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USTR Lighthizer says bilateral trade pacts conflict with multilateral trading system

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imageEconomy4 hours ago (Jul 09, 2020 03:30PM ET)

(C) Reuters. FILE PHOTO: Senate Finance Committee hearing on U.S. trade on Capitol Hill in Washington

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) – U.S. Trade Representative Robert Lighthizer on Thursday said the world needed either a multilateral system to govern global trade or a series of bilateral agreements, but the two were in conflict with each other.

Speaking in a webcast event hosted by the London-based Chatham House think-tank, Lighthizer said that Europe’s proliferation of some 77 bilateral free trade agreements (FTAs) was “one of the biggest challenges to the multilateral trading system.”

He said that to revive the multilateral trading system enshrined in the World Trade Organization, there needed to be a “reset” on global tariff rates, an end to making new trade rules through WTO litigation and new ways to effectively deal with China’s state-directed economic model and non-tariff barriers such as product and food safety standards.

“The FTAs, in my opinion, we should just get rid of them. We should have a multilateral system or a bunch of bilateral systems,” Lighthizer said. “And to be honest, I can go either way. But we can’t have people who…profess to multilateralism and then go around basically being the biggest proponents of a bilateral system.”

The United States last week launched a new trade deal with Mexico and Canada and is in the process of negotiating bilateral trade deals with the United Kingdom and Kenya after activating a “Phase 1” trade agreement with China in February.

Lighthizer and U.S. President Donald Trump have long argued that bilateral trade deals were better for the United States than multilateral ones, such as the Trans-Pacific Partnership. Trump pulled the United States out of TPP on his third day in office in 2017.

Lighthizer also said that Britain’s former trade secretary Liam Fox is “one of the favorites” to become the next director general of the World Trade Organization, but said there were other good candidates as well and the Trump administration is still considering which of the seven to support.

“If you say what are we looking for? Number one, we have someone who understands that we have a fundamental need for reform,” Lighthizer said, adding that the WTO was at “a turning point” that could significantly shift its current form. The next WTO chief will also need to understand that China is “state capitalism,” he said.

USTR Lighthizer says bilateral trade pacts conflict with multilateral trading system

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