03 The US and the WTO
The irony of the Trump administration’s challenge to the WTO is that the US is both an ardent critic of the system and still an active participant in it.
The US continues to express deep concerns over the functioning and usefulness of the WTO, yet at the same time the Trump administration still sees value in the organization and remains an active WTO member. This presents the EU and other champions of the multilateral trading system with an opportunity for engaging the US on maintaining and reforming the WTO.
The Trump administration’s attacks on the WTO
President Donald Trump has repeatedly threatened to withdraw the US from the WTO. However, there are several legal, political and economic constraints to any such move. In particular, a resolution to pull out of the WTO would have to pass both the House and Senate in the US – which constitutes a very high hurdle. In May 2020, Senator Josh Hawley (Republican from Missouri) introduced a resolution in the Senate to withdraw the US from the WTO.15 In the House of Representatives, Peter DeFazio (Democrat from Oregon) and Frank Pallone (Democrat from New Jersey) have also introduced a resolution calling for withdrawal from the WTO.16 These recent actions have triggered a congressional debate over the value of the WTO and the US’s continued membership of the body. They have also shown that President Trump is by no means alone in his criticism of the WTO, and that at least some lawmakers from both parties have an appetite for pulling the US out of the organization. Nonetheless, at present neither resolution is likely to succeed.
Pressure from the business community also makes a US withdrawal from the WTO unlikely. The economic consequences of withdrawal would be significant, as other WTO members without a free-trade agreement with the US would no longer be required to grant the US so-called ‘most favoured nation’ (MFN) status and could raise their tariffs.
The potential for a US withdrawal from the WTO is not the primary concern at present. The greater danger lies in the Trump administration continuing to undermine the WTO from within by blocking the appointment of members to the Appellate Body.
The potential for a US withdrawal from the WTO is thus not the primary concern at present. The greater danger lies in the Trump administration continuing to undermine the WTO from within by blocking the appointment of members to the Appellate Body (see Chapter 4 for an in-depth discussion of the concerns raised by the US and their merits).
While this is the most important pressure point, the Trump administration is taking other steps to challenge the WTO. For instance, in November 2019 the administration threatened to veto passage of the WTO’s annual budget.17 The US is the single largest contributor to this budget, accounting for approximately 11.6 per cent of the total in 2019.18 Giving in to US demands, WTO members agreed to limit funding to the Appellate Body.
The US is also considering withdrawal from the WTO’s Government Procurement Agreement. That would not only be another attack on the WTO itself, but would have negative implications both for the US economy and for potential supplier economies by curbing foreign access to the US’s $837 billion public procurement market.19
Finally, the Trump administration is considering a plan to increase the tariff levels that the country had agreed not to exceed – the so-called ‘bound rates’.20 As part of this effort, the Trump administration might launch a renegotiation of US tariff commitments at the WTO.21 President Trump has long criticized the fact that other countries can charge higher tariffs on certain products compared to what the US can levy. For instance, he laments the fact that the EU imposes a 10 per cent tariff on US-built cars, while the US charges a 2.5 per cent tariff on EU-manufactured cars.
Continued US engagement in the WTO
Even though it is putting pressure on the WTO, the US is still engaging with the organization. According to the US’s trade policy agenda: ‘The Trump Administration wants to help build a better multilateral trading system and will remain active in the World Trade Organization (WTO).’22 Robert Lighthizer, the US Trade Representative, has described the WTO as ‘a valuable institution’ and has even said that ‘if we did not have the WTO, we would need to invent it’ while at the same time outlining the US’s key points of criticism.23 Despite its concerns about the WTO’s dispute settlement system, the US is still launching new cases.24 The US also remains active in the committees of the WTO, where most of the practical work is done, and is contributing to efforts to negotiate new trade rules.
For example, in 2017 the US was among the first WTO members to put forward proposals aimed at improving compliance with notification obligations and enhancing transparency.25 The US was also at the forefront of an initiative on e-commerce, leading to the launch of WTO negotiations involving 76 WTO members in January 2019. Back in April 2018, the US had submitted a statement to the WTO outlining ideas for an e-commerce initiative, stressing that a successful outcome could ‘demonstrate the WTO’s ability to respond to transformations in the global economy’.26 Moreover, the US is supporting efforts to negotiate disciplines on fisheries subsidies that the Trump administration sees as ‘a potentially pivotal opportunity for the WTO to demonstrate that its negotiating arm remains strong’.27
Overall, these areas where the US still sees value in the WTO present an opportunity for other members, such as the EU, to engage the US. Equally, where the US has raised criticisms and taken steps to undermine the WTO, there is a chance to address valid US concerns and reform the organization. Even the former WTO director-general, Roberto Azevêdo, has acknowledged that ‘the trading system may not be perfect’ and has argued ‘to turn this current crisis of multilateralism into an opportunity to save it’.28
The principal remaining chapters of this paper provide a more comprehensive analysis of US concerns and structural challenges regarding each of the WTO’s three main functions, assess the merits of US grievances and actions, and outline opportunities for engagement – in particular, areas for potential transatlantic partnership on WTO reform.
15 Hawley, J. (2020), ‘Senator Hawley Introduces Joint Resolution to Withdraw from WTO’, 7 May 2020,
https://www.hawley.senate.gov/senator-hawley-introduces-joint-resolution-withdraw-wto (accessed 14 Jul. 2020).
16 DeFazio, P. (2020), ‘Chairs Peter DeFazio and Frank Pallone, Jr. Introduce Legislation to Withdraw the United States from the World Trade Organization’, 12 May 2020, https://defazio.house.gov/media-center/press-releases/chairs-peter-defazio-and-frank-pallone-jr-introduce-legislation-to (accessed 14 Jul. 2020).
17 Baschuk, B. (2019), ‘U.S. Raises Prospect of Blocking Passage of WTO Budget’, Bloomberg, 12 November 2019, https://www.bloomberg.com/news/articles/2019-11-12/u-s-is-said-to-raise-prospect-of-blocking-passage-of-wto-budget (accessed 14 Jul. 2020).
18 World Trade Organization (2019), ‘Chapter 9: Secretariat and budget’, Annual Report 2019, Geneva: World Trade Organization, https://www.wto.org/english/res_e/booksp_e/anrep_e/anrep19_chap9_e.pdf (accessed 14 Jul. 2020).
19 Baschuk, B. (2020), ‘Trump Considers Withdrawing From WTO’s $1.7 Trillion Purchasing Pact’, Bloomberg, 4 February 2020, https://www.bloomberg.com/news/articles/2020-02-04/trump-mulls-withdrawal-from-wto-s-1-7-trillion-purchasing-pact (accessed 14 Jul. 2020).
20 Baschuk, B. and Leonard, J. (2020), ‘U.S. Weighs Higher Tariff Ceilings in Bid for More Sway Over WTO’, Bloomberg, 12 February 2020, https://www.bloomberg.com/news/articles/2020-02-12/u-s-weighs-higher-tariff-ceilings-in-bid-for-more-sway-over-wto (accessed 14 Jul. 2020).
21 Baschuk, B. (2020), ‘U.S. Plans a “Broader Reset” of Its WTO Tariff Commitments’, Bloomberg, 17 June 2020, https://www.bloomberg.com/news/articles/2020-06-17/u-s-plans-a-broader-reset-of-its-wto-tariff-committments (accessed 14 Jul. 2020).
22 Office of the United States Trade Representative (2018), The 2018 Trade Policy Agenda and 2017 Annual Report of the President of the United States on the Trade Agreements Program, March 2018, https://ustr.gov/sites/default/files/files/Press/Reports/2018/AR/2018%20Annual%20Report%20FINAL.PDF (accessed 14 Jul. 2020).
23 U.S. Senate Committee on Finance (2019), ‘Testimony of Robert E. Lighthizer Before the U.S. Senate Committee on Finance’, 12 March 2019, https://www.finance.senate.gov/imo/media/doc/ARL%20Finance%20Testimony%20March%202019%203.12.2019%20FINAL.pdf (accessed 14 Jul. 2020).
24 See, for example, the following cases: DS585, DS566, DS561, DS560, DS559, DS558, DS557. World Trade Organization (2020), ‘Chronological list of disputes cases’, https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm (accessed 14 Jul. 2020).
25 World Trade Organization (2017), ‘Procedures to enhance transparency and strengthen notification requirements under WTO Agreements’, Communication from the United States, 30 October 2017,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/Jobs/GC/148.pdf (accessed 14 Jul. 2020).
26 World Trade Organization (2018), ‘Joint Statement on Electronic Commerce Initiative’, Communication from the United States, 12 April 2018, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/Jobs/GC/178.pdf (accessed 14 Jul. 2020).
27 U.S. Mission to International Organizations in Geneva (2019), ‘U.S. Statement at WTO Fisheries Subsidies Negotiations’, 27 March 2019, https://geneva.usmission.gov/2019/03/28/u-s-statement-at-wto-fisheries-subsidies-negotiations/ (accessed 14 Jul. 2020).
28 World Trade Organization (2018), ‘DG Azevêdo: we must turn the crisis of multilateralism into an opportunity to strengthen it’, 16 November 2018, https://www.wto.org/english/news_e/spra_e/spra246_e.htm (accessed 14 Jul. 2020).