MNI POLICY: US Free Trade Groups Urge Push For WTO Reform

By Brooke Migdon

     WASHINGTON (MNI) - President Donald Trump and Trade Representative Robert

Lighthizer should push to reform rather than kill the World Trade Organization's

dispute settlement system, ten U.S.-based free trade groups argue, citing

economic concerns and the threat of a crumbling global trading system.

     The U.S. announced last year that it would block the reappointment of one

of the WTO's then four remaining appeals judges, already down from the trade

organization's standard set of seven. Now only three remain -- the minimum for

the system to function -- and the terms of two expire in December.

     Without the appointment of more appeals judges, disputes such as the EU's

pending case against the U.S. over illegal subsidies provided to aircraft

manufacturer Boeing will likely stall. The WTO appellate body this month

authorized Washington to impose $7.5 billion in tariffs on EU goods in a

companion case, after it determined that Airbus, a competitor manufacturer to

Boeing, received illegal government subsidies from the EU. 

     "We are getting very close to crunch time," said Dan Pearson, a trade

policy fellow at Americans for Prosperity, a D.C.-based conservative political

advocacy group.

     --LEVERAGE

     But Pearson believes the December deadline isn't an inherent negative, and

can be used as a bargaining chip to reform the WTO to advance the nation's own

trade agenda.

     "The United States has quite a bit of leverage now," he said. "They've

gotten the whole world's attention. This is the time to use that leverage to get

some agreements on how the appellate body can be better run."

     Trump has previously said the WTO is a "broken" system and has accused it

of failing and cheating American workers. Since coming into office, Trump has

criticized international trade agreements like NATO and the Trans-Pacific

Partnership for similar reasons.

     But Trump's actions could suggest more than a singular desire to terminate

just one faction of the WTO, and alludes to a greater determination to leave the

organization altogether, according to Pearson.

     "It's not at all clear how committed the Trump administration is to

remaining in the World Trade Organization," he said, noting that the president

has "hinted" at an impending withdraw via his persistent criticism. "In that

context the appellate body dispute takes on a deeper significance. If the

administration chooses to let the appellate body die, is that just a first step

in backing away from the WTO and the global trading system that it underpins?"

     Pearson and nine other free trade advocates representing public policy

organizations addressed the president and Ambassador Lighthizer in a letter this

week calling for WTO reform rather than termination.

     The groups wrote that the uncertainty around the future of the WTO's

appellate body is "undermining the rules-based global trading system" and

"threatens the many U.S. jobs that depend on the global economy."

     --JOBS THREAT

     A complete departure from the current global trade framework would threaten

not only the U.S. economy, but the economies of other nations reliant on

international trade, which would indirectly impact American jobs, said Ryan

Young, whose libertarian think tank the Competitive Enterprise Institute

endorsed the letter.

     "There are a lot of livelihoods at stake," he said, adding that the

benefits of reviving the appellate body would be worth weathering a few policy

trade-offs.

     "It could mean a few steps back policy-wise," he said, noting the

possibility of greater trade barriers should dispute settlements favor other

countries. "But if the other option is complete withdraw from the process,

that's even worse. So the two options that we're realistically facing are bad

and worse. We choose bad."

     Multiple free trade advocates who added their names to the letter said the

initiative has not been recognized by the administration yet, but several

long-standing USTR "career officials" have also expressed concern over the

president's actions and the looming dissolution of the appellate body.

     "My sense is that basically all the appointed folks are on board with

this," Clark Packard, trade policy council for the R Street Institute, a

nonpartisan public policy research organization that signed the letter, said.

"But the president doesn't really have any clue about what's happening here."

     Packard said that the WTO appellate body's lengthy decision-making process

lies at the "crux" of the administration's complaints. Typically, a 60-day

period is given to file a panel report, but WTO cases often drag on for years.

Both the Airbus and Boeing cases have been in front of the WTO for more than a

decade. 

     "The WTO needs to speed up this process, but they only have three judges on

the appellate body right now," Packard said. "That makes the workload a lot

harder and becomes a sort of self-perpetuating cycle." 

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

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