Sun | Sep 23, 2018

Editorial | Circumspect about US-EU detente

Published:Sunday | July 29, 2018 | 12:00 AM

There was a lot of exhaling after last week's talks in Washington between Donald Trump and European Commission President Jean-Claude Juncker. Mr Trump retreated from one flank of his global trade offensive. At least, he called a truce.

While his 25 per cent tariff on European steel imports to America, and 10 per cent on aluminium, stands, Mr Trump shelved his plan to impose a 20 per cent duty on cars. The Europeans, he said, have undertaken to buy America's liquefied natural gas and more of its soybean.

More broadly, the United States and the EU agreed to work together "toward zero tariffs - zero non-tariff barriers and zero subsidies on non-auto industrial goods". To some analysts, this sounds very much like the Transatlantic Trade and Investment Partnership that the Obama administration was negotiating with the EU, but was shelved by Mr Trump.

The undertakings, however, lack detail. Therein lies a cause for concern for Jamaica and the Caribbean Community (CARICOM), for which Kingston has lead responsibility in negotiating international trade agreements. For among the agreements between the Americans and the Europeans, on which the offering was also sparse, was that they would work together to reform the World Trade Organization (WTO) and to cut down unfair trade practices. Mr Trump often claims, without citing evidence, that the WTO is unfair to the United States.

As CARICOM's heads of government underlined at their summit in Montego Bay earlier this month, the Community has an interest in maintaining "an inclusive, rules-based and transparent multilateral trading system under the WTO". It is within that framework, the leaders believe, that their countries have the best chance of attaining the "special and differential treatment" demanded by vulnerable developing countries in global trade arrangements. Against that backdrop, Jamaica and CARICOM must demand from the EU and the Office of the US Trade Representative what Messrs Trump and Juncker define as reform of the WTO.

 

CONCERN OF DEVELOPING COUNTRIES

 

The Doha Round of global trade negotiations was supposed to focus primarily on the concern of developing countries. But in the nearly two decades since the launch of those talks in the Qatari capital, that agenda, which was supposed to improve market access for developing countries' agricultural and other exports, providing them with policy space in the context of special and differential status, as well as the building of capacity, has steadily been eroded.

Instead, they have faced increased demands for market concessions, even as advanced countries edged further away, as Mr Trump has been doing, from the multilateral trading system. Indeed, it is not an illegitimate fear among some developing countries that even their limited gains in the Doha Round are in danger of being lost.

Clearly, Jamaica and its regional partners cannot hope to return to the days of market protection. They have to continue, and even accelerate, economic reform to make their economies globally competitive, while maintaining an expectation that, in the context of a rule-based, multilateral system, they will be afforded reasonable protection by the WTO.

In the absence of clarity on the part of the EU and the United States, it is understandable of small countries that rapprochement between Washington and Brussels, in particular their planned joint efforts for reform of WTO, could be to the disadvantage of countries like those in the Caribbean.

A week ago, this newspaper urged CARICOM to talk regularly and loudly about the dangers of Mr Trump's trade wars. They need now to be wary of the WTO element of his detente with the EU.