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THIRD WORLD ECONOMICS

US has more to lose if Trump pulls it out of WTO

In the wake of the US president’s latest threat to take his country out of the WTO, Chakravarthi Raghavan suggests that it may be time for the rest of the WTO membership to call the US bluff.

GENEVA: In a speech on 13 August in Pennsylvania, a crucial state for his re-election prospects in 2020, President Donald Trump threatened to pull the United States out of the World Trade Organization (WTO) if conditions are not improved.

Almost from the time he entered the White House, Trump and his US Trade Representative (USTR) and other officials have been making such threats via Twitter and in speeches.

The US has also been blocking consensus for setting in motion processes to fill vacancies on the WTO’s Appellate Body (AB), expressing dissatisfaction with the AB’s “unfair rulings” against the US and the need for systemic changes, but never putting forth its own proposals for changes in the WTO’s Dispute Settlement Understanding.

In testimony to the US Congress, USTR Robert Lighthizer has said on record that the US is blocking the filling up of AB vacancies as this is the only way to get the WTO to change its rules. However, about a year since his testimony, he has refrained from telling Congress in detail about all the specific changes the US wants in the WTO rules.

In his latest remarks in Pennsylvania, Trump claimed unfair treatment by the WTO to the US and that Washington doesn’t have to abide by WTO rulings. He was especially critical of the terms granted to China when it acceded to the WTO.

Trump and his White House have been strangers to truth and facts. As the records of the WTO working party on China’s accession negotiations (and the minutes of its various meetings) show, the terms of accession were negotiated by the then USTR Charlene Barshefsky with her counterparts and authorities in Beijing, and the WTO membership were asked to more or less accept these without change.

The records and minutes of the working party also clearly show that as each of the conditions for China’s accession was presented through the Swiss chairman of the working party, it was taken note of and adopted.

At that time, when delegations friendly to China raised questions, the Chinese vice-minister negotiating the accession in Geneva told them that his political masters in Beijing had given their agreement.

Only on one issue – on disputes relating to China’s currency issues –were the terms of the Chinese accession changed, following India’s objection to the wording, with the Chinese explaining that their own notes of the negotiations bore out the validity of the Indian objection.

Within the US, the Trump administration could blame the then Clinton administration for the terms of the Chinese accession, but in the context of the WTO and international commitments, it was the US that negotiated the terms and not only agreed to them but also pressured other WTO members to fall in line.

On balance, in the 18 years since China’s accession in 2001, the US has benefited much more from the accession and the WTO’s multilateral trading system and its rules than China or any other member of the WTO.

Now, the Trump administration appears to be engaged in a “blackmail game”, threatening the WTO that while other members should abide by the rules, the US, like the sovereigns of Europe in the Middle Ages, should remain the law-giver from time to time but does not itself have to abide by the law.

It is time for the WTO membership, other than the US, to call the US bluff and tell it to either be a member committed to abiding by the rules of the system in good faith, or withdraw from the WTO.

A US withdrawal would have a negative effect on international trade of other members, but the US and its enterprises would lose more in terms of trade in goods, services and intellectual property protection. (SUNS8967)       

Chakravarthi Raghavan’s latest publication is The WTO and Its Existential Crisis (Trade & Development Series No. 43, Third World Network, 2019, http://twn.my/publications_tnd.htm).

Third World Economics, Issue No. 686, 1-15 April 2019, p2, 5


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