US President Donald Trump’s renewed threat to pull his country out of the World Trade Organization (WTO) should be considered as “negotiating tactics” ahead of the G7 summit, Geraci said.
“They put the threat that they leave on the table and then they see what comes out of this meeting. But Trump sometimes threatens some action, and then this action is never done. So I think this is a negotiating tactic that brings attention to the topic. G7 in France will talk a lot about that,” Geraci said.
He said that the problem with the WTO was that its rules were outlined before Asia became the fastest growing economic region. Trump directed Trade Representative Robert Lighthizer last month to secure changes to these rules to prevent developing countries from taking advantage of regulatory loopholes.
“The problem with WTO is that the rules were not designed to deal with high economic growth and emergence of Asia, specifically China. It was designed to make sure that there are no [price] dumping situations for smaller countries,” he added.
China, the world’s second largest economy, has been identified by the United States as the biggest abuser of WTO rules. Since joining the WTO, China has insisted that it is a developing country, according to a White House memorandum.
“I think the solution goes back to trade tensions with China. I think the United States may want to take a little bit of time,” Geraci said.
Discussions about reforming the WTO have been going on for years and the organization’s 164 member states are yet to reach a consensus on the matter. The members are divided in two camps, with one group of states — including Russia — advocating for the organization’s further development and another calling for developing a new format for the WTO.
Trump reiterated last week that the United States might pull out of the WTO, following what he claimed were years of mistreatment at the hands of the organization.