October 10,2019

Grassley, Wyden Op-ed: The World Trade Organization is faltering. The US can’t fix it alone

The World Trade Organization is faltering. The US can’t fix it alone

By Senate Finance Committee Chairman Chuck Grassley and Ranking Member Ron Wyden 

With the World Trade Organization Public Forum underway in Geneva, it is time for members to confront and address the problems that are eroding the WTO's credibility and effectiveness. These are problems that, if left unresolved, will endanger the WTO's future relevance.

Today, the WTO is where nations negotiate the rules for international trade and resolve disputes that arise when a trading partner believes the rules aren't being followed. This trading system has been critical to helping reduce global poverty rates, which have shrunk even while the global population has expanded.

We support the WTO's mission, but we are growing frustrated that the institution is not fully and effectively performing its intended functions.

First, while the WTO was intended to be a forum for multilateral trade negotiations, it has proven difficult to come to agreements that give a fair shot to all nations, not just wealthier countries that can subsidize their industries.

In addition, some WTO members that have advanced economies are claiming "developing country status" in order to avoid their trade obligations. For years, economic powerhouses, like China, have relied on this self-designation to shirk WTO commitments in critical areas such as agriculture and illegal subsidies. This hinders progress for members that want to expand trade and commerce and undermines the integrity of the WTO itself. This is why we support the US proposal to change the way the WTO treats developing countries, which is targeted at strengthening the negotiating function of the organization.

Still, two ongoing projects offer the WTO a chance to get it right. Negotiations are underway to curtail the fish subsidies that have long promoted overfishing and unfair competition and to decrease barriers to e-commerce and digitally-supported trade. If concluded, these agreements would demonstrate that the WTO can still serve as the institution it was intended to be.

Second, while the WTO serves as a forum to settle disputes among its members, we have serious concerns about the degree to which the system is working. The Appellate Body -- the quasi-judicial review forum used to take a second look into dispute decisions -- has long strayed off course from its original form and function. Our concerns about systemic and procedural problems with the Appellate Body are not new, nor are they partisan. US presidents on both sides of the aisle have taken issue with Appellate Body members addressing issues that were not raised by the parties to involved in the dispute, taking longer than 90 days to decide appeals, and creating new rights and obligations for WTO members -- all against the terms of the Dispute Settlement Understanding.

We see great value in having an institution like the Appellate Body that ensures dispute panels faithfully apply the rules to which we all agreed. However, the Appellate Body also needs to operate as the members agreed.

Lastly, the WTO must improve its ability to monitor member states' trade policies and practices. Some WTO members, like China, consistently fail to meet their obligations to accurately report the subsidies they provide to domestic industries. In other cases, members have failed to disclose measures that affect international trade, such as India's ban on US agricultural products for alleged safety concerns, which the WTO ultimately found to be disguised protectionism, or China's various cybersecurity requirements on information and communication technology.

This is unacceptable. A number of countries regularly take advantage of other WTO members that comply with notification and transparency rules while ignoring their own obligations. The United States has advocated for measures that would incentivize the member states to abide by the rules by providing for consequences in cases of noncompliance, such as loss of privileges to chair WTO bodies.

Undoubtedly, there is a lot of work to do to fix these problems. The United States has long been a leader on these issues, but we can't do it alone.

The United States, Japan and the European Union have been discussing WTO reforms. Partnerships like this are essential to showing member states who consistently break the rules that their actions won't be tolerated. We encourage and welcome others to join us in these efforts.

The Bretton Woods experiment following World War II, which established the General Agreement on Tariffs and Trade (GATT) alongside the World Bank and International Monetary Fund, and the resulting creation of the WTO nearly half a century later, wasn't just about advancing US interests alone, it was about advancing our collective interests. For the WTO to succeed in this mission, its members must acknowledge its shortcomings -- particularly when it comes to enforcing or negotiating rules to confront unfair trade practices -- and work toward solutions to fix them.