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February 17, 2020

U.S. Government Outlines Faults Of WTO Dispute Settlement System

On February 11, the Office of the U.S. Trade Representative (USTR) issued a 174 page report outlining the U.S. government’s criticisms of the World Trade Organization’s (WTO) dispute settlement system. The report alleged that the WTO’s Appellate Body has consistently failed “to apply the rules of the WTO agreements in a manner that adheres to the text of those agreements.”

Specifically, the USTR said, “the Appellate Body has added to U.S. obligations and diminished U.S. rights by failing to comply with WTO rules, addressing issues it has no authority to address, taking actions it has no authority to take, and interpreting WTO agreements in ways not envisioned by the WTO Members who entered into those agreements.”

The USTR concluded that “this overreaching violates the basic principles of the United States Government” and that “there is no legitimacy under our democratic, constitutional system for the nation to submit to a rule imposed by three individuals sitting in Geneva, with neither agreement by the United States nor approval by the United States Congress.”

The report goes on to provide several examples to support its arguments and to explain how those examples have harmed the United States and prevented the country from “counteract[ing] economic distortions caused by non-market practices of countries like China that hurt our citizens, workers, and businesses.” (As a reminder, the Metals Service Center Institute was part of the Manufacturers for Trade Enforcement coalition, which fought for retention of non-market economy status for China. The U.S. Department of Commerce announced in 2017 it would keep that designation.)

Though the report does not offer solutions, it says “WTO Members must come to terms with the failings of the Appellate Body … if we are to achieve lasting and effective reform of the WTO dispute settlement system.”

In related news:

  • The USTR published a notice on February 10 that eliminates Brazil, India, Indonesia, Malaysia, Thailand, Vietnam, Colombia, Costa Rica, Argentina, South Africa, Albania, Armenia, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova, Montenegro, North Macedonia, and Ukraine from the list of developing countries that receive special treatment under U.S. countervailing duty law. Under an agreement with the WTO, the USTR has the ability to determine what countries get special treatment.