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Trump's key trade adviser uses aggressive tactics to shake up WTO

US ambassador to WTO Dennis Shea says China's non-market economy is at odds with WTO norms

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Mr Shea says that without a major overhaul, the WTO risks losing the support of the American people.

Geneva

WHEN the US ambassador to the World Trade Organization (WTO), Dennis Shea, showed up to his first meeting in May, he excoriated his Chinese counterpart in the normally staid bureaucratic hall, saying he had "entered the realm of Alice in Wonderland - white is black, up is down."

Attendees were stunned by Mr Shea's rebuke, with a WTO spokesman describing the exchange with China's ambassador, Zhang Xiangchen, as "extraordinary in its intensity".

But the moment underscored President Donald Trump's priorities, his administration's unorthodox means of achieving its goals and his effectiveness at using an obscure organisation in Geneva to shake up the international order.

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The WTO oversees the rules for nearly US$20 trillion in trade every year and plays an integral role in the US effort to strong-arm China into ending policies Mr Trump says are unfair to American businesses and that have led to Beijing's almost US$300 billion trade surplus with the US this year.

"The biggest challenge is dealing with China, whose non-market economy is simply incompatible with WTO norms," Mr Shea said in an interview. "Without a major overhaul, the WTO risks losing the support of the American people."

Mr Trump has called the WTO the "single worst trade deal ever made". And while he would need congressional approval to follow through on a threat to leave, he's already set in motion measures that could paralyse the organisation's ability to arbitrate disputes by next year.

American tactics against the WTO have already borne fruit - leaders at the annual Group of 20 meeting agreed for the first time to push for reform of the organisation - which has led to concern that a Machiavellian approach to commerce could herald a downturn for both markets and consumers.

"The worst-case scenario for the global economy, for the consumer, for everyone on the surface of the Earth, is to have no rules, to have the law of the jungle," WTO director-general Roberto Azevedo said this summer. "Investors will pull back, the economy will lose steam and jobs will be lost - millions of jobs will be lost."

Mr Shea, 57, has focused on China, which he says has been taking advantage of the US and other WTO members. He's accused Beijing of stealing American technologies, subsidising industries to the detriment of others and selling its products in other markets at illegally low prices.

He's also been finding allies such as the European Union and Japan, though China continues to deny any wrongdoing vigorously.

"China, the world's largest exporter and an economic heavyweight, insists on being treated in the WTO like a much poorer member while maintaining a regime that is fundamentally incompatible with the rules and principles of this organisation," Mr Shea said during the US trade policy review in Geneva this month.

He developed his aggressive approach through a decades-long relationship with US Trade Representative Robert Lighthizer, the man Mr Trump has entrusted to carry out his "America First" agenda. "For Bob Lighthizer, having Dennis Shea as his deputy in Geneva is the perfect fit," said Greg Gross, who worked with Shea and Lighthizer when they were all part of Bob Dole's 1996 presidential campaign. "He knows well how effective and focused Dennis is and also how diplomatic he can be."

Mr Shea's most relevant experience for his current role came during the 11 years he spent as a member of the US-China Economic and Security Review Commission, which investigates national security and trade issues.

As the top Republican on the commission, he co-authored 10 reports to Congress that identified ways China was violating its WTO commitments. That deep understanding of China's impact on the US led Mr Lighthizer to tap Mr Shea as part of his USTR team with a conspicuously uniform drive to contain China's economic rise.

"Dennis isn't a bomb-throwing radical," said the current vice-chairman of the commission, Carolyn Bartholomew. "He's aware of the way that WTO rules have not been able to respond effectively to China's trade abuses." BLOOMBERG