Recently, Roberto Azevedo stated that he was going to step down as the director-general of the World Trade Organisation (WTO). According to BBC, It was pre-planned but the head of WTO’s quits was way ahead of time. It was definitely not expected when the global economy is trapped in a paradox.
There is a huge downfall in global trade and the world is on the edge of having another Great Depression. Meanwhile, Trump is accusing WTO of being unfair with America. He thinks that WTO gives a lot of benefits to China for being a developing nation but the United States is never treated well.
The Head of WTO Quits While Disputing With The US
US President Donald Trump has repeatedly criticised WTO and world trade rules on numerous occasions. It is becoming abundantly clear authoritative entities that were established to maintain order in the world were crippled from the very beginning. Despite the direct impact of coronavirus pandemic, this surprise departure is also credited to leaders like Trump who do not care about the rules.
Azevedo maintains that it was a personal decision to step down early as the director-general of WTO, plus he thinks it is best for the organisation, right now. He admits that the WTO might not be a perfect organisation but they have always been indispensable in the times of need. The organization maintains order among chaos of trade between a number of countries trying to become the king of the jungle.
Donald Trump Is “OK” With This Surprise Exit
WTO is a watchdog when it comes to global trade but the Trump administration insists that the company has strayed from its real purpose of protecting and liberalizing global markets. Trump also has had an issue with WTO since 2001 when China was allowed entry into the organisation.
Trump believes that the conditions to that entry caused millions of Americans to lose jobs because of low-skilled workers. Reportedly, Trump was “OK” with the exit of Azevedo because he was planning to leave the organisation if it didn’t change the rules.
The Head of WTO quits at a very difficult time where global trade is expected to further decrease to historic levels. The economic activity is halted to the point of uncertainty in order to stay safe from the pandemic. Even the UK Economy saw its worst downturn since 2008. If the developed countries are in distress, one can imagine the impact on developing countries.
Possible Reforms in The Trade Rules
Trump’s dispute with the WTO resulted in the failure of many trade dispute arbitrations, blocking the appointment of judges in the Appellate Body, which hears the appeal from WTO members. It means that the body never had enough officials to judge major trade disputes between countries. Other than the US, Japan and the European Union, are also pressurizing WTO to make notable reforms in trade rules.
Arguably, optimal global trading rules need to reflect the new reality caused by the pandemic. It will start by recognizing China as a powerful economy and strictly decide about subsidies and forced technology transfer (FTT) that have scattered the economy. These policies are applied as the solution but they are the root of the problem. First of all, subsidies provide an unfair competitive advantage to “selected” firms, and to top off the damage, FFT renders the whole purpose of innovation irrelevant.