Doomsday For Global Trade
Jan 07, 2020| Doomsday for global trade
America has had some wins at the WTO: against the European Union for subsidies to Airbus, an aircraft-maker;
and against China for its domestic subsidies; theft of intellectual property; controls on the export of rare earths,
which are used to make mobile phones; and even its tariffs on American chicken feet.
But it has also been dragged before the appellate body repeatedly,
in particular by countries objecting to its heavy-handed use of "trade remedies": tariffs supposed to defend its producers from unfair imports.
Time after time, it has lost. In such cases, it has generally sought to become compliant with the rules rather than buy the complainant off.
Though previous administrations had grumbled, and occasionally intervened in judges' appointments, the Trump administration went further.
Its officials complained that disputes often dragged on much longer than the supposed maximum of 90 days,
and—more seriously—that the appellate body made rulings that went beyond what WTO members had signed up to.
They made it clear that unless such concerns were dealt with, no new judges would be confirmed.
Judicial overreach is in the eye of the beholder. Losers will always feel hard done by,
and America has been quick to celebrate the WTO's rulings when it wins.
But plenty of others think that the appellate body had overstepped its remit.
A recent survey of individuals engaged with the WTO, including national representatives, found that 58% agreed with that verdict.
Getting so many countries to sign up to the WTO was a remarkable achievement.
One way negotiators managed this was by leaving the rules vague, and papering over their differences with ambiguous language.
Take "zeroing", for example: using dubious mathematics to calculate defensive tariffs on unfairly traded imports.
The Americans claim that the rules do not say they cannot do it. But others counter that the rules do not say they can.
It is such long-running differences that have set the scene for the latest showdown.