| The headquarters of the World Trade Organization in Geneva, Switzerland (Photo: VNA)
After taking office in early 2017, President Trump voiced dissatisfaction with the WTO, an intergovernmental organization that regulatess international trade and provides a dispute resolution mechanism. Trump called WTO a “catastrophe” and accused it of treating the US unfairly.
President Trump said the US has no need for the WTO if it fails to close legal loopholes that benefit certain countries. He said some rich countries are considered “developing countries” and benefit from WTO policies, including advantages in dispute resolution procedures, lower tariffs, export subsidies, and weaker commitments. Trump said the WTO was established to benefit all countries except the US, and Washington has lost almost every lawsuit filed with the WTO. While calling for reform of WTO regulations, Washington has blocked all appointments to the appeals chamber as existing judges’ terms end, paralyzing the dispute resolution system.
Some observers said the real reason for Trump’s antagonism toward the WTO is his commitment to protectionism, which he believes will benefit the US more than free trade. This viewpoint contradicts WTO guidelines and purposes. But as a WTO member, the US is constrained by the organization’s principles.
Observers say the US, the world’s largest economy, plays a key role in the WTO and its withdrawal could wreak havoc. Outside the constraints of the WTO, the US could increase tariffs as much as it wants and other countries would be forced to take countermeasures, provoking a global economic crisis.
Leaving the WTO would cause multiple problems for the US businesses. WTO members could increase import tariffs on US goods and impose other demands that would make it difficult for US companies to compete in the global market. And the US could no longer use the WTO dispute resolution system to deal with unfair trade acts. Former WTO Deputy Director General Rufus Yerxa said the US could be isolated from the global economy.
The WTO was created in 1995 with a mission of facilitating free and fair trade. President Trump’s hard line on the WTO reflects Washington’s embrace of protectionism and presents a challenge to the WTO if it wants to maintain its role and power in global trade relations.