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WTO head rejects talk of global trade war as US hints at more tariffs Protectionism is not the answer, Angela Merkel warns US
(35 minutes later)
Roberto Azevêdo says countries see risks of going it alone despite Trump’s action against China German chancellor uses Davos speech to protest against sanctions on imports from China
Larry Elliott and Larry Elliott and
Graeme Wearden in DavosGraeme Wearden in Davos
Wed 24 Jan 2018 12.08 GMT Wed 24 Jan 2018 17.21 GMT
Last modified on Wed 24 Jan 2018 16.44 GMT First published on Wed 24 Jan 2018 12.08 GMT
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The head of the World Trade Organization has played down talk of a global trade war after the US said it was planning to take fresh action against Chinese imports. Germany’s chancellor Angela Merkel has sent out a strong warning to Donald Trump about the dangers of protectionism as the United States said it was preparing to impose fresh sanctions on imports from China.
Speaking to the Guardian in Davos, Roberto Azevêdo said countries were becoming more aware of the risks of a go-it-alone approach that would harm their poorest citizens the most. Merkel used a speech to the World Economic Forum in Davos to stress the need for multilateral answers to global problems on a day when Trump’s commerce secretary Wilbur Ross prompted fears of a tit-for-tat trade war between Washington and Beijing.
The WTO’s director general said that a year ago the World Economic Forum’s annual meeting had been dominated by talk of Donald Trump’s protectionist policies leading to a trade war. With Trump due to make his own speech to the WEF on Friday, Merkel said: “Protectionism is not the proper answer. If we are of the opinion that things are simply not fair, then we have to seek multilateral answers, and not pursue a unilateral protectionist course where we isolate ourselves.”
“We are here one year later without a trade war and I don’t think we have the makings of one yet,” Azevêdo added. Earlier this week the US put hefty tariffs on Chinese solar panels and washing machines, but Ross said more sanctions were in the pipeline.
The WTO head was speaking as Wilbur Ross, the US commerce secretary, said his country had been badly treated by the protectionist policies of other states in the past, adding: “The difference is that the US troops are now coming to the ramparts.” “We don’t think that adhering to the rules is protectionist. We think, in fact, it is essential to having markets operate properly to have people play by the rules,” he said.
Earlier this week, the US put hefty tariffs on Chinese solar panels and washing machines, but Ross said more sanctions were in the pipeline. Ross said his country had been badly treated by the protectionist policies of other countries in the past, adding: “The difference is that the US troops are now coming to the ramparts.”
“We don’t think that adhering to the rules is protectionist. We think in fact it is essential to having markets operate properly, to have people play by the rules,” he said.
Ross served notice that the US was looking at the aluminium market, saying: “You are aware of the actions taken yesterday. You are aware of the some of the actions that have preceded it. There will be more to come.”Ross served notice that the US was looking at the aluminium market, saying: “You are aware of the actions taken yesterday. You are aware of the some of the actions that have preceded it. There will be more to come.”
He said he was not concerned about the possibility that Beijing might respond with measures of its own. “Every time you take a trade action, there is the possibility of the other side taking a trade action in retaliation,” he said, noting that a tit-for-tat from Beijing might lead to a ratcheting up of the US response.He said he was not concerned about the possibility that Beijing might respond with measures of its own. “Every time you take a trade action, there is the possibility of the other side taking a trade action in retaliation,” he said, noting that a tit-for-tat from Beijing might lead to a ratcheting up of the US response.
Ross’s comments in Davos came amid speculation that the US would pull out of its free trade deal with Mexico and Canada (the North American Free Trade Agreement) unless it secured better terms. Ross’s comments in Davos came amid speculation that the US would pull out of its free trade deal with Mexico and Canada (the North American Free Trade Agreement) unless it secures better terms.
The head of the World Trade Organiszation played down talk of a global trade war after the US said it was planning to take fresh action against Chinese imports.
Speaking to the Guardian , Roberto Azevêdo said countries were becoming more aware of the risks of a go-it-alone approach that would harm their poorest citizens the most.
The WTO’s director general said that a year ago the World Economic Forum’s annual meeting had been dominated by talk of Donald Trump’s protectionist policies leading to a trade war.
“We are here one year later without a trade war and I don’t think we have the makings of one yet,” Azevêdo added.
Azevêdo said that since 2008, only 5% of global trade had been affected by restrictive measures: “We didn’t see rampant protectionist pressures.”Azevêdo said that since 2008, only 5% of global trade had been affected by restrictive measures: “We didn’t see rampant protectionist pressures.”
Trump is due to speak in Davos on Friday and Azevêdo said he expected the US president to maintain his tough approach to trade. “I wouldn’t expect him to change what he has been saying. He has had a very consistent approach towards international trade. He thinks the multilateral trading system has to be more responsive to economic reality and he would like to see reform.” Azevêdo said he expected the US president to maintain his tough approach to trade in his speech on Friday. “I wouldn’t expect him to change what he has been saying. He has had a very consistent approach towards international trade. He thinks the multilateral trading system has to be more responsive to economic reality and he would like to see reform.”
Azevêdo said every mutlilateral organisation, including the WTO, could be improved but warned against an isolationist approach. “Partitioning the world into isolated areas and markets is going to bring higher costs to everyone and those who will pay the cost first and the most will be consumers in general and the poorer segments of the population in particular.” Azevêdo said every mutlilateral organisation, including the WTO, could be improved but echoed Merkel in warning against an isolationist approach, which he said would hurt poor people most.
He also said it would take time to untangle the UK from trade agreements the European Union has with other countries, especially the quotas governing imports into the single market.He also said it would take time to untangle the UK from trade agreements the European Union has with other countries, especially the quotas governing imports into the single market.
The EU and UK want the quotas to be divided up after Brexit, but so far this has been resisted by other WTO members.The EU and UK want the quotas to be divided up after Brexit, but so far this has been resisted by other WTO members.
Azevêdo said he did not expect the status quo to be agreed without scrutiny. “Every time they see the opportunity to negotiate, there is a tendency for negotiators to try to maximise the outcome. After the UK leaves the EU there will be new terms of contract. Other WTO members will say whether they accept them or not.” Azevêdo said he did not expect the status quo to be agreed without scrutiny, and predicted that the process could take some time. “Every time they see the opportunity to negotiate, there is a tendency for negotiators to try to maximise the outcome. After the UK leaves the EU there will be new terms of contract. Other WTO members will say whether they accept them or not.”
Asked how long it would take to conclude the talks, Azevêdo said it was difficult to predict because political will was important, but added: “I think it is very unlikely to be a few months.”
Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.
Davos 2018Davos 2018
WTOWTO
ChinaChina
Trump administrationTrump administration
Global economyGlobal economy
Donald TrumpDonald Trump
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