It has been 15 years since Congress last voted on whether to withdraw its support of the World Trade Organization (WTO). On May 7, Josh HawleyJoshua (Josh) David HawleyTo counter China, the Senate must confirm US ambassadors Facebook unblocks Rittenhouse searches GOP holds on Biden nominees set back gains for women in top positions MORE (R-Mo.) asked Congress to do it a third time.
The joint resolution does not call on the United States to exit the WTO. It only asks Congress to withdraw its approval of the Geneva-based institution. What this means in practice is anyone’s guess. As in 2000, and again in 2005, a “yea” vote does not trigger any specific policy action.
In 2020, like in 2000 and 2005, the anti-WTO camp will argue that the institution undermines U.S. “economic sovereignty.” Hawley writes that the WTO has gotten in the way of U.S. trade remedies, in particular. He also insists that COVID-19 has shown that U.S. supply chains are too vulnerable to disruptions, and that the WTO makes “reshoring” more difficult.
The pro-WTO camp will respond, as they did in 2000 and 2005, that U.S. exports have increased dramatically since 1995; that the U.S. is the single largest user of WTO litigation; and that U.S. farmers, workers and businesses will lose out if Washington retreats from the rules-based system anchored by the WTO.
In 2000, with the House Ways and Means Committee touting the WTO as a big improvement over the General Agreement on Tariffs and Trade, the vote split 338-86.
In 2005, with President Bush still promoting the WTO’s Doha Round as a way to fight terrorism by creating more global wealth through trade, the vote split 363-56.
In 2020, by contrast, a vote would be held against the backdrop of the Trump administration’s blocking of appointments to the WTO’s Appellate Body and several bouts of tariff unilateralism. Will the “yeas” have it this time?
One consideration that got no attention in 2000 or 2005 merits close attention in 2020: The role of preferential trade agreements (PTAs). These are the deals that, like the US-Mexico-Canada Agreement (USMCA), give members better terms than they get from the WTO. The term is “WTO plus,” the logic being that PTAs cover more issues than the WTO, and cover those that the WTO does more deeply. Hawley and those in favor of the joint resolution will insist that PTAs, like US-UK, are the way forward, and that these make the WTO irrelevant.
Actually, the proliferation of PTAs makes the WTO more relevant. In 2000, there were only 83 PTAs in force. In 2005, there were 137. In 2020, there are 303. Without the WTO, these PTAs won’t deliver on their promise.
First, the WTO makes it possible for negotiators to focus on plus provisions. If the WTO did not set out a baseline, negotiators would have to reinvent the wheel with each new agreement. If US-UK is concluded quickly, for example, it will only be because, as WTO members, both sides can skip the basics and move to the complex nontariff issues that frustrate transatlantic trade. To this end, USMCA uses a lot of WTO text, freeing up negotiators to go after the high-hanging fruit.
Second, PTAs use the WTO to shore-up predictability where they might otherwise cause havoc. In the case of technical trade barriers, for example, which cover more than 90 percent of U.S. exports, USMCA requires that disputes over the basics be heard at the WTO. This is to lower the risk of having different bodies of case law for different countries. For example, Congress has worried that Canada eked out a separate body of case law on trade remedies under Chapter 19 of the North American Free Trade Agreement.
The bottom line is that PTAs need the WTO. Sen. Hawley presents a false dichotomy when he champions US-UK but wants out of the WTO. Even a cursory read of USMCA reveals this to be folly; President TrumpDonald TrumpGOP grapples with chaotic Senate primary in Pennsylvania Trump social media startup receives commitment of billion from unidentified 'diverse group' of investors Iran thinks it has the upper hand in Vienna — here's why it doesn't MORE’s signature trade deal uses a lot of WTO text, and even WTO dispute settlement.
When Congress votes on whether to withdraw its support of the WTO, it should recognize that a “yea” vote will undermine USMCA, US-UK and the long list of trade agreements that President Trump has prioritized.
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University, a nonresident senior fellow at the Atlantic Council and host of the podcast TradeCraft.