Trump's International Tariffs Spark Fears Of A Trade War

Mar 12, 2018
Originally published on March 12, 2018 6:27 am
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U.S. trading partners around the world are grappling with how to respond to President Trump's new tariffs on steel and aluminum imports. The president says the move protects U.S. national security. But the fact that Canada, Mexico and Australia have been exempted undercuts the notion that this is about national security, and it raises speculation that these tariffs will face a legal challenge at the World Trade Organization, or the WTO. Pascal Lamy is a former WTO director-general, and he joins me now from Paris.

Thank you so much for being with us this morning.

PASCAL LAMY: My pleasure, Rachel.

MARTIN: Do you think the Trump administration's national security argument for these tariffs will hold up if challenged by other nations at the WTO?

LAMY: Well, that's open to interpretation by the WTO dispute settlement. But it, for sure, looks quite strange to invoke this national security/defense argument in trade with, for instance, other NATO members. NATO is a defense alliance between a large number of European countries and the United States of America, and the notion that they would be at war with each other is clearly very, very stretched - as least, seen from Europe.

MARTIN: Right, because the EU has not been exempted, although President Trump has left open that possibility. Would it hold water for you if they were just tariffs across the board against everyone on these imports?

LAMY: That wouldn't change, A, the fact that invoking the national security looks strange, and second, there is another area, which is whether this meets the normal WTO standards for activating a safeguard. You're allowed to do that in WTO provided you can provide the necessary evidence that you've - have been the victim of a sudden, unforeseeable surge in imports, which, at least in European eyes, is not the case in the U.S. By the way, this is the reason why in 2002 - and I was European trade commissioner at the time - the George W. Bush administration lost its case in WTO.

MARTIN: So those steel tariffs enacted by George W. Bush - those did not meet that standard, which is why they lost their case. Let me ask you, what if the WTO rules against the U.S., and the Trump administration just decides to ignore that ruling? I mean, you yourself have said that the rest of the world, quote, "may not be on the same planet," end quote, as the Trump administration when it comes to trade. Is the future of the WTO at risk here?

LAMY: Well, these are - if I may, Rachel, these are two different questions. A, what happens if U.S. loses its case and does not comply with the WTO adjudication? The answer is then the winning party is allowed to impose countermeasures, which is, by the way, what the EU has already said. We are ready, on the EU side, to impose tariffs on Kentucky bourbon, Florida orange juice, Harley-Davidson and the rest. The answer to the second question is, in a way, more important and more worrying. Most of the countries on this planet - at least, members of the WTO - for the last 50 years have shared a sort of ideological consensus according to a (inaudible) opening trade is win-win.

It seems to be the case now that Mr. Trump and large number of people in his administration have a totally different view of trade, which is, trade is a win-lose; imports are bad; exports are good. And this is where I think there is a serious problem. If the U.S. believe WTO is a (unintelligible), which is what Mr. Trump has tweeted, if I'm properly informed, then the WTO members must prepare for a situation where the U.S. would lead WTO. I don't think that would be good for anybody, starting with the U.S., by the way, because if you leave WTO, anybody can do anything with your trade. On the other side, there should be - there should be - another solution, which is if the U.S. have a problem with WTO, let's have a good negotiation. But again, this is only possible if there is still a consensus that we need a international, global, rules-based trading system, which is, I think, what is at stake.

MARTIN: Pascal Lamy - he is the former director-general of the World Trade Organization and European commissioner for trade. And we spoke to him this morning on Skype. Thank you so much.

LAMY: My pleasure.

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