WTO at risk of ‘existential crisis’ shock caution over future of free trade – Liam Fox | City & Business | Finance

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The International Trade Secretary blamed the US-China trade war, political uncertainty and a widespread slowdown in global growth as potential dangers that threaten to unhinge the WTO. Mr Fox urged immediate action from world leaders to boost economic growth, while taking aim at the G20 for failing to tackle the crisis. He warned the G20 has not addressed the “scale [and] urgency of the challenges facing the global trading system” and said the international body needs new members to solve disputes. He said: ”The WTO now faces one of the biggest tests since its establishment and, with all its functions under strain, it could become an existential crisis.

“So, the message from the UK is clear: urgent and drastic action must be taken to protect the global trading system as we know it.

“With the global trade headwinds getting stronger and global growth slowing, action by G20 leaders will be sorely needed if we are to turn our anxieties into solutions that will protect the prosperity of all our citizens.

“If we do not identify the real threats to global prosperity and security and deal with them effectively, then who could blame our citizens for asking – what is the G20 for?”

Mr Fox also called for more work on the rules governing industrial subsidies.

Earlier this month at a meeting in Fukuoka, southern Japan, G20 finance leaders warned that trade and geopolitical tensions have “intensified”, raising risks to improving global growth.

The group repeated support for a rules-based multilateral trading system.

The G20 group said: “Global growth appears to be stabilising and is generally projected to pick up moderately later this year and into 2020.

“However, growth remains low and risks remain tilted to the downside.

“Most importantly, trade and geopolitical tensions have intensified.

“We will continue to address these risks and stand ready to take further action.”

At the G20 summit in Buenos Aires, Argentina, in December 2018, leaders described international trade and investment as “important engines of growth, productivity, innovation, job creation and development”.

Their communique said: “We recognise the contribution that the multilateral trading system has made to that end.”

The leaders had also called for reform of WTO rules that they said were falling short of objectives and pledged to review progress.

Meanwhile, International Monetary Fund (IMF) Managing Director Christine Lagarde emphasised that “the first priority should be to resolve the current trade tensions” while working to modernise international trading rules.

The IMF this month warned the US-China tariff war could cut 0.5 percent from global gross domestic product (GDP) output in 2020, about the size of G20 member South Africa’s economy.

However, the international body maintained that growth is still expected to improve this year and next.

US Treasury Secretary Steven Mnuchin last week said he did not see any impact on US growth from the trade conflict and that the government would take steps to protect consumers from higher tariffs.

Mr Mnuchin met People’s Bank of China (PBOC) Governor Yi Gang on Sunday in the first meeting of high-level US officials in a month.

The US official described the meeting as “constructive” and “a candid discussion on trade issues”, but offered no further detail.



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