying no mind
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The World Trade Organisation velopment, a Geneva-based think-tank.
The sabotaging of the WTO’s appellate
Situations vacant body, however, is clearly the handiwork of
the Trump administration. On December
11th the term of Peter Van den Bossche, the
European judge on the body, will expire.
He will be the third judge whose reap-
pointment the Americans have blocked.
On the present course, by the end of
As members gatherforits big meeting, the WTO is in trouble
2019 too few judges will be left to rule on
VERYBODY meets in Buenos Aires,” dence relating to solar-panel imports to new cases (three are required). Mark Wu, a
“Esaid Cecilia Malmstrom, the Euro- help make the case that any tariffs would law professor at Harvard University, wor-
pean Union’s trade commissioner, days be WTO-compliant. ries that gummingup the judicial arm may
before heading there for the World Trade But an institution can be damaged make countries doubt that the WTO is the
Organisation’s (WTO) biennial gathering without blowing it up. Over the past few bestforum forsettlingdisputes. “The riskis
of ministers, which opens on December weeks organisers ofthe meeting in Buenos less of an immediate explosion,” he says,
10th. Some non-governmental organisa- Aires have been managing expectations “than a slowerdeath by a thousand cuts.”
tions have been blocked by the protest- down. No one thinks much will be agreed Mr Lighthizer has hinted at a return to
averse Argentine authorities, but a meet- on. Some sigh that a committed American the old, pre-WTO system ofresolvingtrade
ing of people will indeed take place. One administration might have achieved an disputes—by national muscle rather than
ofminds is anothermatter. agreement on curbing fishing subsidies, re- lawyers. Ms Malmstrom says she cannot
Most participants can agree on one vived one easing barriers to trade in envi- envisage going back to that. But the im-
thing. The WTO, which codifies the multi- ronmental goods, and organised an ambi- passe has no obvious way out. Any
lateral rules-based trading system, needs tious agenda for e-commerce. Instead, the manoeuvre to bypass the American block-
help. President Donald Trump has railed Americans have been bickering over the age of the appellate body would be politi-
against it and threatened to pull America language in a proposed joint statement. cally, if not legally, untenable. And the
out. Without American leadership, there is They quibble with references to the “cen- Americans have not said what reforms
little hope ofreachingnewdeals. And even trality of the multilateral trading system” they want.
asthe WTO’sdealmakingarm isparalysed, and to “development” as an objective.
the Trump administration is weakening its Still, it is unfair to blame the Trump ad- Bull in a China shop
judicial one by starvingit ofjudges. ministration alone forthe likelylack ofpro- As the Trump administration kicks at the
Despite Mr Trump’s threats, America gressin BuenosAires. The dealmaking arm working leg of a limping institution, it is
does not seem on the verge ofcrashing out ofthe WTOhasnotworked foryears. India worth recalling that previous American
of a system it helped to construct, to rely routinely holds agreements hostage to its administrations have also felt frustrated
entirely on bilateral trade deals and reme- demands. The Chinese scuppered an with the WTO. Few would disagree that it
dies. He may think that true reciprocity agreement over environmental goods. needs reform. In particular, China, de-
means American tariffs to match Chinese Some developing countries complain that scribed by Ms Malmstrom as the WTO’s
ones. (For goods, America’s average 3.5%, dealsto help them should be agreed on be- “problematic client”, has an economic
China’s 9.9%.) But Congress is likely to sty- fore new areas are opened up. Updating model that sits awkwardly inside the WTO
mie attempts to raise duties, and anything the rules needs consensus among all 164 system. The organisation’s rules were
he does manage will face swift and painful member countries, which is almost unat- drafted in the early1990s with transitional
retaliation. Robert Lighthizer, the United tainable. “Even the US at its most construc- economies like those of Eastern Europe in
States trade representative, seems to be tive isn’t going to fix the system where it is mind. Hosuk Lee-Makiyama of the Euro-
stickingto the WTO’srulesfornow. On De- now,” says Andrew Crosby of the Interna- pean Centre for International Political
cember 4th, for example, he requested evi- tional Centre forTrade and Sustainable De- Economy, a Brussels think-tank, says they 1