February 19, 2018 / 10:43 PM / a year ago

WTO should prepare for life without U.S., ex-chief Lamy says

GENEVA (Reuters) - World Trade Organization countries need to prepare for a future without the United States as a member of the club, former WTO chief Pascal Lamy said on Monday.

FILE PHOTO: Pascal Lamy, former World Trade Organization Director-General, speaks during an interview at the Reuters Russia Investment summit in Moscow, Russia, September 30, 2015. REUTERS/Maxim Shemetov

The United States has thrown the WTO into crisis by blocking the appointment of new judges, undermining its dispute settlement system just as it tries to cope with seismic disagreements over whether China trades fairly.

U.S. officials have declined to discuss what would persuade them to lift their veto on judges, with no sign of a resolution before the next judge steps down in September.

“If a major power does not want to play by the rules of internationally disciplined trade, the others will have to react,” Lamy said.

“Plan A” for WTO members, the preferred option, would be to ask what the problem was and offer to fix it,” he said.

Plan B would be to “make sure the system can work without them,” Lamy said, adding: “The rumor that there might be a plan B might help make sure plan A could work better.”

Lamy said the U.S. tactics were likely to lead to one of three outcomes. The mildest was reform of the WTO’s case law to meet Washington’s concerns. The middle path led back to the pre-WTO era of weaker trade disciplines and less enforcement.

“The third possible scenario is what I call the ‘lonesome cowboy’, which is either the U.S. quits or the others, in order to resist this U.S. offensive, build a WTO minus the U.S.”

Lamy said he sympathized with some of the U.S. complaints about China, though President Donald Trump and his advisers had a “mediaeval” view of trade, at odds with the modern reality of global value chains.

He was speaking at an event hosted by the U.N. trade agency UNCTAD, entitled “Trade in crisis: headwinds or maelstrom?”

Reporting by Tom Miles; editing by John Stonestreet

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