Foreign Affairs Minister Chrystia Freeland was in Washington last week in a last-ditch effort to find common ground with the United States in North American free-trade agreement talks.
Meanwhile at the World Trade Organization in Geneva, Canada was taking veiled shots at the United States for undermining the global trading system.
The juxtaposition of co-operation on NAFTA and talking tough at the WTO demonstrates Ottawa’s increasingly uneasy relationship with its largest trading partner. On the one hand, the Trudeau government needs to make nice to get a NAFTA deal. But it’s also alarmed by the Trump administration’s increasingly militant trade posture.
The May 8 statement, signed by Canada and 40 other WTO members, admonishes countries for ratcheting up global trade tensions and engaging in protectionism.
The United States isn’t named in the statement. But the message is clearly aimed at the Trump administration, which has taken an end-run around the WTO by imposing unilateral steel and aluminum tariffs on dozens of countries, and threatening more against China.
The signatories urge WTO members to stop “taking protectionist measures.” The statement also stresses the need to fill “all current and future vacancies” on the WTO dispute-settlement body – an apparent reference to the United States, which has been systematically blocking the naming of new judges to the organization’s seven-member appeals tribunal in recent months.
“We underline the necessity of members to contribute to keeping the WTO effective, relevant and responsive,” according to the statement, signed by a disparate collection of developed and developing countries.
The words themselves are “relatively anodyne,” but they point to growing angst among many countries about the future of the WTO, says trade lawyer Matthew Kronby, a former Canadian trade negotiator.
“It reflects broad concerns among the membership as to the WTO’s capacity to address major substantive and institutional challenges and remain relevant,” says Mr. Kronby, a partner at Bennett Jones in Toronto. “It wouldn’t be hyperbole to call these concerns existential.”
The Trump administration has been waging a war of words, and actions, against the WTO. Earlier this month, U.S. Commerce Secretary Wilbur Ross slammed the WTO as a keeper of an “obsolete set of rules,” which he says are designed to benefit exporting countries such as China “to the detriment of importing countries.”
U.S. President Donald Trump has similarly accused the WTO of being unfair to the United States, while giving China unfair “perks and advantages.”
Last week’s joint statement is one manifestation of a growing pushback from countries worried the United States and others are undermining the rules-based global trading system, and the WTO.
Mr. Ross is partly right that the WTO hasn’t kept up with the times. But that is mainly due to the failure of the Doha round of global trade talks – an effort to modernize WTO rules that stalled over disagreements between rich and poor countries.
Even WTO director-general Roberto Azevedo has acknowledged that the organization’s rules need an upgrade.
Nor is the United States alone in its frustration that the WTO has not been more effective in getting China and its powerful state-run enterprises to play by the same rules as the rest of the world.
Unfortunately, the Trump administration’s aggressive trade posture has pushed many countries to side with China in its showdown with the United States. The European Union, for example, has joined India and Russia in backing China’s case at the WTO seeking compensation due to the tariffs on steel and aluminum.
The WTO statement is similarly making strange bedfellows. Canada signed the letter along with Hong Kong, a special administrative region of China.
“It has been an unfortunate accomplishment of U.S. trade policy in recent months to cause most of the world to rally to China’s side because of our disregard for the WTO and the global system,” former U.S. treasury secretary Lawrence Summers argued in a recent op-ed in The Washington Post.
“Not only does having many others on its side make it easier for China to resist the United States, but it also undercuts the effectiveness of our sanctions.”
The WTO’s future was already uncertain before Donald Trump.
The organization doesn’t stand a chance if the world’s largest economy treats it as a pinata, rather than using U.S. influence to push for reform.