The U.S. Rejection of the WTO and its Dispute Settlement System — Trump and Now Biden — Too Bad.

 

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      Both the Trump administration and now the Biden administration have attacked the WTO’s dispute resolution system, unjustifiably.

    This attack has grown even more intense in the last two months when two panels ruled in favor of China and against the U.S. In both cases the panels rejected the U.S. defense of national security under Gatt Article XXI. (In cases involving Section 232 tariffs on steel and origin markings.) Another WTO panel ruled a bit earlier against the United States concerning its Section 301 imposition of tariffs alleging improper Chinese IPR practices.

     All these cases have now been appealed to the defunct Appellate Body process — which the United States caused by blocking appointments to that body.

     This has led to the situation where China is now both championing the rule of law in trade relations and the disputed resolution system of the WTO. A system in which the U.S. was the architect.

      A good piece that appeared this week discusses this unfortunate foreign policy of the United States. Here are some excerpts.

 

  • Such was Donald Trump’s distaste for the WTO that he threatened to pull the United States out of the organization altogether. It’s debatable whether this could be done without the approval of Congress, but the subtleties of Constitutional interpretation were never Trump’s forte. In the meanwhile, his associates dismantled the WTO’s dispute settlement system and challenged many of the basic precepts of the organization including special treatment for developing countries and the use of national security exemptions to aggressively stymie exports from other countries. 
  • President Biden has put far greater emphasis on alliances, the environment, and on human rights. He has shown respect for his allies, and he seems to listen to what they say. One area where little has changed however is trade and this is particularly true with respect to the WTO. Gone are the bombastic rhetoric and pugilistic protectionist actions. In its place is a kind of sneering indifference, a view that supporting, let alone leading the WTO. 
  • The US “effort” at reforming the Dispute Settlement System of the WTO is equally opaque. The Trump administration had deliberately crippled the dispute system by blocking the appointment of the seven jurists who serve on the Appellate Body. While the wider membership was dismayed at the US tactics, Trump administration officials quite skillfully laid out the case against the Appellate Body, convincingly arguing that the AB had been overreaching its mandate and taking up issues not under appeal. What US officials Lighthizer and Shea never explained was how this should be fixed. 
  • The December dispute settlement panel decisions on against the US on its steel and aluminum tariffs will complicate reform efforts. The four cases, in which Lighthizer used a Kennedy administration statute to justify the tariffs on national security grounds, applied against exports from China, Norway, Switzerland, and Norway …. The USTR press release condemning the ruling proved him right. Still, the Biden administration cannot be singled out on this point. Previous administrations had expressed similar indignation at the possibility that WTO lawyers might weigh in on what constitutes the national security interest of a superpower. 
  • Another country that has taken note is China. Filling the void left by the United States has been a hallmark of Beijing’s foreign and economic policy for some time.

                                       “Disintegration of the WTO.” (2023)

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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