Trump using cudgel against world trade
Even though Washington helped design the World Trade Organization and the trade body usually rules in favor of the United States when Washington brings cases before it, US President Donald Trump seems intent not only on criticizing the WTO but on sidelining it completely. Reports reveal he has been considering the draft of a bill for the US to abandon key WTO principles so he can “have more say” over US trade policy.
A White House official confirmed to CNN that Trump ordered the draft legislation and was briefed on it in May, even though those who drew up the proposal believe it to be “unworkable”.
The leaked proposal, referred to as the United States Fair and Reciprocal Tariff Act, would give Trump the authority to act based on his administration’s assessment of trading policies between nations. This would mean the US president would be acting of his own volition instead of adhering to the collective rules of the WTO and the US’ obligations as a member.
Although it is thought that if put forward, the proposal would face opposition in Congress, even that is not certain given the extent to which the restraints on the presidency have been softened.
Trump has already caused a crisis in the WTO by blocking the appointment of new trade judges, which has threatened to destroy the dispute settlement system. But quitting the WTO, as he will no doubt have been advised, would not be in the interests of the US, no matter how much loathing Trump has for the trade body.
Although his administration claims to welcome economic relationships rooted in fairness, reciprocity, and faithful adherence to the rules, it belies that by acting unfairly and breaking the rules so it can take as much as it can without giving anything back.
Yet even by resorting to economic brutality his administration will not be able to extort prosperity from others.
The US’ prosperity and security are being challenged by its lack of competitiveness in many sectors, not because it has to play by the same rules as its trade partners.
The world is undergoing a profound adjustment, and while some sectors in the US will feel the pain of change, history shows international trade boosts countries’ economic growth over the long-term, and there is no reason why the US should prove an exception.
By running roughshod over the WTO rules with its attempt at an economic shakedown, the US is shooting itself in the foot, as it has triggered retaliation from all its major trade partners.