Two days before US President Donald Trump is expected to decide whether to grant the EU a permanent exemption from new tariffs on steel and aluminium, France’s Emmanuel Macron has called for a reform of the World Trade Organization.

The WTO’s multilateral approach to trade is necessary, but must be updated to address challenges such as trade-distorting subsidies, Macron told a ministerial meeting of the Organisation for Economic Cooperation and Development in Paris.

Meanwhile, last-minute talks between EU Trade Commissioner Cecilia Malmstrom and US Commerce Secretary Wilbur Ross on the sidelines of the same meeting saw no progress on the tariffs issue, a spokeswoman for Malmstrom said.

Trump is expected to decide by Friday whether to give EU countries a permanent exemption from the tariffs of 25% on steel and 10% on aluminium products.

The US president announced the tariffs in March after arguing that his country’s steel and aluminium industries had been “decimated by decades of unfair trade and bad policy with countries from around the world”.

“We cannot respond to contemporary dysfunctionality by withdrawal, protectionism, or the rejection of multilateral responses,” Macron told the OECD.

But, he said, WTO rules must be updated to deal with “massive public subsidies that distort the world market, intellectual property, social rights, and the protection of the climate.”

Macron said current-day trade issues called for urgent reforms to the WTO’s dispute resolution mechanism.

He also warned against the ability of member states to block badly needed changes, saying the organization had made little major progress since its establishment in 1994.

“I therefore propose a negotiation process, starting with the EU, the US, China and Japan, which will then rapidly be extended to G20 and OECD countries, on the reform of the WTO,” Macron said.

German Economy Minister Peter Altmaier, meanwhile, said Europe would have a unified response to Trump’s decision, whatever it was.

“We have worked very intensely in the last weeks to avoid the raising of tariffs…but we are also prepared to react to any decision of the president [Trump] in a unified and very clear manner,” Altmaier said after a meeting with his French counterpart Bruno Le Maire.

“The European response will be united, the European response will be firm,” Le Maire said.

The OECD itself, earlier on Wednesday, repeated its warning against any “escalation of trade tensions,” in a barely veiled reference to Trump’s new tariffs.

In its six-monthly economic outlook, it argued that in an ever-more integrated world economy, “a further escalation of trade tensions might significantly affect the economic expansion and disrupt vital global value chains.”

It also cut its global economic growth forecast for 2018 slightly, from 3.9% to 3.8%.

However, the organization of 35 mainly developed countries maintained its 2019 forecast of 3.9% growth in gross domestic product.

The ministerial meeting also saw Lithuania and Colombia sign off on agreements to join the OECD.

Tags: ; ; ; ; ;