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Trade war would hit developing and poor countries hardest: Economist

Xinhua | Updated: 2017-08-08 13:28
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GENEVA - If the recent warning by the head of the World Trade Organization (WTO) on the "clear risk" of a trade war sparked by protectionist policies materializes, it would threaten poor and developing countries the most, says economist Martin Khor on Monday.

Khor, executive director of the Geneva-based South Center agreed with WTO director general Roberto Azevedo Azevedo's recent statement that should a trade war break out, countries "will in the end be worse off than when the dispute begins."

Khor said in an exclusive interview with Xinhua that "the developing countries especially the poorer ones would be the most affected victims of a trade war as they have no means to defend themselves."

The fears have been stoked with statements from President Donald Trump US Administration that it is examining its trade practices with China and suggesting measures will be taken against its perceived distorted trade balance.

Azevedo said Aug 2 at a forum in Panama that the global community must be attentive because "the risk of a trade war is very clear."

The WTO chief warned that whichever country applies unilateral measures, other countries would respond, triggering a domino effect.

Khor said he viewed a trade war as "a real possibility", noting that some leaders of the US Republican Party that controls both houses of the Congress would like to introduce a trade adjustment tax equivalent to a 20 percent duty on all imports entering the US, as part of their tax reform plan.

"This would be really against WTO rules and will fuel outrage among US trade partners who would retaliate," said Khor.

He said the US could also use antidumping and anti-subsidy measures "especially against China" to prevent steel and other products from entering, estimating that it would trigger retaliatory measures against the US.

"The whole trade scene can quickly turn chaotic with a major trade war being unleashed which will not benefit anyone," he cautioned.

The South Centre director agreed with Azevedo's call for more dialogue, when he noted the potential influence that digital technologies can have on world trade.

"The cooler and wiser persons in the US administration and Congress and opinion makers should take concerted efforts to try to prevent the president from going down this disastrous route" of protectionism, asserted Khor.

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