Govt.

High-Level Trade Meeting in Canada Snubs US and China

In late October, Ottawa will host representatives of major trading nations from around the world to discuss reforms for the World Trade Organization; China and the U.S. were not invited.

Main entrance to the Centre William Rappard, headquarters of the World Trade Organization in Geneva. The scultptures “Peace” (left) and “Justice” (right) by Swiss sculptor Luc Jaggi, 1925, are visible. Photo: Pierre-Yves Dhinaut, 2007/World Trade Organization, CC

Canada is hosting a high-level summit on October 24 and 25 with a “small group of like-minded” trade ministers from around the world. Currently Australia, the European Union, Japan, Singapore, and South Korea are expected for the meetings. Brazil, Chile, Kenya, Mexico, New Zealand, Norway and Switzerland have also been invited.

China and the U.S. have not.

The purpose of the meeting is to discuss potential reforms of the important multilateral World Trade Organization. For most of the world, the WTO is the dominant means of resolving trade disputes between nations and has been since its founding in 1995. It was put into place by the Marrakesh Agreement, which was signed by 123 nations on April 15, 1994. It replaced the previous granddaddy of all global trade agreements, the General Agreement on Tariffs and Trade (GATT), which began shortly after the end of World War II, in 1948.

Canada is acting far more than just as a host for this meeting. In part because of what happened earlier this year with trade disputes involving the U.S., the Ottawa government has been looking to bring together a group of countries to support a multi-national trading system which can stand against rising nationalist – and protectionist – trends. Though all parties will be involved in planning and leading discussions, Canada is expected to take a lead role in the meeting.  

According to sources, the meeting will focus primarily on reforms of the World Trade Organization itself, though there may be other frameworks also reviewed at the same time. Topics will include looking at how effective the current trade monitoring systems are, strengthening and enforcing dispute settlement processes, and updating trade rules for an era where digital goods and services and cryptocurrencies can quickly cross borders.

While ordinarily the U.S. and China would have been considered mandatory for such a summit, Canada and others within the group decided early to lock them out of this stage of discussions.

As for why the U.S. was blocked, Donald Trump has regularly expressed anger at the WTO as a body which has ruled against the U.S. way too often. Trump and others within his administration also have been actively planning to find ways to get around and possibly remove itself from the WTO since early in his term. The logic, if there is one, is that Trump does not like multilateral trade agreements or treaties of just about any kind. His quick elimination of everything from the Trans Pacific Partnership Agreement to NAFTA and the JCPOA agreement with Iran (to keep Iran’s nuclear programs in check) are just a few examples.

Former WTO chief Judge James Bacchus said, during public comments at the WTO on October 3, that Trump’s distaste for the WTO goes even deeper than just as a multilateral body. He said Trump was forcing unnamed countries into accepting illegal constraints on their own exports, even though it was illegal to do that under current WTO rules. He said that, “It is imperative that the other members of the WTO stand up against the bully” that is the United States.

Besides this, since Donald Trump has been in the White House, he has blocked the appointment of judges on the Appellate Body of the WTO. There are now four vacant seats there because of that, leaving only three judges to rule on disputes. Those within the WTO see the U.S. as abusing its powers as a member of the WTO by blocking the new appointments, which are considered critical to the proper functioning of the organization.

Presumably the agreement Bacchus calls illegal would be either the new USMCA agreement with the U.S., Canada, and Mexico, or Trump’s unilateral forcing of its own trade sanctions against countries like Iran on others like the EU.

As for China, while it is also a member of the WTO and has even argued it may use the body to help settle some of the trade disputes between the U.S. and China, China is also seen as not that helpful in early stage discussions. It has come under criticism from the WTO for several of its own trade policies. It has also been less than transparent in sharing information on its economy, despite continued promises to the WTO that it would do so.

For both countries, the high level of anger between the countries over their current trade wars would also likely distract from the overriding mission of the meetings coming up in Ottawa. So for all these reasons, Canada has intentionally not invited either China or the U.S. to the meetings. It will bring them into the discussions, it said, at a later stage.

The World Trade Organization is headquartered in Geneva, Switzerland. There are currently 164 members of the group, including both the U.S. and China.