Donald Trump, a double threat to the global free trade

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Sitting located on the shore of Switzerland’s Lake Geneva is the headquarters of the World Trade Organization (WTO), a free-trade factory.

Here the nations of the world meet to draw up commercial offers and to reduce the rates and taxes applied on imported goods.

But the system, which has worked in various forms, starting from 1940, is under threat from two sides.

(USA) has announced the customs duties on imports of foreign steel and aluminium, for reasons of national security, and refused to appoint new members of the WTO appellate body that settles disputes.

These developments are the WTO is of growing importance for the UNITED kingdom. At the moment it is represented by the EU, but after Brexit, the UK negotiating on its own account. This should give the UK the ability to negotiate more specifically designed to fit.

The flip side of the coin is that the UNITED kingdom does not longer belong to the single largest economy in the world – the european union. Brexit consequences

The first job of the newly increased group of the UNITED kingdom to the WTO will be to negotiate a “schedule”, an extensive list of goods, and the rates to be paid on them, ranging from avocados to zippers.

The UNITED kingdom assumed or may inherit the EU schedule. The trouble is that this requires the consent of other countries, and some of them have said no.

Take New Zealand, for example. At the moment you can sell 228,000 tonnes of lamb and mutton to the EU every year, without fees. The UNITED kingdom and the EU has decided to split this fee between them, but in New Zealand it is the opposite.

David Walker, New Zealand’s ambassador to the world trade organization: “Yes, there is a series of other WTO members, clear that a simple share split like that is not acceptable for us.”

The reason is simple. At the moment, New Zealand can sell lamb from anywhere in the EU, and so lose the flexibility, if you need to sell a few in the UK and in the rest of the EU.

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The UNITED kingdom can probably get around these problems, by offering countries like New Zealand a better deal. But there are other clouds on the horizon. For a start, the WTO failed to negotiate a global cut rates for decades for one simple reason – every single country has a veto.

Ieva Barsauskaite, from the Lithuanian delegation to the WTO, warns me that get all of the 164 countries on board is not easy.

“Get a 164 and your friends in a place, decide on a dinner, decide on a plate for all, and include single mothers, teenagers, retirees, veterans and everyone with a dog, and people with allergies – that’s how the trade agreements have been made here,” he says.

For the UK, which is hoping to breathe new life into the WTO, which is not very encouraging. But there are bigger problems.Trade war threat

Donald Trump, the decision to impose tariffs on steel and aluminum is a game changer, not because this has not been done before – it has. But why he did it on “national security” grounds – that of the WTO rule that can not be contested.

All countries can take measures to ensure their national security, but are only expected to do so at times of real crisis, like a real war.

But now, in time of peace, the President, Trump has cited national security as a reason for rates. If others will follow the escalation may be impossible to stop or reverse.

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No wonder that Roberto Azevedo, the WTO, the director-general, is concerned: “Only the threat of a trade war is already harmful,” he told the BBC.

“But if this escalation goes on, and on, and on, you can have something very, very harmful, the possibility of a recession. And if you look back in history, you know, in the 1930’s, which is exactly where it led.

“That is why I said, ‘obey the rules, do things according to the rules, because if others don’t like it, there are mechanisms to take care of this,” he says.No court of appeal

But those mechanisms are themselves now in danger. The appellate body of the WTO has been solving problems for over 20 years, and its decisions must be accepted by all WTO members. There is no veto.

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But the appellate body is rapidly running out of members, like US, is the block of new appointments in a discussion on their role. Need a minimum of three members, though six or seven would be much better, at the moment only has four.

“For over a year, it has not been possible to achieve a consensus among the members to start the process to fill the vacancies,” says the WTO, legal affairs director, John Adank.

“So, if this stalemate continues, the risk is that the appeal court he won’t be able to function, because if you get up to three or less than three members, it may be difficult for an appeal.”The Global Trade

More from the BBC series taking an international perspective on the trade:
The automakers fear the growing obstacles to trade after Brexit
And little price impact’ by axing EU rates
UNITED kingdom to seek to be exempted from US steel tariffs
We do not want the wall with the UNITED kingdom – the european union Tusk
Airbus warns of Brexit parts supply risk

The quiet atmosphere of the WTO, with its well-oiled collegiate atmosphere, has a comforting and comfortable to the touch, but it was based on a post-war consensus that seems to have lasted forever, since 1945.

President Trump has helped to destroy the consensus – that there is a contract that all agree to, with a couple of tweets, and the threat of a trade war; putting the future purpose of the WTO in his castle on the shores of Lake Geneva in serious doubt.

You can hear more from Jonty Bloom the World Trade Organization in the latest episode of Radio 4’s In Business, broadcast at 20:30 BST on Thursday 19 April.