Business | Economy
WTO tells US to cut trade barriers and raise exports
The US should cut barriers to its markets to help it tackle economic turmoil, and boost exports to deal with its current account deficit, the World Trade Organisation (WTO) said.
- Reuters
- Published: 23:39 May 16, 2008
Geneva: The US should cut barriers to its markets to help it tackle economic turmoil, and boost exports to deal with its current account deficit, the World Trade Organisation (WTO) said.
Further adjustment and reforms by the US would lessen distortions in global markets and strengthen the global trading system, as the US is the world's big-gest economy and trader, it said in a trade policy review due to be published on June 9, a copy of which was obtained by Reuters.
"In the face of the economic uncertainty prevalent in early 2008, US welfare would be best promoted by exploiting the adjustment capacity of the US economy and continuing to reduce barriers to market access and other distorting measures, including those that result from high levels of assistance in agriculture and energy," the WTO said.
US exports and imports continued to expand faster than GDP over the past couple of years, the WTO noted.
Capital inflows
And foreigners' willingness to invest in the US has been vital in generating large capital inflows to fin-ance the current account deficit.
"However the sustainability of the deficit cannot be taken for granted, and as such carries certain downside risks including an increase in protectionist sentiment," it said.
Measures to restrict trade would not be appropriate as the deficit reflects a gap in savings and investment, it said.
The US may need to boost its savings rate while maintaining its traditional openness that allows US producers and consumers to access foreign goods, services and capital.
"Reducing the current account deficit is also likely to require expanding US exports, which would be facilitated by a more liberal trading system and stronger demand growth outside the US," it said.
Although the US is a strong supporter of the global trading system and a comprehensive deal in the long-running Doha round to open up world trade, it has not fulfiled all its international obligations, the WTO said.
These include notifying agricultural tariff quotas and government procurement statistics and fully implementing WTO rulings on intellectual property rights and anti-dumping.
The WTO urged the US to ensure that amendments in 2007 by Congress to the way the Executive reviews the national security implications of foreign direct investment do not undermine predictability for foreign investors.
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