LDN - Business

U.S. says rejects WTO's 'straitjacket' of trade obligations

[March 02, 2019] By David Lawder and Alexandra Alper

WASHINGTON (Reuters) - The Trump administration filed another salvo at the World Trade Organization on Friday, saying U.S. trade policy was not going to be dictated by the international body and defending its use of tariffs to pressure China and other trade partners.

A report drawn up by the U.S. Trade Representative outlining the White House's trade agenda for 2019 said the United States will continue to use the Switzerland-based WTO to challenge what it sees as unfair practices.

However, "the United States remains an independent nation, and our trade policy will be made here – not in Geneva. We will not allow the WTO Appellate Body and dispute settlement system to force the United States into a straitjacket of obligations to which we never agreed," the report said.

The United States has imposed tariffs on $250 billion worth of Chinese imports to press its demands for changes to what Washington sees as China's unfair policies on intellectual property protections, technology transfers, industrial subsidies and domestic market access.

China has challenged the Trump administration's tariffs in the WTO, arguing that they violate its agreed rules. The case is likely to be ultimately decided by the WTO's Appellate Body, the world's top trade court.

The United States must be allowed the "policy space" to address trade problems, the report said.

"That policy space must include the ability to use tariffs or other forms of leverage to persuade other countries to take our concerns seriously," it said.

The report was not explicit about how the United States would respond to a ruling against it on the issue.

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A logo is pictured outside the World Trade Organization (WTO) headquarters next to a red traffic light in Geneva, Switzerland, October 2, 2018. REUTERS/Denis Balibouse/File Photo

The report was published a day after a WTO adjudication panel handed Washington a major victory over China, ruling that China's domestic price supports for wheat and rice constituted an excessive subsidy and violated WTO obligations.

APPELLATE JUDGES

The United States has argued for years that WTO judges have routinely broken with procedures and exceeded their mandates, imposing new obligations on members.

In an effort to force reforms, Washington has routinely blocked the appointment of judges to its Appellate Body, a process that requires consensus among member states. If continued, the tactic will render the body inoperable by December, when terms end for two of the remaining three judges. WTO rules require three judges to hear appeals.

While Trump's complaints have found some sympathy among other WTO members, blocking new appointments is widely opposed as it risks crippling a guardian of international law. Friday's report did not mention U.S. actions to block judges.

The report defended U.S. actions to impose steel and aluminum tariffs on national security grounds, adding that national security exceptions have long been recognized at the WTO and its predecessor, the General Agreement on Tariffs and Trade (GATT).

If the WTO were to overrule the U.S. determination that the tariffs were essential to national security, it "would threaten serious damage to the multilateral trading system," it said.

(Reporting by David Lawder and Alexandra Alper; Editing by Sonya Hepinstall)

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