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WTO chief has never talked to Trump, but agrees trade reforms needed

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The head of the World Trade Organization talks frequently to world leaders, including those from France, Germany, Japan and Britain, but he has never spoken to President Donald Trump, despite the intense US focus on trade.

Even so, WTO Director General Roberto Azevedo said he agrees that the global trading system needs reforms, and soon.

But in an interview on the Freakonomics radio podcast released Thursday, he cautioned against blithe predictions that the exchange of punitive tariffs among major trading powers will not hit their economies.

Trump has relentlessly pursued a confrontational trade policy, including harsh tariffs on steel and aluminum, and on $250 billion in annual imports from China, nearly half the total from that country.

He has also accused the WTO of treating the United States unfairly. Washington has blocked the global trade body from establishing panels to settle disputes between members.

But asked if he had ever been able to discuss the issues with Trump, Azevedo said, “Not directly, no.”

This is unusual since “an action that is taken by the United States has repercussions everywhere across the world.”

Azevedo said “there is a lot of sympathy for some things that are said on the part of the United States,” including on the overcapacity in steel and the need for better protections for technology and patents — the issue at the heart of the US attacks on China.

However, he explained that the vast majority of job losses that have driven some of the anti-trade sentiment are actually caused by technology rather than imports.

– Don’t blame imports –
But “for governments and for politicians, it is easier to blame, you know, the foreign for these problems which are happening inside their own economies.”

But leaders are finally realizing that “unless we address this, these kinds of tensions that we see today in terms of trade are only going to increase.”

“We have to fix this situation as soon as we can,” he said, or the WTO dispute settlement system will collapse.

And he cautioned that the trade tensions would eventually hit the real economy.

“It’s amazing that I still hear people say, ‘Oh, but the economy is great.’ Of course it’s great! It hasn’t been affected yet!” Azevedo said.

He said tariffs and other policies must first go through “an incubation period,” while politicians are looking at the very short term electoral cycle.

Many economists and the Federal Reserve say the tariffs could impact economic growth and prices but economic data do not yet reflect this.

Adam Posen, head of the Peterson Institute for International Economics, said economists did not yet have a good model for calculating the potential hit from a trade war.

“It’s bad but we don’t know how bad,” he said at a forum in Washington on Thursday.


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