WTO Disproportionately Targets U.S. Trade Enforcement Laws

New white paper outlines America's concerns with WTO

WASHINGTON, DC— By overstepping its mandate and disproportionately targeting America’s trade enforcement laws, the World Trade Organization (WTO) is threatening the United States’ ability to protect manufacturers and workers from unfair trade, according to a new white paper distributed by the Alliance for American Manufacturing (AAM).

“As this report shows, in decision after decision, the WTO has ruled against the U.S. and weakened our laws designed to fight back against subsidies and illegal dumping,” said Sen. Sherrod Brown (D-Ohio). “Rather than providing American steel companies with a way to crack down on Chinese cheating, the WTO has undermined the tools our businesses need to defend themselves and their workers."

The U.S. – just one of the WTO’s 164 members – has been the disproportionate target of 58 percent of the WTO’s decisions in trade remedy disputes. And, of those decisions, the WTO panels or appellate body has ruled against the U.S. over 90 percent of the time, according to the paper titled “How The WTO Undermines U.S. Trade Remedy Enforcement.”

"The U.S. is fully within its rights to defend against illegal foreign dumping and subsidies,” said AAM President Scott Paul. “But activism by WTO Appellate Body members is chipping away at our manufacturing sector and the ability of hardworking Americans to earn a decent living.”

"We need a reset of our trade relationship with China, starting with a reset at the WTO, said Brown. "This is something I’ve called for, and I’m encouraged by the news from the White House this week that they’re preparing a plan to bypass the WTO and take direct action against China and other countries where we have trade disputes.”

Legal scholars, other WTO members, and President Trump’s nominee to be U.S. Trade Representative have all criticized the WTO dispute settlement process for going beyond its mandate and creating new rights and obligations beyond those agreed to by its membership. The paper’s authors raise the prospect of forming a coalition with other WTO members to mount a coordinated campaign to reform the Appellate Body. In addition, it highlights a longstanding proposal that suggests WTO members establish an independent Commission of legal experts to determine whether the WTO panel has deviated from review standards.

The recommended review is especially timely as the Financial Times reported on Monday that the Trump administration is “exploring alternatives to taking trade disputes to the World Trade Organization in what would amount to the first step away from a system that Washington helped to establish more than two decades ago.”

"Given the track record of the WTO decisions being disproportionately stacked against the U.S., it is no surprise that the Trump administration may want to push back," said Paul. “This is a fight worth having, as there are significant risks to American workers and U.S. companies if the WTO continues to chip away at our rights.

“The WTO has taken overreaching actions that put its very existence at risk. Our message is clear: Reform your ways, or understand that the U.S. will look at every option to defend our industries and workers against unfair competition.”

Related:

  • The WTO’s dispute processes gained new attention in December 2016 when China challenged the United States’ continued practice of treating the country a “non-market” economy. Under U.S. law, China is obligated to meet six qualifiers before being upgraded to market economy status; however, China met none of the criteria.
  • For years, China has dumped massive amounts of steel into the global marketplace, and has funded its industrial overcapacity through state-owned enterprises. As a result, approximately 15,000 American steelworkers have lost their jobs since 2015.

To read the full paper visit AmericanManufacturing.org.