WTO Capacity for Action is Unknown, Says Organization's General Director

03/15/2018 - 11h46

U.S. President Donald Trump's decision to increase the tariffs on steel and aluminum announced last week moves world trade into uncharted waters and could lead to the possibility of a commercial war, says the general director of the World Trade organization (WTO), Roberto Azevêdo.

The scenario could worsen as the capacity for action of the main arbitration body of global trade to deal with the effects of the measure is still unknown. President Trump now threatens to call on national security as a justification and the WTO regulation is vague on the agency's margin to question Trump's argument, Azevêdo told Folha in an interview on Tuesday evening, March 13, as he was preparing to take part in the World Economic Forum on Latin America held in São Paulo.

That could make proceedings at the WTO against the new tariffs, such as that Brazilian President Michel Temer threatened to issue in the following morning, lose force.

"There is the economic risk. And there is the systemic risk, as other countries believe that the measure is not compatible with multilateral rules and are making threats. There is always the risk that escalating retaliations could lead to a trade war. And we are making efforts to avoid that," he said.

Azevedo, however, does not believe that will occur in the short term, and cites the possibility of mitigating the effects. He believes that Brazil is trying hard to be among those not affected by the new rules.

Translated by THOMAS MUELLO

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