Donald Trump didn’t offer much in the way of new information on the trade discussions with China and Europe during his remarks to the Economic Club of New York on Tuesday.
While the president served guests the customary buffet of economic bravado (everything was over-seasoned and most of the fare tasted like a gas station hot dogs), the menu was devoid of details on the “Phase One” trade agreement at the heart of the recent rally on Wall Street.
Trump reiterated that China “wants to make a deal” and that an agreement “could happen soon”, but other than that, market participants were left to chew on this piece of nasty gristle: “If we don’t make a deal, we’re going to substantially raise those tariffs”. That’s ironic, because China’s position is that if there’s no tariff relief, there’s no deal.
You can see how this has become somewhat self-referential.
As far as Europe is concerned, Trump struck a somewhat belligerent tone ahead of what’s almost sure to be an official announcement that a decision on EU auto tariffs has been delayed for another six months.
Meanwhile, halfway around the world in Geneva, a US delegate suggested Washington may not approve the WTO’s biennial budget. According to people present at a regular meeting of the organization’s budget committee, the US cited Trump’s consternation at the organization’s appellate body, as well as ostensible concerns tied to an effort on the part of Europe and Canada to establish an alternative arbitration mechanism.
Trump can throw sand in the gears by simply refusing to support the budget procedure, a move which, if taken to its logical (or illogical) extreme, may throw the future of the WTO into doubt, thereby compelling members to reconsider whether the body can function as an arbiter of trade disputes.
The US is the biggest contributor to the WTO’s budget.
Last year, the rumor mill was alive with chatter that Trump might seek to make good on his threat to pull the US out of the WTO altogether, a move lawmakers, economists and some of the president’s own advisors warned would be catastrophic.
In July of 2018, Axios published the details of what it said was a “leaked draft of a Trump administration bill that would declare America’s abandonment of fundamental WTO rules”. The acronym for the bill – and this is real – was “FART”.
Apparently, the US is going to say something important later this month about what the Trump administration describes as “systemic concerns regarding the compensation of appellate body members”. That’s according to a document the WTO posted on Tuesday.
Trump has blocked all new appointments, forcing the body to conduct its business with only a trio of active members out of a possible seven. Two of those three members will see their terms expire early next month. One of them – US attorney Thomas Graham – has indicated he could depart immediately rather than stick around to resolve pending cases. If he does that, the appellate board would likely cease to function.
In short, Trump is attempting to sabotage the WTO and as Bloomberg writes, Tuesday’s alleged threat to “unilaterally kill off funding… marks an escalation in the administration’s approach”.
Just call it another episode in the US president’s ongoing efforts to rewrite the rules of global trade and commerce.