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EU Trade Commissioner Warns of International ‘Anarchy’ Without WTO

Posted January 11, 2019

An urgent multilateral effort needs to be made to save the World Trade Organization, the European Union’s Commissioner for Trade Cecilia Malmström said in an address at the Atlantic Council in Washington yesterday, noting that the international trade body is “under increasing pressure.”

By undertaking a WTO reform effort, Malmström said, Europe recognizes the “need to update the rules to face this century’s realities. Particularly unfair trading practices from China – like forced technology transfer and state subsidies.”

The EU is focused, Malmström said, on “how we can find a way to make sure that China [increasingly] plays by the rules.” To achieve that “systematic change” in China’s behavior, she argued, you “need global rules” that only the “best system we have for open border trade” – the WTO – can provide.

Through their trilateral reform effort of the WTO, Malmström said, Japan, the United States, and the EU can give the organization the tools needed to “achieve systemic change that is enforceable and long-term sustainable.”

Malmström outlined a three-pronged approach toward WTO reform, including saving the Appellate Body as the WTO’s dispute resolution mechanism, updating the organization’s outdated rules, and improving transparency.

The EU trade chief was clear that there is a real risk that the WTO could fail if significant action was not taken this year. “Without the WTO, there are no rules,” she said. “International trade without the WTO would be anarchic. Countries would be bullied, companies would fall victim to unfair practices; there would be no reliability, no stability. So we need to repair and stand up for the system.”

In a veiled reference to the frustrations of the Trump administration, Malmström continued, “some suggest that closing is a good option – to redirect investment and wealth back towards their own countries. That will not work. Even if it did, they would sacrifice two things: First, their values… Second, their connection to the world.”