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Since the first half of the twentieth century, the U.S. Congress has increasingly delegated its authority over tariffs to the U.S. president. Some of these statutes permit private actors to petition for tariff relief. Some also permit the president to initiate an investigation and subsequently to take trade-related or other action when certain criteria are met. Since the 1990s, however, a robust multilateral trading system has required the United States and others to resolve disputes over trade measures in Geneva, rather than through unilateral policy steps under these tariff authorities. In a stark departure from this movement away from unilateral action, the Trump Administration has returned to relying heavily on domestic statutes to impose tariffs on goods imported from U.S. trading partners and on those from one country in particular: China.
For seventy years, the security exception in the multilateral trade regime has mostly lain dormant. The exception first appeared in the General Agreement on Tariffs and Trade 1947 (GATT 1947), before being incorporated in the General Agreement on Tariffs and Trade 1994 (GATT 1994) upon the creation of the World Trade Organization (WTO). However, security exceptions also exist in several other WTO provisions, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS). Until recently, perhaps through a combination of WTO member restraint and fortuitous circumstances, WTO panels have not had to make a definitive ruling on the meaning and scope of these exceptions. Yet, suddenly, the security exception lies at the center of multiple explosive disputes, posing a potential threat to the WTO's very existence.
The World Trade Organization's (WTO's) dispute settlement system is facing “unprecedented challenges,” with the current U.S. government waging a “stealth war” on the Organization's Appellate Body (AB). The tactics of this war include procedural objections to the (re)appointment of AB members—those individuals selected to sit in Geneva and rule on trade disputes. Countries have blocked appointments in the past, but the Trump administration's strategy to effectively shut down the AB's ability to hear disputes—by bringing the number of sitting judges below the required three to hear a dispute—represents a new development. In short, the trade regime is dying a slow, piecemeal death, with American challenges “killing the WTO from the inside.” Yet the sources of this crisis are not new. The organization's judges and bureaucracy have deftly managed simmering discontent for nearly two decades, but we have now reached a boiling point. In this contribution, I first describe the sources of the current impasse before discussing how the WTO's adjudicative bodies have sought to address government dissatisfaction in the past and the implications of such judicial responsiveness for reform of the system moving forward.
The United States-Mexico-Canada Agreement (USMCA) differs in a few important ways from prior trade deals signed by the United States but reveals a glimpse of the infrastructure for a new era in international economic governance. This new “Geoeconomic World Order,” will be characterized by great power rivalry between the United States and China, the intense use of protectionist tools to achieve strategic and political goals, and the diminished role of legal adjudication. This approach to trade policy will likely outlast the autocratic and/or nationalistic governments emerging around the world, including the current Trump administration. While international trade law will recover, it will look different in key respects—it will be less multilateral, predictable, justiciable, and enforceable. This more transactional view of international trade law implies a limit on the role of law and an increase in the use of power. It may force a retrenchment of international interdependence and a revival of zones of influence prevalent during the Cold War era.
The world's twenty-year experiment with a rule-based international trading order is most likely ending. Trade wars are raging again for the first time in two decades as World Trade Organization (WTO) members unilaterally impose and counterimpose sanctions. In Geneva, the WTO Appellate Body, whose existence is essential to the functioning of the WTO Dispute Settlement Understanding (DSU), is on a trajectory to shut down in December 2020. For all the fireworks, however, many commentators retain an optimism that the recent events will be a passing phase and that the world will return to a more law-oriented trading system after the present crisis.