The United States’ merchandise trade reached $5.1 trillion by 2023 estimates, representing 18.7% of its gross domestic product of $27.8 trillion, according to World Bank database figures.
America’s merchandise exports amounted to $2 trillion, while its merchandise imports amounted to $3.1 trillion, so the US trade deficit reached about $1.1 trillion.
The total merchandise trade for the entire world in the same year amounts to approximately 48 trillion dollars, representing 45.5% of the world’s gross domestic product of 106.7 trillion dollars.
Thus, the total foreign merchandise trade of the United States represents 10.6% of the total merchandise trade of the world.
Given these numbers, current US President Donald Trump is using his country’s foreign trade as a pressure card to pass his political agenda, with many countries, led by China and the European Union.
Trump even prefers trade as a pressure card on Russia to end its war on Ukraine, unless it accepts his proposal to end the war. Trump also believes that the mechanism of imposing high customs duties on Russia’s trade with America and other countries has a greater impact than economic sanctions.
Does Trump have the right to use customs duties to confront the problem of irregular immigration with Mexico and Canada? Or with the European Union and China, in order to reduce his country’s trade deficit with them or to pass his political agenda?
America and the Trade Organization
Since the end of World War II, the countries of the world have sought to regulate the affairs of the global economy, as the two financial institutions were established, the World Bank and the International Monetary Fund, and the issue of global trade remained managed through what is known as the General Agreement on Tariffs and Trade until the end of 1994.
After World War II, America did not see an interest in establishing the World Trade Organization, nor did it seek to activate it as it did with the establishment of the International Bank and the Fund.
However, at the end of 1994, it sought to approve the birth of the World Trade Organization, as an alternative to the GATT, at the Casablanca Conference, so that the organization would enter into force in January 1995.
The United States’ step to activate the World Trade Organization was the culmination of its control over the global system, as a unified pole, after the fall of the Soviet Union in the early 1990s. America, along with Europe, made many promises to all developing countries to join the organization.
Among the most prominent of these promises were:
- Lifting support for the agricultural sector in America and Europe.
- Opening their markets to agricultural products from developing countries.
- Working to transfer technology to developing countries.
But none of these promises were fulfilled, despite the passage of 3 decades.
The organization is mainly concerned with international trade issues, and its most famous agreements are the Anti-Dumping Agreement, the Anti-Subsidy Agreement, and the Import Prevention Agreement, in addition to the Intellectual Protection Agreement and the Freedom of Investment Agreement. Thus, trade was organized at the global level.
The Organization’s Dispute Resolution Body is the body entrusted with making decisions regarding any practices that countries complain about, as a result of those actions that harm them in terms of trade or services.
Trump’s attempts to obstruct the organization
In his first term, Trump revived trade protectionism and made the world live in an actual trade war, whether by seeking to raise customs duties outside the scope of the rules of the World Trade Organization, and by threatening to withdraw from the organization, or disrupting the appointment of some judges within the organization, which makes the dispute resolution court irrelevant. qualified to do its job.
In general, Trump believes that US trade agreements are multilateral through the World Trade Organization, or through other trade groupings such as… “NAFTA“ These are bad agreements, and are not in the interest of the United States of America.
However, what is new is the use of the customs duties mechanism to achieve political purposes, which was expressed by Alexandre Parola, the representative of Brazil at the Davos Forum, when he said, “I believe that the use of customs duties for political purposes leads to negative repercussions and will really harm the rules-based international system… I think this is a message.” “Bad.”
The most prominent issue here, imposed by Trump’s threats, or his steps expected to take effect, is that they harm the most important principle of the World Trade Organization, which is freedom of trade. International Monetary Fund reports have expressed more than once that Trump’s steps towards trade protection – during his first term – are one of Threats to economic growth worldwide.
How are global trade violations dealt with?
There are steps that must be followed to prove the existence of transgression by one country against another country, and it is not just a matter of an administrative decision issued by a president or minister in a country.
- For example, in the case of dumping, the country against which dumping was practiced must prove the damage it suffered in terms of the cheapening of the foreign product compared to the prices of the local product, the decline in the profits of its companies, or the increase in its local stocks due to foreign goods.
- In the event that an exporting country commits a violation of subsidizing its exports, apart from the tools approved by the WTO, such as the exporting countries providing support to its industry through tax or customs exemptions, then in this case the affected country has the right to complain to the WTO and demand compensation.
- In the case of the Import Prevention Agreement, if a country’s imports exceed its average imports over the past 3 years, and this leads to damage to its balance of payments, it has the right to resort to a system of import quotas, but this right is restricted to the quotas being directed to goods in general. And not against a specific country.
- The Intellectual Protection Agreement gives the right to owners of intellectual rights to obtain compensation in the event that violations of those rights by institutions or countries are proven.
Trump prefers the trade card to pressure Russia to end its war on Ukraine (Shutterstock)
Previous records of American violations
During the era of George W. Bush, customs duties were imposed on some products of the European Union, Japan, and other countries, and this was also done in Trump’s first term on a larger scale, which prompted those countries to resort to the World Trade Organization, to file complaints against the United States, for what happened to those countries. Countries suffer damage due to American decisions.
Recently, Tjozi Akongor-Iweala, Director of the World Trade Organization, stated that entering into the trade protection system, through customs duties, would lead to disaster and hinder economic growth rates.
There is a complaint by member states of the World Trade Organization, due to America’s intransigence towards the organization’s judiciary. How so? After the initial rulings are issued, members can resort to the Court of Appeal with the same organization, but America has delayed the appointment of new judges for this court, so it has not been able to carry out its function since 2019, due to the incompleteness of the court’s members.
The organization and confronting Trump
In the coming days, we will be faced with the spectacle of Trump doing what he promised, or reneging on it. We will also be faced with many scenarios of confrontation by the rest of the members of the organization, or the organization itself.
Will Trump ignore the organization, especially since it suffers from a weakness related to the possibility of it dispensing with American funding?
The world of trade will also wait for Trump’s move to implement the customs duties mechanism to be an opportunity for the rest of the world to unite to draw a new step on the map of the multipolar global system and create a front against Trump’s actions.
This front will either push the US President to accept the rules of a new multipolar world order, or he will succeed in undermining this system by marginalizing the role of the World Trade Organization, or withdrawing from its membership.
