"South Korea Should Actively Participate in New Trade Order Discussions" [WTO End Declaration] ⑥

Shinhwa Yonhap News

The global trade market is reeling under the trade pressure exerted by U.S. President Donald Trump. Following a series of tariff measures targeting the world, the United States has officially announced the restructuring of the trade order under the name "Trump Round." This is a declaration that the U.S. intends to establish a new order, rather than simply reforming the World Trade Organization (WTO). If the first season of Trump’s trade pressure was characterized by tariffs, the second season is likely to focus on the establishment of a new trade order, represented by the Trump Round. Experts have advised that South Korea should actively participate in discussions regarding the formation of this new U.S.-centered trade system.

Lee Jaemin, a professor at Seoul National University School of Law, told Asia Economy on August 13, "The U.S. has officially expressed its dissatisfaction with the WTO since around 2016, and since then, the consistent message has been, 'The WTO has problems, so let's reform it.'" He continued, "However, the recent mention of the Trump Round by Jamieson Greer, a representative of the U.S. Trade Representative (USTR), signals a significant shift in the U.S. stance toward the WTO."

Professor Lee emphasized the importance of the fact that Greer not only contributed an article to a media outlet but also posted it on the USTR website. "Posting an article on a government agency’s website signifies the official position of the U.S. government," he said, explaining, "It reflects the accumulated dissatisfaction within the U.S. government and American society toward the free trade system represented by the WTO."

Some analysts interpret Greer’s recent declaration of the "Trump Round" as an expression of confidence by the U.S., following the recent tariff measures. Jung Haneul, head of the Institute for International Legal Order, said, "The U.S. seems to have confirmed that the reciprocal tariff negotiations it concluded with major countries went better than expected-in other words, that the U.S. still wields overwhelming power as a superpower." He added, "Building on this confidence, the Trump Round is part of the U.S. effort to establish a new trade order."

Kang Insu, a professor at Sookmyung Women's University, stated that the Trump Round declaration should be understood as the U.S. intending to use trade as a tool of industrial policy. Professor Kang explained, "The term 'Trump Round' seems to mean 'let's use tariffs to protect domestic industries and strengthen bilateral negotiations,'" and added, "The U.S. should be seen as expressing its intention to use tariffs not only as a trade policy but also as a significant tool of industrial policy."

He further noted that, unlike previous rounds such as the Tokyo Round or Uruguay Round, which involved participating countries reaching agreements to establish and apply common rules, the Trump Round is premised on an imbalance of power, or asymmetry, making it difficult for it to develop into a traditional round format.

Experts believe that despite the U.S. declaration of the Trump Round, the WTO will continue to exist. They also expect that the U.S. will not immediately withdraw from the WTO. Jung stated, "If the U.S. were to leave the WTO, general tariffs-not negotiated tariffs-would apply to trade with WTO member countries, meaning the U.S. would have to renegotiate tariffs with every country from scratch. Even for the U.S., this would not be easy, so it is likely that the U.S. will continue to use the WTO as a foundation while applying pressure on major countries and key products, as it did with the recent tariff negotiations."

Professor Lee also commented, "It is clear that the U.S. distrust of the WTO system has dealt a significant blow to free trade, but to say that the WTO has become meaningless is an exaggeration." He continued, "For example, South Korea trades with Japan through the WTO without a free trade agreement (FTA), and the volume of trade under the WTO system remains substantial. Even if the U.S. were to withdraw, the WTO system would be impacted, but concerns that the free trade system represented by the WTO would disappear entirely are excessive."

However, they agreed that a weakening of the WTO’s authority is inevitable. Jung pointed out, "When China controlled rare earth exports and lost a WTO case in 2014, it lifted the controls because, at the time, the U.S. was actively supporting the WTO." He added, "Going forward, however, we cannot expect U.S. deterrence, so it is increasingly likely that member countries will not fully accept the WTO’s decisions."

As the U.S. forces its power-based trade logic on other countries instead of the established trade order, the EU, Japan, South Korea, and others have found themselves negotiating tariffs individually, facing a situation where each country must fend for itself.

Some countries are showing signs of solidarity in opposition to the U.S. approach. China and BRICS countries, which are generally unfriendly toward the U.S., are moving to unite against the U.S. method. In fact, Chinese President Xi Jinping held a phone call with Brazilian President Luiz Inacio Lula da Silva, urging "unity" to counter U.S. unilateralism. According to the South China Morning Post (SCMP) and others, President Xi emphasized, "Countries of the Global South must unite and clearly oppose unilateralism and protectionism," and "We must safeguard international fairness and justice, the basic norms of international relations, and the legitimate rights and interests of developing countries, and build a fairer and more sustainable world together."

The EU is expanding FTAs with countries such as Indonesia and the United Arab Emirates (UAE), while the United Kingdom joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in December of last year.

Professor Lee remarked, "Within groups such as the CPTPP or BRICS, which already exist, there are initial moves to strengthen cooperation," and added, "Although dissatisfaction with the U.S. is high, differing interests and circumstances among countries mean that concrete actions toward solidarity have not yet materialized, but I believe they will become more visible going forward."

South Korea now faces the challenge of responding both to ongoing WTO reform discussions and to the emerging U.S.-centered trade system represented by the Trump Round. Cho Seongdae, Director of Trade Affairs at the Korea International Trade Association, pointed out, "The WTO is not just a place for dispute resolution; it should also conduct liberalization negotiations and create new rules. Since it has failed to fulfill these roles, no one can deny the need for reform." He stressed, "For the WTO system to survive, meaningful reforms must be implemented to keep pace with recent changes in the trade environment."

Professor Lee also advised that South Korea should actively participate in discussions on the new trade system envisioned by the U.S. He said, "The new system the U.S. is considering will establish new rules in areas such as economic security, semiconductors, and shipbuilding, and these discussions are about to begin in earnest." He concluded, "The most urgent task is for South Korea to actively participate in the creation of new norms and frameworks centered around the U.S."