A former World Trade Organization director general expects geopolitical tensions to persist over the next several decades, with the United States and China, the world’s two largest economies, engaged in an intensifying trade war.
In a recent interview with Kyodo News, Pascal Lamy, who served as director general of the international body between 2005 and 2013, said if U.S. President Donald Trump seeks to «de-globalize» the United States, it will come at a huge cost.
«This geopolitical tension (as seen between the United States and China) is to be with us for the next 20 or 30 years,» Lamy said.
The tit-for-tat tariff exchanges between the United States and China have shaken financial markets and raised concern about the impact of the escalating tension on the world economy.
Trump has blamed his country’s massive deficits with major trading partners such as China and Japan on unfair trade, threatening to slap steeper tariffs on cars and auto parts to defend national security.
The former WTO chief views the deepening of ties between Japan and the European Union as a way to counterbalance and prompt «a U.S.-China conversation to take place.»
Japan and the European Union, covering a third of the world’s economy, are now seeking to complete domestic procedures by the end of the year to ratify a free trade deal signed in July.
Lamy, currently an adviser at British consulting firm Brunswick Group LLP, said the world has reached a point where supply chains are so interconnected globally that bringing production back to the U.S. market, as advocated by Trump, would be costly.
«If Trump’s vision and strategy is to de-globalize America, then this would have major consequences,» Lamy said.
China’s market-distorting measures, including subsidies, are seen as one factor fueling the rivalry between Washington and Beijing.
Japan along with the European Union and the United States is seeking to reform the WTO as part of efforts to address the subsidy issue.
Washington is also concerned about China’s alleged intellectual property and technology theft, even as speculation has grown that the United States may pull out of the WTO under the Trump administration.
Amid calls for WTO reform, Lamy said there is still room for improvement in the process of decision-making at the international organization.
While a U.S. pullout is not desired, Lamy said the world has to be prepared.
If «it’s about the vision that de-globalization is in the order of the day that he has to pull out from the WTO, from the Paris (climate) agreement or whatever…we have to organize a world without the United States.»
Still, Lamy cautioned that the WTO is not only about tariffs but it also covers intellectual property.
«If you move out of the tent, your intellectual property is not protected anymore,» he said.
All — Kyodo News+