MNI POLICY: Congress Likely to Reject WTO Withdrawal Bill

--Lawmakers Push Decoupling Amid Upturn in China Trade Discord

By Ryan Hauser

     WASHINGTON (MNI) - Republican lawmakers showed renewed interest for

legislation pushing the economic decoupling of U.S.-China relations despite a

more upbeat call between trade officials on Thursday.

     U.S. Senate Majority Leader Mitch McConnell said Thursday he expects

Congress will soon work to pass bipartisan legislation calling on the Trump

Administration "to use targeted sanctions against those responsible for the

repression" of China's Muslim minority groups.  

     That same day, junior United States Senator Josh Hawley (R-MO), introduced

a joint resolution to the House and Senate calling for the U.S. to leave the

World Trade Organization, a proposal that is unlikely to succeed, former WTO

officials told MNI.

     Despite rising pressure in Congress, top trade negotiators from both

countries late Thursday pledged to make progress implementing the Phase One

trade deal and the Commerce Department was reportedly close to signing off on a

rule change that would slightly ease export controls on Huawei by allowing U.S.

companies to work more closely with the Chinese company on 5G standard-setting.

     --WTO WITHDRAWL UNLIKELY

     Senator Hawley "is trying to do what Trump and Lighthizer have threatened

to do in the past," but Congress "won't act on it because doing so would create

more economic disruption while we're in the middle of the biggest economic

crisis since the Great Depression," Peterson Institute senior fellow Jeffrey

Schott told MNI. The resolution does, however, "put pressure on other WTO

members to accept US demands for WTO reforms, especially in the area of dispute

settlement," he said.

     "US withdrawal seems very unlikely," said Simon Lester, a former legal

officer for the WTO appellate body. "In past votes, withdrawal was rejected by

wide margins" in Congress, and "there doesn't seem to be any momentum for

withdrawal this time either," he told MNI.

     Senate Finance Committee Chairman Chuck Grassley's office said that it

"agrees with the Trump administration that the World Trade Organization is in

need of reform" but added that "withdrawing from the WTO would only leave a

vacuum for China to fill and diminish America's position of strength." 

     Earlier this week, Hawley's op-ed in the New York Times proposed abolishing

the WTO, which he said diminishes American economic vitality while empowering

China. But all the U.S. can do, however, is withdraw, and "it's virtually

certain that the other 163 members would continue on without us," said National

Foreign Trade Council President Rufus Yerxa, a former diplomat with the WTO and

USTR.  

     The effects of a possible WTO exit would be disastrous, Yerxa told MNI. "In

practical terms," he said, "we'd leave China, Europe and others in charge of

rewriting WTO rules without us," and remaining countries "would all be free to

raise discriminatory barriers against us and make us the odd man out in world

trade."

     "Of course the WTO needs to better address China's worst behaviors," said

Yerxa, adding that Hawley "should push for reform instead of advocating

abolishment." 

     "You don't burn down your house just because a few rooms need renovating,"

said Yerxa.

--MNI Washington Bureau; +1 202 371 2121; email: ryan.hauser@marketnews.com

[TOPICS: M$U$$$,MI$$$$]