WTO chief sees trade war ending in political talks

GENEVA (Reuters) - The nascent global trade war will have to be ended by a political agreement between world leaders, because continuing down the current path will only damage the global economy, the head of the World Trade Organization said on Wednesday.

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WTO Director General Roberto Azevedo said that world leaders needed to listen to each other and try to fix the problem, rather than resorting to tit-for-tat retaliation, or launching legal disputes.

“On the trade war and how to stop it... it is not something a technical measure here or there is going to solve. This is a political situation,” he told reporters in Geneva.

“A solution can only be found through high-level discussions and engagement.”

U.S. President Donald Trump accused China on Wednesday of targeting American farmers in a “vicious” way and using them as leverage to get concessions on trade a day after the administration announced a $12 billion farm aid package.

Many leaders already realized that they needed to resolve the situation, but there were different views about the best policies to boost growth and create jobs, and the discussion of those views was going on in the United States, Azevedo said.

“Clearly the administration has its own views about how to achieve that, and I suppose there will be a domestic debate over this and at some point in time they will figure it out.”

The WTO itself has been caught in the crossfire of the trade war, triggered by an unprecedented barrage of tariffs erected by Trump and fueled by retaliatory moves by China and threats and counter-threats between Beijing and Washington.

Trump has blocked new appointments to the WTO’s supreme court and has cited national security concerns to justify tariffs on steel and aluminum, outraging foes and allies alike.

But Azevedo said the WTO system was “not paralyzed yet” and he was confident it would survive, because otherwise there would be a worst case scenario with no rules, only “the law of the jungle”.

“Because then, I guarantee you, investors are going to pull back, the economy is going to lose steam and over time jobs will be lost, millions of jobs will be lost.”

Conversations to resolve the problems of the WTO continued, but were not yet advanced enough to see light at the end of the tunnel, he said.

Azevedo said he was talking to leaders of WTO member states to try to find solutions. He had not met Trump, who is widely seen to have started global turbulence single-handed since he took office, but he said he had very good and frequent communications with U.S. Trade Representative Robert Lighthizer.

“I don’t think that there is anything missing in my dialogue with the United States.”

Additional reporting by Stephanie Nebehay; Editing by Stephen Powell