Trump is on the verge of blowing up the entirety of the U.S. world’s trade agreements and the World Trade Organization. This would be like throwing kerosene on a small fire and ending up with world economy burned to the ground.
By James DiGeorgia
Under the World Trade Organization (WTO) trade agreements can be rejected and even suddenly ended if a country can demonstrate its decision is being based on the country’s national security. President Donald Trump’s steel and aluminum tariffs unilaterally imposed on China, Europe, Mexico, Norway, Russia, Canada among others is being justified as needed to protect U.S. National Security.
Ever since the establishment of the WTO, it has been a sacrosanct unwritten rule when it comes to international trade policy: Don’t question national security concerns of another member of the WTO. It’s also been an unwritten rule that no country would make the claim that national security is threatened if it’s not really true.
President Trump’s none stop lying to prosecute its “America First policy” has our WTO partners so angered of the obvious miss use of national security claims that it's forcing Europe, China and others to file one of the most explosive cases every brought to the World Trade Organization arbitrators.
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China, Europe, Mexico, Norway, Russia, and Canada will argue that Trump’s tariffs imposed in May on steel and aluminum cannot be justified on grounds of national security.
This WTO protest by these six nations on President Trump’s tariffs is a dramatic landmark departure from the normalcy of trade diplomacy. Most times members of WTO have resisted challenging tariffs and restrictions justified by national security concerns; for fear that such a case could blow up the entire global trading system.
So the protest and actions taken by these six fellow members of the WTO is literally a Pandora’s box that has been opened. If the WTO rules that national security can justify tariffs, the decision could inspire other countries to play the security card. On the other hand, if Washington finds itself backed into a corner, it could simply quit the WTO, which is something President Trump has stated he wanted.
According to Holger Hestermeyer, an expert in trade law at King’s College London…
“Permitting an unlimited national security exception is a fundamental risk to the trading system, but so is stringent judicial control over national security. To force a panel to decide risks opening Pandora’s box,”
U.S. Ambassador Dennis Shea also has warned that this case would…
“Undermine … the viability of the WTO as a whole.”
The EU, by has argued that the case is a point of principle. Maria Åsenius, chief of staff to Trade Commissioner Cecilia Malmström.
“Of course we had to take this case to court, and we would do again if they launched tariffs on cars and car parts,”
“The U.S. says that it’s a national security justification … and now they threaten to do it with cars and car parts, next time maybe French wine.”
“If they can decide themselves anything is a national security interest … you don’t have any rules anymore in the WTO.”
China’s ambassador to the WTO Zhang Xiangchen a few weeks ago was quoted as saying said the WTO’s national security exemption
“should not be used in an abusive way”
“security issues should not be used as an excuse to restrict normal bilateral trade.”
When you throw in the two statements made by U.S. Vice President Mike Pence last week delivered during a blistering speech against China, saying that Washington was in no rush to end the trade war and would not change course until China changes it
ways; It’s easy to understand why there’s a growing danger that Trump’s trade war could escalate into a complete shutdown of international trade and commerce.
The cases against the national security justification are not the first to reach WTO panels, but they are the most contentious. There are two other cases still under WTO investigation — involving Qatar and Russia. The cases brought against the United States is the first to deal with the legitimacy of the national security defense.
A common position from the EU and China is a blow to many European and American officials, who had hoped that the trade war would morph into a united front against Beijing. The Trump administration hard-line policy against China and its other trading partners is the kind of “black swan event” that could submerge the world economy into a recession. Another reason to take issue with President Trump’s sanity and to prepare for a stock market nose-dive that could rival the worst seen during the 2008-2009 world financial crisis.