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TWN Info Service on WTO and Trade Issues (Aug19/05)
16 August 2019
Third World Network

US has more to lose if Trump pulls it out of WTO
Published in SUNS #8967 dated 15 August 2019

Geneva, 14 Aug (Chakravarthi Raghavan*) - In a speech on Tuesday (13 August) in Pennsylvania, a crucial state he must win for re-election in 2020, US 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, President Trump and his US Trade Representative (USTR) and other officials have been making such threats via Twitter and in speeches, as in his Pennsylvania speech.

The US has also been blocking consensus for setting in motion processes for filling in 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 or demands for changes in the WTO's Dispute Settlement Understanding (DSU).

In testimony to the US Congress, President Trump's USTR, Ambassador Robert Lighthizer, has said on record that the US was blocking the filling up of vacancies as this was the only way to get the WTO to change its rules.

However, almost a year or more since his testimony, he has refrained from telling the US Congress in detail all the specific changes the US wants in WTO Rules!

In his latest remarks in Pennsylvania, Mr. Trump claimed "unfair treatment" by the WTO to the United States and that Washington doesn't have to abide by WTO rulings!

He was specially critical of the terms granted to China when it acceded to the WTO!

Mr. 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 United States Trade Representative, Ms. Charlene Barshefsky, with her counterparts and authority in Beijing, and the WTO membership were asked to more or less accept it without change.

The records of the working party (and the minutes of its various meetings) also clearly show that as each of the conditions were presented through the Swiss Chairman of the Working Party, they were taken note of and adopted as part of China's accession conditions.

At that time, when other delegations friendly to the People's Republic of China (PRC) queried or raised questions, the Chinese vice-minister negotiating the accession in Geneva told them that his political masters in Beijing had agreed to it.

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

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

On balance, in the 18 years since China's accession to the WTO in 2001, the United States has benefited much more from the Chinese 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 and the rest of its membership 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 have to abide by the law itself.

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 abide by the rules of the system in good faith, or to withdraw from the WTO.

The US withdrawal would have a negative effect on international trade of other members, but the United States and its enterprises would lose more in terms of trade in goods, services or intellectual property protection.

(See Chakravarthi Raghavan (2019), "The WTO and its Existential Crisis" (Trade & Development Series No. 43), http://twn.my/publications_tnd.htm)

[* Chakravarthi Raghavan, Editor Emeritus of the SUNS, provided this commentary.]

 


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