The US-China trade talks experienced a “breakthrough” after diplomats from both countries came to an agreement in Geneva. Despite the smiling faces and clinking of glasses, the event seemed to have placed another nail in the coffin of the World Trade Organization (WTO).
Despite being headquartered in Geneva, representatives from the WTO were nowhere to be found during this negotiation. While Geneva and the world might celebrate that the China trade talks were positive, this bilateral deal sidelined the body created to mediate in such conflicts. What are the implications of such a deal by two of the world’s largest economies for the WTO?
The Bypass Heard Around the World
The outcome of the US-China trade talks on May 12 led to a reduction in China and US tariffs. Washington slashed its 145% tariffs to 30%, and Beijing reduced its retaliatory 125% tariffs to 10%. This is a global relief, but it doesn’t mean it lines up with international trade agreements and charters.
Both countries ignored WTO rules, specifically Article II of GATT. Article II outlines the “Schedules of Concessions.” In simple terms, it ensures that each party follows their tariff commitments as per their agreed-upon schedules. Trump ignored this rule in 2018, and he’s doing it again. This time, he didn’t even bother with WTO consultations and panels.
The China trade talks are taking place outside the structured, multilateral environment that the WTO was created to protect. Rather than use the structured dispute system, these superpowers chose to create a new joint mechanism that is independent of the multilateral framework. This is a blatant disregard of the World Trade Organization.
Geneva’s Symbolic Host, Not Functional Home
The worst part of all this was that Geneva celebrated it. The local media hailed the reduction of the China and US tariffs as a win for Swiss diplomacy. But there was nothing diplomatic about this; it was just two powerful countries strutting their might.
The WTO Director-General was invited to be debriefed at the Chinese embassy by the Chinese Vice Premier. At least the Chinese somewhat recognized the WTO; the US could not even be bothered. Even though the DG expressed her support, it doesn’t change the fact that the process was flawed, and the optics disastrous.
What happened in Geneva sets a bad precedent. If countries continue to act in this manner, striking bilateral backroom deals outside the WTO dispute system, it could mark the death of the multilateral trade system and the WTO.
Read Next: The Influence of White Supremacy on U.S. Foreign Policy
