The President of the United States threatens partners and competitors with import rates and even exceeds free trade agreements. The weakening of the WOP is part of the problem.
The processes were related to the numerous executive orders that Trump issued the position and involved cuts in government agencies such as the Usaid humanitarian organization, employees’ resignation, suspension of payments and more.
Only one question – the one that affects in particular those who do not live in the United States – has remained outside: import rates. The reason is that the tariffs of the topic are linked to the law of international trade and the competent authority for such cases is the World Commerce organization (OMC), based in Geneva. And this is already part of the problem.
Frustration for omc
The imposition of punitive rates, as Trump did, violates the existing law, affirms the economist Jürgen Matthes, who directs the International Economic Policy Department of the German Economic Institute IW.
“Trump does not comply with the current commercial law. The other measures he announced against China, the European Union (EU) and all other countries are also lacking in respect of the law on international trade. But this does not seem to disturb him”, says Matthes.
Interested countries can react and present a complaint against Trump rates in the WTT. This is what China did: the Chinese government promptly intended a cause after its products were subject to a further 10%rate.
The problem is that these actions lead to nothing. Matthes claims to be “important and correct to maintain the international commercial system”. He also believes that the Oman arbitration court considers illegal Trump taxes.
The United States could therefore appeal to that decision. But the OMC organ that decides for appeal for appeals has not been able to make decisions because the United States block the appointment of new judges. Trump’s predecessor, Joe Biden, has maintained this practice.
“Since the Court of Appeal does not work, there will be no final verdict against the United States that is binding,” explains Matthes. “And even if there was one, the United States under Trump’s command probably wouldn’t have fulfilled him.”
All of this is frustrating for the 166 members of the WOP, who – also to the united insistence – have joined the organization so that there were at least one minimum compulsory rule in international trade.
Looking for an excuse
Canada and Mexico also see a double violation of the law in Trump’s tariff threats, after all these two US countries are not only members of the WOP, but also have a valid free trade agreement with the United States, the USMCA. This agreement was ratified by the United States Congress and signed by Trump himself in his first term.
But, as the commercial law professor Kathleen Claussen from Georgetown University, the ingenuity of the jurists should not be underestimated when you find the way to get around the current rules.
And this is very clear in the cases of Mexico and Canada. Since the rates against these two commercial partners violate not only the rules of the WOP, but also the reduced commercial agreement of the United States Congress, could be disputed in the US courts.
The law states that Trump provides a reason to violate the rules and in this case refers to the international law on economic economic powers (IEPA). The prerequisite is that he declares national emergency.
And that’s exactly what Trump did by decree shortly after the entry into office: in the case of Mexico, the national emergency is due to migrants. In Canada, due to the smuggling of Fenanil and other drugs.
Go and comes from the rates
Trump loves to apply rates because it is easy to implement them, says Claussen. Furthermore, it is not exactly interested in rates, but in their value as a threat in negotiations.
Claussen compares Trump’s approach with the conditions for “friends and family” that mobile telephony operators use to attract customers. “There are special conditions for friends and family, but you must demonstrate that it belongs to this group,” says Claussen. “And even if today you can prove it, tomorrow everything can be different again.”
Canada and Mexico are already familiar. At the beginning of February the announcement of the punitive rates arrived. Then the postponement came for 30 days. A few days later new rates were imposed on steel and aluminum. So the announcement that the punitive rates that had been suspended will come into force in early March.
“The creation of uncertainty and constantly emitting new threats is part of the basic principles of Donald Trump”, observes Matthes.
The possible calculation of the president: the constant threat of rates increases its power and makes the others more willing to negotiate – that they are foreign governments, are representatives of the national industry looking for auditions with him for fear of the rates.
In the meantime, the Europeans, and in particular the Germans, are discussing which options they have if Trump gives rates on their cars and other products. The European Commission has already announced contram for this case, but without providing details.
Matthes says that it is possible to reach a sort of agreement in advance, so Europeans could buy more weapons or other US goods. Otherwise, there is the risk of ferocious and commercial war, which damages everyone. “But we can’t simply tolerate everything,” he says.
Source: Terra
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