avoid escalating trade sanctions

Editorial. By applying sanctions sanctioned by the World Trade Organization, Donald Trump runs the risk of opening a new front with the Europeans and provoking a bidding war of retaliation damaging to the growth of international trade.

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Editorial of the "World". Donald Trump has a selective conception of multilateralism. Since his election, the President of the United States has continued to conspire the operation of the World Trade Organization (WTO) to better question the rules of free trade. But that does not prevent it today to rely on the institution when it settles a dispute in favor of Washington.

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The WTO has just given the green light to US sanctions against the European Union (EU) after judging that Airbus had benefited from illegal public aid, thereby creating a prejudice against its competitor Boeing. For the Trump administration, which considers that in terms of trade Europeans are "Worse than China, simply they are smaller", the opportunity is too good to assert his credo, "America first", to one year of the presidential election. The United States says it is ready, from October 18, to raise tariffs on 150 goods imported from the EU, for a total amount of $ 7.5 billion per year. Civil aircraft are targeted, but also many agricultural and industrial products.

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Unlike the trade war that Donald Trump has declared to China, these retaliatory measures apply in the international regulatory framework. In this dispute, which began just fifteen years ago, the Europeans have made mistakes, and the decision of the WTO makes sense. However, it is rare that sanctions are applied, the decisions of the organization serve rather to encourage the countries to find compromises, so as not to enter an escalation of retaliations that would be damaging to the growth of international trade.

The risk of making the game of China

By refusing, at this stage, any negotiation on the subject and applying the sanctions authorized by the WTO, Donald Trump takes the risk of opening a new front with the Europeans. "It's a big win for the United States"he blesses. It promises to be short-lived. Boeing is also accused of resorting to public aid. The case must be definitively decided in nine months, this time most likely in favor of Europeans, who, in turn, will be legitimate to impose tariffs on US products.

Litigation is all the more counterproductive as it risks playing the game of China, which dreams of becoming an aeronautical power. Its first medium-haul aircraft, the C919, is waiting for its approval to start carving up crutches at the Airbus-Boeing duopoly. Needless to say, Beijing has not bothered with WTO rules to fund its aviation program with public funds.

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Instead of tearing each other apart about a quarrel that leads nowhere, the Europeans and the United States would do better to join forces to face the Chinese threat. First of all, it is a question of redefining the role of State aid in a sector which, considering the huge amounts of investment, seems difficult to avoid. The new rules could then apply to all actors, including China, in the WTO.

In March 2018, Donald Trump boasted that "Trade wars were easy to win". Eighteen months later, the only tangible result is a profound disruption of international trade, which undermines global growth. Breaking a new course in tension could end up destabilizing it for good.

The world


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