By Emma Farge and Olivia Le Poidevin
GENEVA(Reuters) – From its sleek headquarters on the shores of Lake Geneva, the World Trade Organization hopes to quietly ride out the after-shocks of Trump administration tariffs whose protectionist intent runs in the face of its free-trade mandate.
For three decades the WTO has worked to maintain a rules-based and obstacle-free trading system as a motor of the global economy. It says the 5.8% average annual increase in trade it has overseen has created jobs and raised living standards.
But now the U.S. determination to double down on tariffs risks sidelining the organisation and its ability to regulate trade, enforce rules and negotiate new ones. In a direct blow to the body, Washington has already decided to pause its funding.
Reuters spoke to WTO Director-General Ngozi Okonjo-Iweala and a dozen serving or former officials and delegates to the WTO, who depicted an organisation worried about what the future holds under Trump, but set on continuing its work in the hope that more orderly times eventually return.
“(Members) are saying to me: ‘Yes we are concerned, but at the same time we’re using the system, and we want to continue using it’,” Okonjo-Iweala said.
“I’m telling you that the bedrock of trade is here and it’s not going anywhere. This is what guarantees stability, predictability, trust, any word you want to use, and members know it – including the U.S.,” she said, citing agreements that govern patents, food safety and the value of goods for customs.
Okonjo-Iweala said the WTO administers just over 75% of global trade, down from around 80% due to recent tariffs, and continues to attract new membership applications.
The current alarm follows years of paralysis in the WTO’s top dispute settlement arm, the Appellate Body, due to the U.S. blocking new judge appointments during Trump’s first term, which was not remedied under former President Joe Biden.
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For now, there is no obvious sign of upheaval at the WTO’s headquarters, whose modern facilities stand in contrast to more run-down U.N. institutions nearby.
Black Mercedes saloons with diplomatic licence plates linger outside and besuited delegates huddle in small groups in its sunlit atrium. The spacious offices once occupied by judges of its Appellate Body have been taken over by other staff.
Trump officials view the WTO as a body that has enabled China to get an unfair export advantage via massive subsidies without making the country open up to foreign businesses – a criticism the WTO rejects.
One WTO staffer said people were “nervous” about its future but not currently fearful for their jobs. Asked about possible cuts, Okonjo-Iweala said: “We are making our plans on how to continue to cope. I’m not the type who will let my staff find out from the newspaper what I’m planning.”
Indeed, those staff providing support to the first tier of the WTO dispute system – which remains functional but cannot act on appeals – have seen their workload go up since Trump’s return, with five disputes filed since January.
“The press depicts a picture that the whole WTO system is falling apart, which, in fact, it is not”, said Thomas Cottier, an arbitrator at the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a surrogate for the WTO appeals court.
The WTO was set up in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT) to create a better framework for the exchange of goods.
Now worth over $30 trillion, global trade grew briskly following the collapse of the Soviet Union and China’s entry into the WTO in 2001. As a proportion of global GDP, trade leapt from 38% in 1989 to 61% in 2008 when the global financial crisis bit, World Bank data show. Since then it has seesawed.
Still, when Okonjo-Iweala in February suggested an event to mark the WTO’s 30th anniversary, the U.S. delegate raised budgetary concerns and urged her to make it an occasion for “careful reflection”, a meeting transcript showed.
Okonjo-Iweala took note and pared back the event, she said. The April 10 event will be members-only and the costs of a reception will be borne by Switzerland.
WTO delegates are cautious about prospects for new global agreements to reduce trade barriers in the current environment, with all 166 members having to agree by consensus. One silver lining is that a 2022 deal to curb fishing subsidies could soon take effect, with just 17 more ratifications needed.
WTO staff comfort themselves that the Trump administration, which quickly announced its plan to quit the World Health Organization, has not so far said it will leave the trade body.
Looking further into the future, others say the fate of the WTO and the free trade it defends is ultimately down to its members, in particular open economies such as Europe’s.
“It can survive this if the non-U.S. WTO members agree to remain committed to the obligations they’ve made, and decide they can run the system without the U.S.,” Pascal Lamy, who was director-general of the WTO from 2005 to 2013, told Reuters.
(Additional reporting by Dave Graham; Editing by Sharon Singleton and Mark John)
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