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TWN
Info Service on WTO and Trade Issues (Dec22/10) Geneva, 15 Dec (D. Ravi Kanth) — The United States has vociferously defended its allegedly controversial trade policies during its 15th Trade Policy Review (TPR) at the World Trade Organization on 14 December, insisting that it would pursue the Biden-Harris administration’s worker-centered trade policy regardless of the WTO rules, while “moving aggressively to protect its national security in this more challenging era.” The US gave a clear indication that it will address the current challenges and adopt trade policies and measures as required. It highlighted the “open and dynamic US economy” based on “America’s commitment to working with WTO Members” to improve the lives of its workers. But some of the elements narrated in its statement clearly suggest that the US could set aside the WTO rules in its aggressive pursuit of a “national security”-driven trade policy. In an opening statement at the 15th US TPR meeting on 14 December, the deputy US Trade Representative (USTR) and trade envoy to the WTO, Ambassador Maria Pagan, noted that the US received “more than 2,000 questions.” She expressed concern that “a handful of Members submitted voluminous questions that were neither constructive nor reasonable.” She said, “such an approach undermines the TPR process and limits opportunities for fruitful exchange.” Under the sub-title of “an Open Economy, Engine for the World”, Ambassador Pagan, in her statement, provided evidence as to how the US remains “the world’s largest single-country importer” by purchasing “17.6 percent of goods and services exports from the rest of the world, not including exports within the European Union.” “Seventy-seven countries count the United States as their first, second, or third largest export partner,” she claimed. Ambassador Pagan said that while the US tariffs are among the lowest, “US regulatory processes are transparent, accessible, and open to the public, including to non-US citizens.” According to the US trade envoy, the US “is also the world’s largest investor with FDI outward stock of 9.8 trillion dollars” and thereby, remains “a critical driver of global economic growth, higher living standards, and sustainable development.” Insisting that the US is committed to “development and economic cooperation”, Ambassador Pagan provided an account of the developmental aid provided through the US Agency for International Development, or USAID, with the partnerships being “driven by host-government priorities.” “Programs are delivered in a wide variety of formats to suit the need,” she said. They range from single-country projects to regional trade programs to global facilities that are positioned to provide on-demand technical assistance, she added. The US said that it is “working closely with our African partners to overcome the challenges of the pandemic, for instance, by helping governments and organizations that procure public health goods to digitize their procurement processes, increase collaboration among national health agencies, and mitigate delays at the border for donations.” In Sub-Saharan Africa, the US said it distributed critical vaccines, including through the US Initiative for Global Vaccine Access. “These are just a few examples of our sustained commitment to trade-related technical assistance and capacity building,” it added. Speaking on the US commitment “to the WTO and the multilateral trading system,” the US trade envoy gave an account of the central role played by the US “in creating the GATT and subsequently the WTO, joining other like-minded countries to negotiate rules dedicated to openness and transparency, and to fair, market-oriented competition, grounded in the rule of law and predicated on values that benefit all.” CHANGED TIMES Noting that the world has turned over many times since 1947, and again since 1995, Ambassador Pagan said “we now find ourselves in far different circumstances that require careful examination of some long-held assumptions.” Emphasizing the Biden-Harris administration’s belief “that working pragmatically with partners in all corners of the globe, and at all levels of development, is necessary to better the lives of our people,” Ambassador Pagan said “that purpose – bettering the lives of our people – lies at the heart of the WTO and at the root of our commitment to this organization.” The Marrakesh Declaration and Agreement, which led to the establishment of the WTO in 1995, clearly recognized “that trade should raise living standards, ensure full employment, pursue sustainable development, and protect and preserve the environment,” she said. Ambassador Pagan said that it must be acknowledged that members have, “at times, lost focus on the WTO’s foundational objectives.” She said that gains “from trade for consumers are elevated while the impact on our producers and workers is downplayed,” adding that “people are workers, not just consumers.” She argued that “economic models that predict overall welfare gains from trade assume a perfectly level playing field, but fail to account for how the world actually works.” In essence, “the playing field is not level,” she said, pointing out that “gray areas in the rules are easily exploited to the detriment of our workers, our communities, and our industrial development.” A “NEW” WASHINGTON CONSENSUS For the first time, the US, which promoted the Washington Consensus that required governments to pursue liberalization in the trade and finance sectors, has now come to realize that “liberalization has benefits but also comes with costs; fragmented supply chains generate vulnerabilities.” Worse still, according to Ambassador Pagan, “de-industrialization decimated some of our manufacturing communities.” She suggested that “economic efficiencies helped keep prices low, but they also encouraged a race to the bottom in protecting workers and the environment.” Noting that “the past three years have revealed vulnerabilities in global supply chains”, she said “we did not always have critical equipment and goods when and where we needed them.” She said that the Biden-Harris Administration responded with urgency, establishing the Supply Chain Disruptions Task Force “to address immediate bottlenecks and ultimately build a more resilient, globally competitive goods movement chain.” Ambassador Pagan observed that “Russia’s full-scale invasion of Ukraine is causing unimaginable death and destruction in Ukraine,” adding that the “war against Ukraine has also wreaked havoc on critical global supply chains.” She stressed that the US “will continue to support Ukraine’s courageous efforts to uphold its territorial integrity and protect its population.” “Working with our partners and allies,” Ambassador Pagan said that the US will “continue to take all appropriate measures to defend the rules-based international order that Russia has so egregiously violated.” SAYING “GOODBYE” TO WTO MINISTERIAL MANDATES “In this more challenging era,” Ambassador Pagan said, “it is even more important for trade – and the WTO’s role in the multilateral trading system – to be a force for good.” She said that “there is a perception that deliberations at the WTO do not reflect the lived experiences of regular people, including the insecurity and fragility they feel.” “That must change,” she said, emphasizing that “for the WTO to be relevant, our work here must help improve the lives of regular people.” Without mentioning that in a rules-based organization like the WTO where issues can only be addressed based on ministerial mandates, she said “members must be able to work here to tackle global challenges as they arise.” It is against this backdrop that Ambassador Pagan said the US is “moving forward to adapt our trade policies and initiatives to the circumstances of today, by pursuing fair competition, addressing the climate crisis, protecting our national security, and making the trading system more resilient, sustainable, and inclusive.” Even though the issue of trade and labour has remained outside the ambit of the WTO since the WTO’s Seattle Ministerial Conference in 1999, the US trade envoy said “the Biden-Harris Administration continues to advance a trade policy that stands up for workers’ rights.” The US, she said, “will work with our partners and allies to chart new trade rules that advance decarbonization and other critical environmental standards, support sustainable farming, and promote sustainable and resilient supply chains.” Ambassador Pagan seemed to support strong environmental and labour standards, while saying that “non-market policies and practices, including industrial targeting, also violate notions of fair competition.” The deputy USTR said that “to seriously combat the climate crisis, there is an urgent need to increase investments in clean energy technologies.” Commenting on the controversial US Inflation Reduction Act, and the Bipartisan Infrastructure Law, she said both “are key tools to meet these critical objectives. Both laws provide incentives to encourage a rapid transition to clean transport.” She defended both laws, saying that “they ensure we can create more diverse and robust supply chains and promote the domestic adoption of clean vehicles.” On another controversial issue concerning specific subsidies allegedly provided to electric vehicle production, Ambassador Pagan said “the starting point should be the importance of working to achieve our overall climate, supply chain, and related goals in parallel – and to do so in a way that will have support from our stakeholders.” PROTECTING NATIONAL SECURITY Close on the heels of suffering a major loss in a trade dispute involving US Section 232 tariffs on imports of steel and aluminum products on national security grounds, Ambassador Pagan said “the United States is also moving aggressively to protect its national security in this more challenging era.” “US national security requires that we catalyze long-term growth in the domestic semiconductor industry and advance US leadership in R&D,” she emphasized. She went on to defend the $50 billion appropriated under the CHIPS Act of 2022 for semiconductor manufacturing and R&D activities, insisting that “from the text of the law, the contemplated support is consistent with the WTO agreements, including the Subsidies Agreement.” China has already initiated dispute settlement proceedings at the WTO against certain provisions in the CHIPS Act. Although the US called for building “a trading system that is more resilient, sustainable and inclusive”, it also emphasized the launch of the Indo-Pacific Economic Framework (IPEF) by Washington among 14 partners. The underlying aim of the IPEF, Ambassador Pagan said, “is to develop a modern economic arrangement that delivers broad-based economic connectivity, benefits our workers, combats climate change, builds resilient supply chains, and levels the playing field for our companies.” Arguing that “the WTO also needs to adapt if it is to retain its value in an ever-changing world,” Ambassador Pagan said, “WTO rules are important, but they are not an end in and of themselves nor are they immutable or static.” She said, “individuals adapt to changed circumstances; democratic governments respond to the changing needs of our peoples; and the WTO as an institution must similarly evolve.” Pointing out that the “WTO as an institution is a collection of the membership,” Ambassador Pagan maintained that “first and foremost, we must all make the effort to engage differently at the WTO – in committees, in negotiations, and in resolving disagreements.” It is not clear whether the US is seemingly suggesting that members eschew the multilateral negotiations by opting for plurilateral resolution of issues/challenges, said a trade official, who asked not to be quoted. In her statement, Ambassador Pagan said members “don’t need to agree on everything, but we must agree on one thing – that we will engage more constructively.” Also, members “must reform by doing,” she said, recalling her complaints about how much time is wasted on process-related issues. “Process is necessary, but it should not be used to prevent willing members from talking to each other,” she argued. According to Ambassador Pagan, the US “was the first Member to table a reform proposal five years ago and we intend to remain at the forefront of these reform efforts.” She said that considerable good work is taking place at the WTO on issues like “trade facilitation, TBT (technical barriers to trade), and SPS (sanitary and phytosanitary measures).” She said, “the transparency elements are vital and valuable, and we fully support this work.” +
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