With Major Reforms Needed to WTO Rules and Procedures, Shutdown of Enforcement Regime Not Bad News  

Data on 25 Years of WTO Rulings Substantiate Critics’ Concerns About WTO Threats

WASHINGTON, DC –Today’s shutdown of the World Trade Organization’s (WTO) enforcement regime comes after decades of the WTO’s negotiating function failing to deliver needed reforms to scale back the organization’s anti-democratic overreach into scores of countries’ domestic policies.

It is what Public Citizen warned about 20 years ago. The WTO must bend or break, Public Citizen said at a U.S. House Ways and Means hearing shortly after the Seattle World Trade Organization’s (WTO) Ministerial ended in a meltdown and a proposal to expand the WTO’s authority over even more facets of people’s lives was derailed.

“The WTO’s overreach is proving to be its undoing,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

The WTO’s ability to issue final enforcement rulings will effectively end on Dec. 11, when its appellate tribunal will no longer have a quorum. After a series of WTO decisions in which tribunals cooked up new standards – never agreed to by member nations – the Obama administration initiated a protest. Last year, the Trump administration doubled down, blocking the appointment of new appellate adjudicators.

When Congress debated approving the WTO in 1994, proponents claimed that the new organization would not undermine public interest laws, disciplines against unfair trade practices (such as anti-dumping, countervailing duty or safeguard laws) or the needs of developing countries. Twenty-five years later, the verdict is in. Of the 242 completed WTO. cases, in only 22 did the domestic policies, many unrelated to trade, survive challenge:

 

  • The United States has lost 90% of the 79 cases brought against it, with an even higher loss ratio of 93% on cases brought against U.S. AD/CVD laws.
  • The United States has lost 93% of the cases brought against U.S. public interest laws.
  • Developing nations have won only four of the 84 cases brought against their policies, a 95% loss rate.

U.S. WTO disputes:

  US as Complainant US as Respondent All Disputes (incl. US and non-US cases)
Complainant Win 43 71 222
Respondent Win 6 8 22
% Cases Won By Complainant 87.8% 89.9% 91.0%

 

Developing country disputes:

  Developing Country as Respondent
Complainant Win 83
Respondent Win 4
% Cases Won By Complainant 95.4%

 

Public interest disputes:

  All Public Interest Disputes Disputes where GATT XX or GATS XIV Defense Was Invoked Public Interest Disputes – U.S. as Complainant Public Interest Disputes – U.S. as Respondent
Complainant Win 73 48 22 14
Respondent Win 7 2 0 1
% Cases Won By Complainant 91.3% 96.0% 100.0% 93.3%

Signatory countries are required to “ensure the conformity of their laws, regulations and administrative procedures” with WTO rules that include limits on energy policy, financial regulation and food and product safety, plus new monopoly protections for pharmaceutical firms to charge consumers more.

If countries do not comply, they are subject to millions of dollars in trade penalties.

The country-of-origin labels on meat that consumers relied on in American grocery stores were eliminated after the WTO classified them as “illegal trade barriers” and authorized $1 billion in sanctions. The United States also was forced to weaken regulations under the Clean Air Act, dolphin protection laws and Endangered Species Act rules after successful attacks.

“Given the role played by the United States in pushing the WTO, there is a certain irony that more than a third of challenges decided by the organization have targeted American policies – which have been found to violate WTO rules 90% of the time,” Wallach said.

Recently the WTO has facilitated a circular firing squad over climate change efforts, Wallach said. The European Union and Japan successfully challenged Canadian incentives on renewable energy. The United States won a case against a solar power program in India. Then India successfully attacked renewable energy programs in several American states. Then China filed a case in 2018 against additional American renewable energy measures.

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