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WTO slow in restoring its functions: expert

[The following is excepted from Nikkei interview with Sophia University Professor Tsuyoshi Kawase on U.S. trade polices. The interview was conducted by Junichi Sugihara.]


Q: The former Trump administration had strongly criticized the World Trade Organization (WTO). How will this change under President Biden?


Kawase: WTO’s dispute settlement body is not functioning, as the former U.S. administration had rejected the selection of Appellate Body members. This will not change easily even under the Biden administration. It was under the Obama administration that the U.S. government rejected the selection of an individual member for the first time.


Within the U.S., criticism of the Appellate Body remains strong. Washington has been at odds with the Appellate Body over the issues of dumping and countervailing duties. The criticism has now become bipartisan. Even the Biden administration will not be able to ignore this [anti-WTO sentiment] seen in the Midwest, home to many steelmakers. It is hard to alter this critical view of the Appellate Body. The U.S. will not adopt the approach of the former administration, but since Europe is showing a stance of accommodation, it will probably demand changing rules in a way that will benefit the U.S. in WTO reforms.


Q: Nigeria’s former finance minister Ngozi Okonjo-Iweala has been picked as new director-general of the WTO.


Kawase: Dr. Okonjo-Iweala has served as vice president of the World Bank and is closer to international mainstream members in the U.S. There should be no obstacles to building relationships [with her]. From her remarks at press conferences, she seems to give more priority to building trust with various countries than to rushing to produce results. The Biden administration was supportive of her from the beginning. It endorsed her nomination within a short period and thereby minimized the impact of the absence of the WTO director-general. The U.S. was able to promote the position of the Biden administration by stressing that it would not undermine the WTO.


Q: The tone of national economic security is reflected more in U.S. trade polices with China.


Kawase: “Human rights” are a keyword in U.S. policy on China. Former Secretary of State Mike Pompeo had announced that the U.S. determined that China’s repression of the Uyghurs constitutes “genocide.” Under the Biden administration, the incumbent Antony Blinken has expressed the same stance. Given these examples, the U.S. is sending out a strong message.


This signals that China’s acts constitute violations of international law and should be treated on par with the Holocaust and the 1994 genocide in Rwanda. The Biden administration will continue to take a similar approach to the former administration and impose tougher export controls on Chinese military-civilian fusion companies by citing human rights.


Q: What are prospects for the U.S. to rejoin the Trans-Pacific Partnership (TPP) agreement?


Kawase: Renegotiations will require a lot of time. This is because the current TPP-11 deal partially freezes clauses on the protection of intellectual property rights, which the U.S. had strongly advocated for. When TPP negotiations started, the pact was significant for the inking a trade deal with Japan. The U.S.-Japan trade agreement, which was signed after the U.S. withdrawal from the TPP under the Trump administration, is more beneficial to the U.S than the TPP as it postpones the elimination of tariffs on Japanese cars.


Q: How should Japan deal with the U.S.?


Kawase: Japan must understand and keep well in mind that it will take time for the U.S. to move in trade talks. The Biden administration gives top priority to COVID-19 and other domestic issues. Some experts forecast that the U.S. will not give serious thought to trade issues until two years from now, or probably around the midterm election.


What Japan should do till then is to lay a foundation that is attractive for the U.S. to return to multilateral frameworks such as the TPP. The Biden administration is accelerating policymaking toward decarbonization and is inclined to strengthen the supply system for medical goods. It will become important for Japan to take the initiative in presenting these topics for discussion at international forums and to create an environment conducive to U.S. participation in discussions.

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