U.S. Trade Infallibility and the Crisis of the World Trade Organization

Abstract

On December 10, 2019, the World Trade Organization (WTO) lurched into a crisis when its Appellate Body became paralyzed due to actions of the Trump Administration. Obligations under the WTO agreements are now effectively unenforceable, threatening the collapse of the WTO itself. There is no viable path forward for the WTO to restore the Appellate Body to its full powers without the agreement of the United States. A study of current U.S. trade policy, however, indicates that such agreement is likely not forthcoming or that U.S. demands to end the crisis will be too high a price to pay. The Trump Administration has adopted a doctrine of U.S. trade infallibility, which holds that in any trade dispute in or outside of the WTO, the United States is always right and should always win. The United States will ignore and heap scorn on any WTO decisions that it loses and will recognize and lavish praise on those that it wins. The United States claims the right to enforce U.S. trade remedies against any nation without regard to WTO law or international law. The United States prefers bilateral negotiations to the multilateral negotiations supported by the WTO. The doctrine of U.S. trade infallibility is an extreme form of nationalism, which is fundamentally incompatible with the multilateralism of the WTO. The crisis in the WTO might mark the end of the high tide of multilateralism as a global norm. Instead, a dangerous new era of vicious nationalism may be emerging in which nations pursue their own interests at the expense of others and create the conditions for global conflict. Only a new round of multilateral negotiations among all WTO members focused on the dispute settlement system can save the Appellate Body and the WTO itself.