Donald Trump may have been laughed at as the president “always kicking out chickens,” but when the World Trade Minister gathered in Paris this week, the message from Washington was clear.
For the first time since Trump imposed his “Liberation Day” tariffs, the OECD Annual Meeting has put together the world’s leading trade ministers quorum in one place. And the collective challenge was clear.
The minister was in line in public spaces to defend and reform a multilateral, “rule-based” system in the OECD’s Paris Chateau, but the mood was shaky. While the government appears to be busier than ever, all of its deals with Washington are outside the global system that is buckling under tension.
“The US message was unmistakable. “We have a huge trade deficit that we need to deal with. What matters is one-sided power and what we have,” said a diplomat who attended a meeting with US trade representative Jamieson Greer. “This is how you see the world, so you’d better get used to it.”
The conversation wasn’t easy when the minister’s clutches later gathered to discuss reforms to the World Trade Organization and reforms to an increasingly marginalized 30-year-old global organisation.
Rather than pitching what to change, the organisation’s director, Ngozi Okonjo-Iweala, asked people around the table to suggest places the government might be willing to compromise.
According to one attendee, no one spoke.
“We were really in front of the meeting and it’s not anywhere,” they said. “The US said no multilateral process was offered and that its one-sided approach was working, but India has thwarted reforms by saying the same things it has been saying for the past decade.”
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The US is pushing to act unilaterally on tariffs and force the country to cut back. The OECD warns that the Trump trade war risks sending global growth to the weakest levels since Covid-19, and the US is struggling with some of its biggest hits in GDP.
“Economic outlook has weakened around the world, and it is almost no exception,” the OECD said. Its chief economist, Alvaro Pereira, warned that there would be an urgent need to attack the trade to lower the trade barrier, or that the impact on everyone would be “huge.”
However, the Trump administration continues to signal its intentions as it is in multiple negotiations with trade partners who want to avoid “mutual tariffs” imposed in April but suspended until July 9th.
Earlier in the week, the US Trade Representative sent a letter in what he described as a “friendly reminder” that the deadline for an offer to the White House was approaching quickly.
Experts said Trump wanted to attack a series of unbinding transactions that began in the UK last month, raising deep questions about the feasibility of the WTO.
The WTO’s dispute resolution system has struggled to function since 2019, when the US decided to block the appointment of new appellate panel members, but efforts to resolve disputes over fisheries and agricultural subsidies have been blocked forever.
“By establishing a series of “tradings” that are essentially unbinding, the United States suggests that it does not require a strong multilateral commitment for the trading system to function, nor does it require any means to resolve conflicts.”
The 166-member call for reforming and modernizing the WTO has attracted a lot of strength in recent years, but so far has made slight progress. The scale of that challenge was clear enough when 21 trade ministers, including Greer, discussed the WTO on the sidelines of the Paris Conference.
No one has made the offer of Okonjo Iweala to suggest something to give up in the spirit of compromise, but some have argued that Trump’s return has at least given the minister a “necessary shock” about reform. “The argument is that a good crisis should never be in vain,” the person said.
They cited indications that the US continued to support the WTO e-commerce moratorium, which continued to support the WTO e-commerce moratorium, as evidence that Washington continues to engage.
The day after the meeting, UK Trade Minister Jonathan Reynolds told the economic security conference in Brussels that the US approach was potentially catalytic. “What the US is doing is to force the world to have a WTO round and use that power to do it.
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Trade Minister Manuel Toval Rivera, who chaired the main OECD meeting in Costa Rica, added that there are indications of “good momentum” in some reform debates.
He then pointed out Greer’s decision to attend as another encouragement point. “I went to Washington the day after he was confirmed with the Senate and asked him, “All other trade ministers are here. Jamieson, we need you in Paris, we need to talk to each other.”
Still, the Trade Minister interviewed by the Financial Times was realistic about the difficult path to reform.
“There are significant differences in opinion, particularly on the role of tariffs and how these tariffs are applied,” Australian Trade Minister Don Farrell told FT.
“I don’t think we’ve reached an agreement on how to resolve these issues, but the broader mood was that the organization doesn’t just go as it is. It has to change.”
South Africa’s Trade Minister Parkstau said the US position recognizes at least the need for elements of multilateralism. “The US says, “Look, I think the system is unfair to us and needs to be reset, but that doesn’t mean we don’t need an engagement framework.”
“What does that look like,” he added. “It’s something we all guess right now.”
