The world trade disaster

Trump uses the resignation of the WTO chief to launch another attack on the already weakened World Trade Organization. She has a lot to do right now. Is a German now moving to the top?

Arguing in pandemic times: America's President Donald Trump and China's President Xi Jinping - here as a cardboard display in a souvenir shop in Moscow.

DA Donald Trump does not miss the chance to step up. “The World Trade Organization is terrible,” the American president grumbled on Thursday evening when journalists – standing in front of a helicopter ready to take off – asked about the surprising resignation of WTO chief Roberto Azevêdo.

The 62-year-old Brazilian wants to give up his position at the end of August. Trump added that the United States had been treated very badly by the WTO. And then he complained once more that China was viewed as a developing country and that this status gave it many trade advantages over America.

Trump has long viewed the WTO as the stirrup holder for China’s rise to an economic world power that wants to overtake America. He is therefore working with all means to weaken the organization in which 164 states have agreed on the rules of the game for the exchange of goods.

But the WTO has not been able to fulfill its role as a guarantor of free trade since December of last year at the latest: Under pressure from Trump, the Americans had overturned the WTO’s dispute settlement mechanism by blocking the appointment of judges in the WTO appellate body.

As a result, trade disputes between WTO members can no longer be resolved and ended. In international trade, the law of the thumb threatens to rule from now on.

Throws down surprisingly: WTO chief Roberto Azevêdo
Throws down surprisingly: WTO chief Roberto Azevêdo: Image: dpa

It is questionable whether a confrontation with Trump would have helped

In order to reduce this risk, a group of WTO members, including the EU countries, China, Canada, Brazil, Mexico and Switzerland, agreed on a preliminary appeal procedure at the end of April, which is intended to end disputes among themselves by means of an arbitration tribunal. America in particular, as the biggest contender at the moment, is not part of this association. So it is by no means a full substitute for the actual dispute settlement system.

Some observers had hoped that the proposals to reform the WTO, which were also discussed in connection with the American blockade, could have been brought to a decision-making stage at the ministerial conference in June. But this important WTO meeting, which only takes place every two years, has been postponed for at least a year due to the corona pandemic.

Azevêdo cited this as the main reason why he himself resigned a year before the end of his second and last term of office as WTO Director General: He did not want the (protracted and highly political) follow-up process to be timed to prepare for the important one Ministerial conference overlap.

This argument is entirely plausible, even if it is whispered in Geneva that the level of frustration Azevêdo had to experience in the almost seven years of his tenure also played a role in his early departure. In addition, criticism of his administration has recently become louder. It is said that the former diplomat presented the interests of his organization in public too quietly and did not defend himself enough against the attacks by the Americans. Whether the WTO, which only functions as a kind of secretariat for its member states, would have helped an open confrontation with Trump is just as questionable.

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What is clear is that the WTO is now meeting the now flaming leadership debate at an inopportune time. Because she has her hands full: Citing the emergency in the Corona crisis, many countries have imposed export restrictions, be it for medical equipment or food. According to the rules of the WTO, these must be proportionate and limited in time.

But whether they are (and whether the restrictions have even been announced) must be checked by the WTO. “In the context of Covid-19, a spiral of protectionist measures could set in motion and make the fight against the pandemic much more difficult in import-dependent countries,” warns Olaf Wientzek, who heads the Konrad Adenauer Foundation’s Geneva office.

Whether the members can agree on a successor for Azevêdo within a few months is in the stars. It is conceivable that Trump will block and delay this selection process with the help of his right of veto in order to weaken the WTO, which he demonizes, even further.

Should no new director general be appointed at the beginning of September, one of the four deputies would take over the office on an interim basis. Among them is the German Karl Brauner. This competent lawyer, who is currently responsible for the WTO arbitration departments among other things, would not be a bad choice in the opinion of many observers.