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This Week In Trade

Trump questions WTO funding as organization looks for new chief

Posted: May 18, 2020

President Trump on Saturday questioned U.S. financial contributions to the World Trade Organization and why it pays more to the organization than China, lumping the WTO in with the United Nations and the World Health Organization.

“Why is it that China, for decades, and with a population much bigger than ours, is paying a tiny fraction of $’s to The World Health Organization, The United Nations and, worst of all, The World Trade Organization, where they are considered a so-called ‘developing country’ and are therefore given massive advantages over The United States, and everyone else?” Trump tweeted. “Prior to the Plague floating in from China, our Economy was blowing everybody away, the best of any country, EVER. We will be there again, and soon!”

WTO contributions are based on members’ share of global trade. As the world’s two largest traders, the U.S. and China are the two biggest financial supporters of the WTO, funding 11.6 percent and 10.1 percent of the WTO’s 195.5 million Swiss franc budget in 2019, respectively. The U.S. paid roughly $3 million more than China did in 2019.

The president’s remarks come at a pivotal time for the WTO as members this week will begin the process of selecting a new director-general. DG Roberto Azevêdo announced last week that he would step down as of Sept. 1 -- one year before his term ends.

The president has frequently complained about what he sees as outsized U.S. funding commitments to international organizations. At the WTO last year, the U.S. at the last minute objected to the WTO’s compensation structure for Appellate Body members as part of its push to overhaul the WTO appeals system. The U.S.’ late objection briefly delayed the finalization of the WTO’s budget in committee. WTO members adopted a one-year budget in December that greatly slashed Appellate Body funding. The WTO typically approves budgets for two years at a time.

In a more drastic move, Trump last month announced the U.S. would cut funding for the WHO over what the administration has claimed was mismanagement of the novel coronavirus outbreak. Trump on Saturday suggested the U.S. could restore 10 percent of that funding, which he says would match China’s contributions.

Trump gave no indication that his questioning of the WTO’s funding was related to the deputy-general selection process. That process soon will take center stage in Geneva as members search for a candidate to lead the WTO through an existential crisis exacerbated by the novel coronavirus pandemic. The new DG will be tasked with facilitating the restoration -- in some form -- of the Appellate Body and helping to break the impasse of the WTO’s negotiating arm. The U.S. has been blocking appointments to the Appellate Body since mid-2017, which in December left the body without a quorum to hear new appeals.

U.S.-China tech war rages

The Commerce Department last week announced changes to its foreign direct product rule that will result in more high-tech chips’ being subject to U.S. export controls. The move is an effort to block Huawei from obtaining U.S. technology. On Monday Chinese officials rebuked the new restrictions, saying that “China is firmly opposed to this.”

“The use of national power by the United States as an excuse for so-called national security, abuse of export controls and other measures to continue to suppress and contain specific enterprises in other countries is a violation of market principles and fair competition, a disregard of basic rules of international trade, and even a serious threat to global industry chain supply chain security,” a Ministry of Commerce spokesman said in a statement.

The official did not threaten to retaliate against U.S. companies, though Chinese state media has suggested that retaliation is being considered. Immediately following Commerce’s announcement, the Global Times said China was prepared to retaliate against Apple, Boeing, and others, citing sources close to the Chinese government. The MOFCOM spokesman said only that China would take steps to protect Chinese companies.

“This damages the interests of Chinese enterprises, the interests of American enterprises, and the interests of enterprises of other countries,” the spokesman said. “China urges the U.S. to immediately stop wrong practices and create conditions for enterprises to conduct normal trade and cooperation. China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.”

Commerce seeks input on new 232 case

Commerce is seeking comments on its newly announced Section 232 investigation into imports of laminations, stacked cores and wound cores for implementation into transformers, electrical transformers and transformer regulators. A draft Federal Register notice scheduled for publication on Tuesday says stakeholders will have 21 days to submit comments. Rebuttal comments will be due 10 days after the initial comment deadline.

Events

  • The National Association of Foreign Trade Zones will host its annual spring conference virtually on Tuesday and Thursday. Topics will include policy developments at U.S. Customs and Border Protection, the U.S.-Mexico-Canada Agreement, and trade in an election year.
  • The Swedish-American Chambers of Commerce on Thursday will host a discussion on how maintaining the free flow of goods, services and data will be critical to attempts to recover from the economic crisis created by the pandemic. Participants will include Peter Dahlen, the managing director of the American Chamber of Commerce in Sweden, and Jonas Hellman, the managing director of politics and social analysis at Prime Weber Shandwick. Foreign correspondent Tomas Kvarnkullen will moderate.
  • The Washington International Trade Association continues its COVID-19 and trade series on Thursday with an examination of ports, logistics and global supply chains. Participating in the panel discussion will be Wendy Cutler, the vice president of the Asia Society Policy Institute; Ralph Carter, the vice president of regulatory affairs at FedEx; Phil Levy, a former senior economist for trade on the President’s Council of Economic Advisers; Evelyn Suarez, the principal of the Suarez firm and a former member of Virginia’s Maritime Association Board; and Curtis Robinhold, the executive director of the port of Portland.
  • Former trade officials Clete Willems and Miriam Sapiro on Thursday will take part in a panel discussion hosted by the Chatham House on the U.S.’ role in shaping world trade. Willems, now a partner at Akin Gump, was the deputy director of the National Economic Council from 2018-19; Sapiro, who is the vice president of Sard Verbinnen & Co, is a former deputy U.S. Trade Representative and acting USTR. -- Brett Fortnam (bfortnam@iwpnews.com)

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