The man in charge of overseeing global trade says ‘the first shots have been fired’ in a trade war, and ‘the situation is extremely serious’

WTO Director General Roberto Azevêdo

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WTO Director General Roberto Azevêdo
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Denis Balibouse/Reuters

  • Trade tensions are growing around the world, due in large part to President Donald Trump’s trade battles.
  • World Trade Organization Director General Roberto Azevêdo warned that current trade tensions risk hurting the world economy and undermining the post-World War II trading order.
  • “Whether or not you call the current situation a trade war, certainly the first shots have been fired,” Azevêdo wrote. “This calls for our attention, and most importantly, our action.”

One of the most important trade officials in the world is sounding the alarm about President Donald Trump’s trade war and the rising tide of protectionism.

Roberto Azevêdo, the director general of the World Trade Organization, warned in an op-ed published Thursday of the shift toward more protectionist trade policies and increased barriers.

“Global trade is under threat,” Azevêdo wrote in The Independent. “Whether or not you call the current situation a trade war, certainly the first shots have been fired. This calls for our attention, and most importantly, our action.”

Azevêdo also warned that further escalation could result in significant downsides for the economic growth of the US and other nations around the world.

“The situation is extremely serious,” he said. “Reciprocal trade restrictions cannot be the new normal. A continued escalation would risk a major economic impact, threatening jobs and growth in all countries, hitting the poorest hardest.”

A large percentage of economists agree that increased international trade and a free exchange of goods is generally positive for the countries involved. They also agree that current trade rules prevent certain populations, including parts of the US, from benefitting. Managing these downsides while growing trade is a key challenge for governments.

The danger from a possible slowdown in global trade is already on the rise. The WTO’s latest World Trade Outlook Indicator, which measures trade growth, dropped to 100.3 in August’s release from 101.8 last month. The report said the index further bolsters the WTO’s predictions that world merchandise trade growth is slowing.

“Rising trade tensions continue to pose risks to the trade forecast and will be monitored closely going forward,” the WTO said.

Azevêdo acknowledged that the WTO could benefit from reform to make dispute settlement and regulatory functions work better. But he reiterated that reform should come in the spirit of cooperation rather than antagonism.

The WTO plays a key role in the current trade fights between the US and other countries since the organization is the arbiter of international trade rules. As part of the tariff fight, several countries have filed formal WTO complaints regarding Trump’s tariffs. The US, in turn, has filed counter-complaints on countries including China and Canada.

The Trump administration has openly weighed the possibility of pulling out of the organization. Such a move would likely cause a collapse of the post-World War II international trading order.

“”The world needs this organisation more than ever,” Azevêdo said. “Without it, we would face a future of uncertainty, trade war, lower growth, lower salaries and diminished job opportunities everywhere – in both poor and powerful countries alike.”