 Hello and welcome to NewsClick. Today, we have with us Rajat Nag, who has been looking at international issues, economic issues and also was formerly managing director general of Asian Development Bank. Rajat, World Trade Organization seems to be in a deep crisis at the moment with what is called the Trump tariffs. The tariffs on steel and aluminum it's been also done using a clause which has never been used earlier in the WTO tariff increases or tariff barriers of this kind, which is calling it a security exception. This is has been talked about as if it's a nuclear exception and that it goes to the heart of the WTO trade dispute settlement bodies, the issues, this whole structure of WTO. Do you see this as something which will really unsettle global trade completely? I think it's of very major concern. I think the rule based order which is basically the sort of fundamentals of WTO is really being called in doubt. And for the reasons that you have just mentioned, see if it was just raising the tariffs on steel or aluminum, unfortunate as it is it really wouldn't be a big deal. This has happened in the past, various countries have imposed tariffs, then there's been counter tariffs, a bit affected for time and things have settled down. But in this particular case, what is of concern is exactly what you are saying. The rationale that Mr. Trump has used which is the nuclear option. See the WTO was based on a mechanism that the rules of engagement would apply to everybody. And if there is a dispute, there's a dispute resolution mechanism, we'll try to sort it out. Accepting if a country invokes a national security issue because you can't have an external organization, say the WTO, take a view if this particular thing was a national security threat for you or not. And Mr. Trump has chosen that. This is essentially that sovereignty was respected, at least on the security. Right. And you said that, look, if I say it's my national security threat, then you or somebody else or WTO cannot question it. And this is why it was used, it was actually never used. I mean, this is a nuclear option. And I can't recall any particular case when that was used. In Mr. Trump's case, it is so blatantly wrong because first of all, steel and aluminum by itself is not a security threat. And even if it were for the U.S., the largest imports come from Canada, from Mexico, who are exempt and from EU, which are allies. So this is patently false. And therefore, what it does is basically it sticks a thumb in the eyes of WTO. And you're starting to find common WTO in crisis. I think it's a very valid one. WTO has been weak and we all know its problems, that Dohera never took off, etc. But you don't make it worse by bringing in the nuclear option, which really makes WTO very important. So I really am very concerned about what is happening on this tariffs that Mr. Trump has imposed, not for the tariffs per se, which is bad enough. And there will be tit for tat and nobody will come out of the winner. But the clause that he has used opens up a whole series of issues which the world has never seen before. It's a can of worms. It is a can of worms. Now, other issue that has been there, which has been hanging fire for quite some time for the last two years, that the United States has not let on the appellate court judges be appointed. Now, it has come down to, I think, four. It will come down to three, after which the appellate board cease to function because it needs at least three judges on the bench. Is this also part, like the steel tariffs, is it also a part that United States actually is taking a wrecking ball to the WTO and wants to actually break it? It's not happening by accident, but they really want to dismantle the dispute settlement process completely. You know, whether they're doing it very consciously to wreck WTO or not, I mean, one doesn't know, but it certainly looks like they're taking the wrecking ball to all international institutions. I mean, some more than others. And WTO is certainly in the sights of Mr. Trump because he has always been against free trade. So he sees WTO as an organization, which is anathema to his concept of the global order and not filling the positions of the appellate judges and all just makes it worse. So here you are, an organization which is weak to begin with and is weak because of the constraints put on it and the various interests which are not consistent, which come to play. Then you have an institutional arrangement, which is not very strong, the dispute resolution mechanism, the appellate tribunals, et cetera. And then to make it worse, you explore the nuclear option on it, which is the national security. So yes, whether Mr. Trump wants to completely wreck WTO or not, he certainly is doing his best to make sure that it sort of, you know, gets worse. You know, the other interesting point, which is, which should also be registered, people are refusing to register these points because I think it's quite troubling for them. That is that he talks about reciprocity. India and United States should have reciprocity. Now, when WTO was created, it was recognized different countries have different levels of development and therefore the bound tariffs for countries, depending on the development, were actually different. So reciprocity was not the principle. The principle was graded reciprocity, if you will. And now Trump is actually talking about reciprocity, equal reciprocity, no, fully reciprocal. Interestingly enough, even when reciprocity can be considered, it was never on line items, that each line item has to be reciprocal, but it was on a basket of goods. That also Trump seems to be now deviating from. Do you see all of this as my needs first to help with everybody else is the approach that Trump and his administration is taking? Absolutely. I mean, as I said, he has always been not only a skeptic of free trade, he has been anti free trade. He ran his campaign on that basis. And Mr. Trump probably can't be accused of getting deep into any policy issues. But one thing that you have to give to him, he has always been very consistent on trade trade issues. And therefore, this whole thing about renegotiating NAFTA reciprocity, etc. Now, unfortunately, if somebody refuses to consider facts, they're very difficult to then sort of proceed beyond first base. The global trade order based not on reciprocity, as you very rightly said, individually, but reciprocity in a larger sense, that free trade helps. It is not a zero sum game. But there are going to be winners and losers. And therefore, you've got to find ways of how to compensate losers. Now, by Mr. Trump bringing in reciprocity on a line by line items, I will, you know, put tariffs on the more steel. If you sort of don't let my Harley Davidson's go into your country, I'll do something more etc. etc. It's a very asymmetric situation. You have a country like US, in India, still a large country. So even if you leave that aside, you've got much weaker countries, smaller countries, poorer countries who can't deal with this. And the whole idea of WTO was to create a trading regime by which you'd lift all boats now some more than others. Mr. Trump is systematically by calling into question all of these basic principles of free trade rule based global order is undermining the institutions. There's an other other issue that we should really focus on. The developing countries have said that WQ is really something which put a much larger burden on them and benefit in the rich countries. There seems to be a lot of data to support what was that that contention. And the Doha Development Round didn't really take off. And one of the reasons that Doha Development Round didn't take off was it was supposed to redress this imbalance, which the rich countries really didn't want to do. With Trump going in this direction, we seem to be headed completely the other way, that actually the rich countries should benefit even more and unwillingness to recognize any, shall we say, concern of the poorer countries. Right. And the Doha Round, as you rightly said, didn't take off because the incidents of benefits and costs were still sort of unfair. There was asymmetry. Europe still sort of protected its agriculture. But when it came to sort of, you know, supporting the trade for aid principle, they were protectionists or at least difficult to crack into. Even the United States protected its agriculture. And the United States. But at least there was a general recognition that the richer countries, the developed countries have benefited from this global trade regime. And sometimes they were brought to the table, you know, dragged to the table screaming and, you know, resisting. But at least the principles were not disputed. And there was, I think, and I've been in several of these meetings when I felt that if nothing else that the developed countries were a bit embarrassed about some of these positions they were taking because of their domestic politics. Mr. Trump has now made it sort of very, very respectable even to flout all of these issues. And therefore negotiations at any multilateral forum and not just on trade. I mean, we saw what happened to the Paris, you know, climate change accords makes it that much difficult. Therefore, what I see happening is a greater resurgence of regional trading arrangements. You know, you will have the RCEP, you will have the, you know, TPP minus one, you will have the FTAs. None of them are going to be as efficient as a global trading arrangement, the first best. But I'm afraid that's what will happen because the global order, not just trade order, my concern is the global order is being jeopardized by Mr. Trump and his administration. My only concern is that the regional trade blocs could work or regional other arrangements could work. But the absence of the biggest economy in the world still today, advocating rule of the jungle. It's like it's difficult to see how this is not going to affect everybody. Like we have always argued amongst us that we should have given up on the United States long ago on climate change. And rest of the globe should have moved ahead. But it's very difficult to do that considering exactly the largest. Exactly. So the problem lies that if one, the largest economy decides the rule of the jungle is what should be imposed on the World Trade arrangements. It's difficult not to have consequences. And I couldn't agree more with you. There will be consequences. And the irony is it will have as much detrimental effect on the US itself. I mean the steel and aluminum tariffs that Mr. Trump has imposed, even if I leave aside the issue of national security, it will, the last I had read, it'll create maybe something like 100,000 jobs by protecting the steel industry. It will, however, cause a loss of about 900,000 jobs because those job losses will happen now in Detroit, will happen in other places, which you steal, which will now be more expensive. Therefore, American products will become more expensive, et cetera, et cetera. Now, so it's not as if US is going to come out of this on top either. But certain constituencies and maybe the constituencies which support Mr. Trump would benefit and that too for a short while, because the steel industry is not going to revive in the US just because there's a 25% tariff. And in any case, the steel and the aluminum tariffs imports account for only 2% of US's total imports. So, you know, it is just totally self-defeating, almost, but it has a huge political symbolic value, I suppose. It could ignite a global downturn. Exactly. And then, you know, it'll be foolish of people to expect that countries will just take it lying down. And that is exactly where you have the state for that. You put tariffs on steel, I'll put tariffs on something else and then I'll do this. And nobody is the winner, including the US. Thank you very much, Rajat, for being with us. We'll continue to watch the unfolding trade scenario globally and its financial impacts. As Rajat has already said, it will have implications for global trade. It will have implications for the global economy and nobody is going to benefit by the leading economy taking a wrecking ball to the whole global order, trade order at the moment. This is all the time we have for NewsClick today. Do keep watching NewsClick. Watch us on Facebook and YouTube.