Fulfilling Trump’s promise on trade law enforcement
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Beneath the headlines of renegotiating NAFTA and torpedoing the TPP, President-elect Trump has often spoken about improving trade law enforcement, especially against China; indeed, on the campaign trail, he beat that drum in pretty much the same rhythm as Hillary ClintonHillary Diane Rodham ClintonGraham: There's a 'bureaucratic coup' taking place against Trump Fox News poll shows Dems with edge ahead of midterms Poll: Democrats in position to retake the House MORE.  Trump promised to use “every lawful presidential power to remedy trade disputes if China does not stop its illegal activities” and to bring new trade law cases “both in this country and at the WTO.” 

Donald Trump is no stranger to litigation, but how can he and his team execute on this promise?


Today, the main forum for enforcement of trade rules is the “dispute settlement” process at the World Trade Organization.  Adjudicated by neutral legal experts, these WTO decisions have real force because a country that ignores an adverse decision can lose trade advantages, hurting its own exports.

Since 1994, there have been over 500 of these cases. In this system, America is already the #1 litigant: the U.S. has initiated 111 of the cases and has been a defendant in 127 cases. In other words, almost half of all WTO disputes have involved the U.S. as either complainant or respondent.

So, how do we presently decide to bring a WTO case? Almost every case starts with U.S. companies complaining about market access in other countries, heavily subsidized imports, or other actions that seem to be tilt competition unfairly. Then the Administration needs to be convinced that there is a strong legal case, i.e. that the other country is violating its treaty obligations to us.

That second part is easier said than done: it usually requires complex, detailed knowledge of the law, regulations, and/or administrative practices in the other country. Sometimes it requires evidence of informal business practices or statistics on local market conditions. In short, the industry concerned usually has to have made a substantial investment gathering evidence before the problem even gets serious consideration in Washington.

The downsides to this approach are evident. First, since we bring a WTO case only when some Americans complain loudly enough, it’s all ad hoc and we have never developed a systematic litigation strategy to help American industries and American workers. Contrast this with how Charles Hamilton Houston and Thurgood Marshall at the NAACP developed a decades-long, step-by-step strategy to defeat legalized segregation until they finally achieved Brown v. Board of Education. We need that kind of approach to trade law.  We should develop a set of strategies for how we want trade law to develop in major areas of concern: service industries, intellectual property, labor standards, environmental protection, state industries and subsidies, and “rules of origin.” Then, we have to commit ourselves to a long, step-by-step path to favorable outcomes in each area.

Second, such a systematic program to develop and enforce the trade rules won’t always be what “corporate America” wants.  Often our multinational do not want to bring WTO cases for fear of subtle or not so subtle retaliation in countries where they have big investments.  Today, GM builds more cars in China than the U.S., Apple sells more iPhones in Asia than in the U.S., and Hollywood gets more than 70% of its annual box office from ticket sales abroad. When the post-World War II trade system started, perhaps “what [was] good for General Motors [was] good for the country," but that is no longer clearly the case.  

That means a truly muscular trade enforcement agenda has to think not in terms of the “corporate America” but in terms of “America, Inc.” – in the same way we used to talk about “Japan, Inc.” as a set of policy choices by Japanese officials that put Japanese manufacturing and Japanese employment first. Less reliance on input from corporate America means President TrumpDonald John TrumpGrassley: Dems 'withheld information' on new Kavanaugh allegation Health advocates decry funding transfer over migrant children Groups plan mass walkout in support of Kavanaugh accuser MORE will need to expand the USTR enforcement staff (as Clinton proposed) and make the components of the U.S. government that monitor foreign business environments – agencies within the Commerce and State departments – do a better job (something so wonkish not even a Clinton policy paper mentioned it).

Lastly – and most controversially – when we see clear violations of the WTO rules, the U.S. should respond more immediately with counter-measures. A real problem of the international system is that WTO decisions only require prospective changes and never compensate countries for market share they have lost. If the U.S. took counter-measures immediately – something that should be in the wide tariff discretion of the President -- behavior in some of our trading partners might change dramatically.

In all this we should remember that the U.S. has already been the defendant in more WTO actions than we have initiated. The more we take countries to task for their trade policies, the more ours will also be subject to scrutiny. But then President Trump is no stranger to litigation as a defendant either.

Justin Hughes teaches international trade and intellectual property courses at Loyola Law School, Los Angeles, where he is the Honorable William M. Byrne Professor of Law. He served in the Obama Administration 2009-2013 as Senior Advisor to the Under Secretary of Commerce and, in that role, was the U.S. chief negotiator for the Beijing Treaty on Audiovisual Performances and the Marrakesh Treaty for the Blind.

The views expressed by authors are their own and not the views of The Hill.