The head of the World Trade Organization has played down talk of a global trade war after the US said it was planning to take fresh action against Chinese imports.
Speaking to the Guardian in Davos, Roberto Azevêdo said countries were becoming more aware of the risks of a go-it-alone approach that would harm their poorest citizens the most.
The WTO’s director general said that a year ago the World Economic Forum’s annual meeting had been dominated by talk of Donald Trump’s protectionist policies leading to a trade war.
“We are here one year later without a trade war and I don’t think we have the makings of one yet,” Azevêdo added.
The WTO head was speaking as Wilbur Ross, the US commerce secretary, said his country had been badly treated by the protectionist policies of other states in the past, adding: “The difference is that the US troops are now coming to the ramparts.”
Earlier this week, the US put hefty tariffs on Chinese solar panels and washing machines, but Ross said more sanctions were in the pipeline.
“We don’t think that adhering to the rules is protectionist. We think in fact it is essential to having markets operate properly, to have people play by the rules,” he said.
Ross served notice that the US was looking at the aluminium market, saying: “You are aware of the actions taken yesterday. You are aware of the some of the actions that have preceded it. There will be more to come.”
He said he was not concerned about the possibility that Beijing might respond with measures of its own. “Every time you take a trade action, there is the possibility of the other side taking a trade action in retaliation,” he said, noting that a tit-for-tat from Beijing might lead to a ratcheting up of the US response.
Ross’s comments in Davos came amid speculation that the US would pull out of its free trade deal with Mexico and Canada (the North American Free Trade Agreement) unless it secured better terms.
Azevêdo said that since 2008, only 5% of global trade had been affected by restrictive measures: “We didn’t see rampant protectionist pressures.”
Trump is due to speak in Davos on Friday and Azevêdo said he expected the US president to maintain his tough approach to trade. “I wouldn’t expect him to change what he has been saying. He has had a very consistent approach towards international trade. He thinks the multilateral trading system has to be more responsive to economic reality and he would like to see reform.”
Azevêdo said every mutlilateral organisation, including the WTO, could be improved but warned against an isolationist approach. “Partitioning the world into isolated areas and markets is going to bring higher costs to everyone and those who will pay the cost first and the most will be consumers in general and the poorer segments of the population in particular.”
He also said it would take time to untangle the UK from trade agreements the European Union has with other countries, especially the quotas governing imports into the single market.
The EU and UK want the quotas to be divided up after Brexit, but so far this has been resisted by other WTO members.
Azevêdo said he did not expect the status quo to be agreed without scrutiny. “Every time they see the opportunity to negotiate, there is a tendency for negotiators to try to maximise the outcome. After the UK leaves the EU there will be new terms of contract. Other WTO members will say whether they accept them or not.”
Asked how long it would take to conclude the talks, Azevêdo said it was difficult to predict because political will was important, but added: “I think it is very unlikely to be a few months.”