Director-General calls on member states to negotiate more 'careful' definition
TOKYO -- The head of the World Trade Organization has called on member states to negotiate "a more careful definition" of the national security exemption, a provision used by U.S. President Donald Trump to justify a flurry of tariff threats.
Member states are entitled to use the national security exemption, a Cold War-era clause that allows countries to take otherwise WTO-inconsistent actions, under the organization's rules. However they "need to determine what constitutes, really, a national security exception," WTO Director-General Ngozi Okonjo-Iweala told Nikkei Asia.
She did not name specific countries in relation to this topic and acknowledged the challenges in reaching agreement. "I think it's one of those topics that is going to be quite difficult, which members have to tackle in the reform process of the dispute-settlement system," she said in an exclusive interview with Nikkei reporters.
Her comments come as the status of the WTO as a referee of international trade is being questioned, after Trump announced global 10% tariffs on all trade partners alongside additional levies that included duties totaling 145% on China. Although both sides recently agreed to halt most of the tariffs for 90 days, the U.S. administration initially justified the unprecedented tariff threats on security grounds.
The trade organization's dispute-settlement system has been partially paralyzed since the previous Trump administration blocked the appointment of judges to the Appellate Body, which is responsible for hearing appeals from the panels in trade disputes.
Okonjo-Iweala stated that reform must come "with and in cooperation with the United States," saying that the current "crisis" in the dispute-settlement system "presents an opportunity," as the organization can now address untouched fundamental problems, such as criticisms of unfair trading practices and the under-inclusion of developing countries.
The director-general also identified scope to reform "developing nation" status. In the past Trump has claimed that China unfairly took advantage of that status despite its huge economic size. Unlike other organizations such as the International Monetary Fund and the World Bank, the WTO has no clear definition of a developing economy, explained Okonjo-Iweala. This has allowed some countries to benefit from special and differential treatment, which exempts them from implementing certain disciplines in an agreement, or extends the timeline for compliance, she said.
"We should, as part of the reform, look at ... what level of per capita GDP you don't need help with, and you can implement things by yourself without needing access to" special and differential treatment, she said, without specifically naming China.
"It is access to [such treatment] that is most important, and not whether I'm called a developing or developed [nation]. Those are just names."