Luxembourg and the WTO

    For Luxembourg, a minuscule country in size and influence in the World Trade Organization, their relationship with the WTO has been mostly non-consequential. This can be seen immediately through a few telling statistics. A WTO report of Luxembourg's trade relations details the following (Luxembourg):

• 77.5% of merchandise exports go to European union.
• 77.1% of merchandise imports come from European union.
• 74.6% of commercial services exports go to EU.
• 65.4% of commercial services imports come from EU. 

What this trade profile says, in effect, is that without membership in the WTO, Luxembourg would maintain their most robust trading parter, since they are a member state of the EU, and any losses in trade could be easily made up through EU trade agreements with non-member states. This isn't to say that Luxembourg's membership has been detrimental to their macroeconomic trade; it simply has not moved the needle all that much.

    With that being said, Luxembourg's relationship with the WTO could soon turn sour because of rocky EU and WTO relations. In 2019, the WTO allowed the United States to impose tariffs on some EU products to counteract what the U.S argued were unfair subsidies to European aerospace giant Airbus. The EU took these tariffs to court, but a panel of three judges allowed them to stand (WTO Formally Backs). These tariffs could harm Luxembourg's exports to the United States, which are mostly industrial goods that are subject to the new tariffs (Luxembourg). In response to this situation, the EU tried to levy tariffs on the United States due to subsidies to their aerospace giant Boeing. This time, however, the WTO looks primed to block the tariffs (EU Is 'Very Concerned'")! This could harm Luxembourg's economy as well, since it further damages their robust industrial sector.

Works Cited

“EU Is 'Very Concerned' by Delayed WTO Decision on Tariffs vs U.S.” Reuters, Thomson Reuters, 25 June 2020, www.reuters.com/article/us-usa-trade-eu/eu-is-very-concerned-by-delayed-wto-decision-on-tariffs-vs-u-s-idUSKBN23W2L7.

“Luxembourg” WTO Trade Profiles, WTO, 2018, www.wto.org/english/res_e/statis_e/daily_update_e/trade_profiles/LU_e.pdf

“WTO Formally Backs US Tariffs on EU Goods.” CNBC, CNBC, 14 Oct. 2019, www.cnbc.com/2019/10/14/wto-formally-backs-us-tariffs-on-eu-goods.html.