The United States needs the World Trade Organization

The policy failures of the Trump Administration are legion. The more than 100,000 deaths of United States citizens from COVID-19 are the most spectacular and tragic example of this. But many more such failures can be found below the surface of public attention. One of these is the U.S. government’s relationship with the World Trade Organization (WTO).

The WTO was largely designed by and for the United States. Pick any features of it and the link to U.S. interests is clear. The WTO is sometimes described as a “tripod,” with the three legs of trade in goods, trade in services and trade-related intellectual property. Regarding trade in goods, the U.S.  insists on violating basic WTO principles to subsidize agriculture and has been doing so now for over half a century. If, say, Thailand were to subsidize is electrical machinery sector, it would run afoul of a WTO principle. But the U.S. can and does subsidize its agricultural sector with abandon.

The WTO agreement on trade in services was explicitly written to support the U.S.-based, Coalition of Service Industries, which lobbied strenuously for its inclusion. The purpose of the services agreement was to support the U.S. financial, telecommunications and business/professional services sectors. The requirement to include trade in services as part of the WTO was a non-negotiable position of the United States, and it naturally prevailed. The U.S. services sector has benefitted ever since.

The WTO agreement on intellectual property was also explicitly written to support U.S. economic interests, particularly a committee of U.S.-based businesses that authored a position paper under the direction of IBM. Many prominent international economists argued that intellectual property protection had no place in the WTO, but they were ignored. The inclusion of intellectual property as part of the WTO was another non-negotiable position of the United States, and it again prevailed. Given the radically broad scope of the agreement across intellectual property of all kinds, U.S. businesses have reaped significant benefits.

Finally, there are the dispute resolution provisions of the WTO. These were also written with U.S. interests in mind, namely, to enforce U.S. wins in services and intellectual property. While other WTO members have successfully brought dispute settlement cases against the United States, the U.S. has also had many significant wins, including against China. In writing the dispute settlement agreement, the United States inadvertently created the most robust dispute settlement system in the world, one that could be used as a model for other realms of conflict.

Despite the WTO’s significant contribution to maintaining an open trading system, as well as to global and U.S. prosperity, the Trump administration has undermined it. It has threatened to withdraw from it altogether, a sort of trade tantrum.

Short of this, it has sabotaged the very WTO dispute settlement system that the United States designed. The main motivation here seems to be not practical but ideological, a loathing of all things multilateral. This blindly nationalistic posture risks undermining the actual economic interests of the United States, representing a self-inflicted, commercial wound.

Then came the COVID-19 pandemic. U.S. Trade Representative Robert Lighthizer considered 100,000-plus deaths an opportunity to reshape trade relations and had the audacity to refer to these trade relations (and not the pandemic) as a “disease.”

But the pandemic crisis makes open trading relations more rather than less important, particularly in the case of medical supplies, pharmaceuticals and food. Unfortunately, pandemic subsidies will cause increasing amounts of countervailing actions, and generally nationalistic postures might completely undermine the system altogether, exacerbating recessionary effects, including in the United States.

The United States needs the WTO, an organization largely designed for its own interests. The current pandemic makes that need greater than it has ever been. During the current crisis, U.S. politicians must take note and defend the WTO from the Trump administration.

Kenneth A. Reinert is a professor of public policy and director of the International Commerce and Policy Program at the Schar School of Policy and Government at George Mason University.