US exit from WTO would cause "chaos" for businesses
The head of the World Trade Organization (WTO) has warned it would be chaos for companies around the world if US President Donald Trump follows through on his threats to leave the institution.
WTO director general Roberto Azevêdo told Bloomberg last week he is already working with the US and the organisation's other members to address common complaints but warned a US exit would have "chaotic consequences" for the global economy and the US itself, according to the newswire.
Azevêdo's comments come after Trump warned he would withdraw from the WTO "if they don't shape up" during an Oval Office interview with Bloomberg on Thursday (30 August).
According to the publication, the President deemed the 1990s agreement establishing the body "the single worst trade deal ever made."
A US departure would be not be good for anyone, Azevêdo reportedly told Bloomberg.
"The US is about 11% of global trade. So leaving the organisation would be a blow to the organisation. But it would be a blow to the US as well."
He added such a move would leave US businesses vulnerable to commercial discrimination and new tariffs around the world if non-US members were no longer bound by the WTO's rules.
"That is the worst thing that could happen for an economy as globally connected as the American economy," Azevêdo reportedly said.
Trump's latest threat follows reports in July that the President was considering a draft bill that would give him authority to walk away from the WTO and increase US import tariffs without congressional consent.
The United States Fair and Reciprocal Tariff Act – or FART, as social media dubbed it – would give the President unilateral power to ignore the two most basic principles of the WTO and negotiate one-to-one with any country.
Meanwhile, the latest round of negotiations regarding the overhaul of the current North American Free Trade Agreement (NAFTA) continue.
The US, Canada, and Mexico have been working to renegotiate and modernise the 24-year-old trade pact since last summer, with the most recent round of talks held in Mexico City in March.
Last week, Trump announced a preliminary agreement regarding a new trade accord with Mexico had been struck - a deal that could potentially replace NAFTA – but talks with Canada are due to resume on Wednesday (5 September).