WTO overreach has made it harder for the U.S. to counteract unfair trade practices, USTR argues.
For decades, the World Trade Organization (WTO) has unfairly targeted U.S. trade enforcement laws, effectively tying the hands of the United States as it moved to protect American workers and companies from trade cheating by countries like China.
Since his 2016 presidential campaign, Donald Trump has been highly critical of the WTO, even threatening to withdraw the United States from the organization. In December 2019, the U.S. blocked the appointment or reappointment of WTO judges, effectively suspending the work of the WTO's Appellate Body, a seven-person panel that hears disputes brought by WTO members.
Now the Trump administration is out with a new report further making the case that the WTO, specifically the Appellate Body, "has not functioned according to the rules agreed by the United States and other WTO Members." Authored by the office of the United States Trade Representative (USTR), the report asserts that the Appellate Body has failed to comply by its own rules and participated in “persistent overreaching.”
“For more than 20 years, successive Administrations and the U.S. Congress have voiced significant concerns that the Appellate Body has failed to function according to the rules agreed by the United States and other WTO Members,” Ambassador Robert Lighthizer said in a press release. “Unfortunately, the conduct of the Appellate Body has converted the WTO from a forum for discussion and negotiation into a forum for litigation.”
The USTR report finds that though the Appellate Body established to only serve as “a check in the rare event a panel report contained an egregious error,” it has increasingly asserted itself as a defacto “Supreme Court of International Trade” and frequently overturns the findings of the WTO’s panels.
Indeed, a 2017 study by Terence P. Stewart and Elizabeth J. Drake of the law firm Stewart and Stewart found that the WTO disproportionally targets U.S. trade remedy disputes, which have been the subject of five times as many WTO decisions as other nations. Though the U.S. accounted for only 12.73 percent of the trade remedy measures imposed by the WTO from 1995 to 2017, the U.S. was subject to 57.5 percent of the WTO’s decisions in trade remedy disputes.
It's worth pointing out that while Trump has been known to pick fights with, well, a lot of people, the criticism of the WTO's Appellate Body isn't new. Former President Barack Obama, for example, endeavored to resolve trade cheating through action within the WTO. But the Appellate Body often unfairly ruled against the U.S., drawing criticism from Obama administration officials.
Which brings us to today. If the WTO is to act an impartial dispute settlement system, then it must come to terms with its failures, USTR asserts in the report.
"The United States has always been a strong supporter of a rules-based international trading system and remains so," the report states. "The United States is publishing this Report – the first comprehensive study of the Appellate Body’s failure to comply with WTO rules and interpret WTO agreements as written – to examine and explain the problem, not dictate solutions. WTO Members must come to terms with the failings of the Appellate Body set forth in this Report if we are to achieve lasting and effective reform of the WTO dispute settlement system."