Global Finance Institutions Go to Bat for WTO
World Bank and IMF defend rules-based trading system against protectionist impulses
Top global finance institutions defended the role of the World Trade Organization on Monday, countering a Trump administration challenge some fear could undermine decades of rules-based order.
"A strong global trading system centered on the WTO remains critical," the International Monetary Fund, World Bank and WTO said in a joint report prepared for the Group of 20 largest economies.
Last month, President Donald Trump's trade team argued the case f or disregarding some rulings of the WTO, the Geneva-based body that most of the world has signed up to oversee international trade disputes.
Administration officials say the group has failed to uphold fair-trade principles, overlooking some countries' practices that distort cross-border flows of goods and services at the expense of jobs, industries and economic growth. U.S. officials have also discussed implementing new tariffs and other policies that other countries say might violate WTO agreements, but that Washington sees as necessary to rebalance distorted trade relationships.
The U.S. isn't alone in seeking more protective policies. Many companies complain that access to China, which is now seeking "market-economy" status among WTO members, has become more difficult in recent years. And trade-watchers are documenting a surge in nontariff barriers around the world. Trade worries dominated a recent meeting of the G-20 finance chiefs.
But economies should respond by seeking greater integration to strengthen global growth, the IMF, World Bank and WTO said.
The three global institutions -- each facing fights with the Trump administration over their respective roles in the world economy -- said the WTO had prove to be a "powerful tool" for ensuring policies don't distort international trade.
"Sustaining the dispute settlement system" and reviving the WTO's negotiating role "is more important than ever," the report said. "Continued efforts in these areas would also discourage all types of protectionism, and further demonstrate that trade agreements provide a system of rules that is evenhanded to all."
That isn't how the Trump administration sees it, however, saying the WTO has been a weak trade watchdog.
"The American people grew frustrated with our prior trade policy not because they have ceased to believe in free trade and open markets, but because they did not all see clear benefits from international trade agreements," the U.S. Trade Representative's office said in its first report on the president's trade agenda.
The system of rules governing trade hasn't delivered promised gains for U.S. workers or industries, the administration argues, pointing in particular to the massive trade deficits the U.S. maintains with China, Mexico and other major trade partners.
Economists say skepticism of globalization and trade has been a common theme among the different constituents around the world who decided to pull the U.K. out of the European Union, elect Mr. Trump to the White House and encourage China's government to put the brakes on long-promised market liberalization.
The IMF and its sister institutions say global integration has fueled global growth, spurred productivity and cut consumption costs for lower-income households with more goods imported from abroad.
Still, they said, trade is leaving too many individuals and communities behind. "Adjustment to trade can bring a human and economic downside that is frequently concentrated, sometimes harsh, and has too often become prolonged."
But rather than attacking the rules-basedsystem and raising barriers, the institutions said governments must do more to help workers make the transition to new jobs.
Original Source: View