US policy agenda indicates possible defiance of WTO

The Dollar Business Bureau

Holding American sovereignty above WTO norms, the Trump administration has indicated in its trade policy document that it will not tolerate unfair trade practices, even if that meant defying WTO guidelines for foreign trade.

The newly launched 'America first' campaign is fast dismantling the multilateral trade networks built over decades of diplomatic maneuvering. Despite the potential risk of such hasty steps backfiring at its own economy, USA is adamant on dealing with the world on its own terms.

In its document outlining the annual agenda for trade policy, US Trade Representative's (USTR's) Office has affirmed its opposition to trade practices that override market forces. Hinting at arch-rival China, the policy states that use of shenanigans like state subsidies, currency devaluation, loss-bearing government-owned institutions, or violation of intellectual property rights will not be tolerated.

This is a huge departure from the policies of past Presidents, who have usually promoted conformity to the apex international trade body. By far, USA has exerted influence in the foreign trade arena via its influence in WTO. This is an unprecedented open defiance of WTO rules.

Trump, an ardent believer of the market forces, has pledged to free foreign trade of manipulative practices. The irony of the framework is that, he proposes to do so by imposing border taxes and restricting imports from countries like China and Mexico, which is clearly against the spirit of free markets. Moreover, deploying an extremely restrictive trade policy may go against the mandate of WTO. So furthering the protectionist agenda makes it necessary for USA to break free from the boundaries prescribed by WTO. The answer to how disruptive this could be for the liberalised world also depends on how many countries would follow suit.

Trump's top contender for the position of trade negotiator, Robert Lighthizer, has advocated in the past, the need for aggressively interpreting WTO provisions to find ways of dealing with China's long arm in world trade.