U.S. Takes Steps To Sideline The World Trade Organization

Dec 10, 2019
Originally published on December 11, 2019 1:39 am
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RACHEL MARTIN, HOST:

President Trump has long complained that the United States is a loser on the playing field of global trade. Now his administration is going after the ref. The United States is taking action to sideline the World Trade Organization, which has been the chief enforcer of global trading rules. Allies say the president simply wants to reform the organization. Critics say he is tearing it apart. Here's NPR's Scott Horsley.

SCOTT HORSLEY, BYLINE: You might not think the World Trade Organization would have much to say about solar rooftops in Connecticut, but it does. For years, Connecticut, like other states, has offered rebates to homeowners who invest in solar panels.

SELYA PRICE: The goal was really to encourage adoption of residential solar projects.

HORSLEY: Selya Price is with Connecticut's Green Bank, which runs the program. For a while, the state offered an extra incentive to homeowners who bought solar equipment that was made in Connecticut. Not many did. Nevertheless, India challenged that provision, along with similar buy local measures in other states, and the World Trade Organization ruled in India's favor, saying it's illegal for the U.S. to champion domestic products over foreign imports. President Trump complains that as an international trade referee, the WTO is taking advantage of the U.S.

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PRESIDENT DONALD TRUMP: We never used to win before me because before me, the United States was a sucker.

HORSLEY: In fact, since the WTO's founding, the U.S. has enjoyed a good track record of winning cases there. But as of today, the appellate body that decides those cases and rules on trade disputes between countries is losing its power. Term limits have left six out of seven seats on the appellate body vacant, and the Trump administration is blocking the appointment of replacements. U.S. Trade Representative Robert Lighthizer says the administration is fed up with an appellate body that drags its feet, makes its own rules and fails to deal with trade challenges posed by countries like China.

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ROBERT LIGHTHIZER: We clearly need reform. Every other country, or almost every other country, has made this same point.

HORSLEY: Previous administrations have raised similar complaints, but none has gone so far as to cripple the WTO's enforcement body. Carla Hills, who had Lighthizer's job in the first Bush administration, acknowledges the WTO needs modernizing to deal with 21st-century challenges like digital trade and powerful state subsidies in China.

CARLA HILLS: It's kind of like having an old house that didn't have a washing machine. It needed to be upgraded. That doesn't mean you knock down the house.

HORSLEY: Hills warns that without a functioning appellate body to decide cases, countries may be tempted to ratchet up tariffs and make other hostile trade moves.

HILLS: I think it's a law of the jungle.

HORSLEY: From its inception in the 1990s, the WTO was designed to prevent big, powerful countries from throwing their weight around. Trump, however, likes the freedom to squeeze other countries and drive a hard bargain, just as he did in his business career. Veteran trade lawyer Scott Lincicome says whatever the shortcomings of the WTO, Trump is wrong to hamstring its enforcement arm.

SCOTT LINCICOME: The United States has long been a champion of the WTO, not only because it wins cases but because it sees tremendous value in having a functioning multilateral trading system and a dispute settlement body.

HORSLEY: Other observers are more sanguine about the president's tactics. Thomas Duesterberg, who is a senior fellow at the Hudson Institute, says with a trade referee sidelined, countries will simply have to negotiate their own agreements and perhaps work together to build a new trading framework.

THOMAS DUESTERBERG: I think in the long run, the interests not only of the United States and Europe, but also like-minded countries like Japan, Australia, Korea, will lead us to a point where we'll find a way.

HORSLEY: In the meantime, the president will have more leeway to pursue trade policies he calls America First.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF FUNK OFF'S "LIVING OFF") Transcript provided by NPR, Copyright NPR.