In an interview at the G20 meeting, Scott Morrison tells Fairfax the US-China trade war is a chance to look at the rules

This article is more than 2 years old

This article is more than 2 years old

The Australian treasurer, Scott Morrison, has said the global trading system has failed and ought to be subject to a broad review, according to reports.

The World Trade Organisation (WTO) system was “built for a different time” and the current trade war between the US, Europe and China could provide the opportunity to take a closer look at “how those rules work and how they’re operating”, he was quoted as saying.

Morrison’s comments, reported by the Australian Financial Review, will likely be welcomed by US president Donald Trump, who has repeatedly criticised the WTO’s trade rules.

Earlier this month, Trump said the WTO had treated the US “very badly for many, many years”, putting the US at a trade disadvantage, and in recent days he flagged his preparedness to expand his roster of tariffs on Beijing to US$500bn (A$674bn), covering almost every product imported to the US from China.

The International Monetary Fund warned last week that rising trade tensions between the US and the rest of the world could cost the global economy US$430bn, with America “especially vulnerable” to an escalating tariff war.

Australian stocks suffered their biggest fall in four months on Monday, when the ASX 200 lost 0.9% of its value thanks to concerns about the impact of a trade war.

Morrison attended the 2018 G20 Buenos Aires summit over the weekend, where the global trade war was much discussed.

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Afterwards, he told Fairfax it may be difficult to reduce the tensions contributing to the current trade impasse without considering the chronic problems that have plagued the global trading system for years.

“It needs to be looked at in the broader context of how the system has failed to deal with these long-standing issues, and that’s something we discussed with the Americans,” he said.

He didn’t spell out what changes he thought were necessary, but global trade experts have increasingly been critical of the WTO’s inability to resolve trade disputes within a reasonable time frame.

They say the break-down in the WTO’s processes has coincided with an increase in bilateral and preferential trade agreements between smaller numbers of nations, leaving the WTO on the sidelines.

Trump has also been pushing his G7 allies – the UK, Germany, France, Canada, Japan, and Italy – to abolish tariffs, non-tariff barriers, and subsidies.

Morrison said French officials had also been lobbying countries at the G20 summit at the weekend to review the WTO’s processes and rules.

Before the G20 meeting last week, Morrison said he would be raising with his foreign counterparts the current problems with global trade.

“Economic integration from open trade and investment has benefited Australia greatly,” he said. “I will use the meeting to stress to my colleagues the importance of keeping markets open. History is clear: when trade barriers go up, growth and jobs go down.”

Morrison met with the US treasury secretary, Steven Mnuchin, the UK chancellor, Philip Hammond, Canada’s finance minister, Bill Morneau, the Netherlands finance minister, Wopke Hoekstra, the president of the European Central Bank, Mario Draghi and the managing director of the International Monetary Fund, Christine Lagarde.

He also used the forum’s tax session to remind his counterparts that the G20 needed to keep working together to crackdown on multinational tax avoidance.