Even before the founding of the WTO 25 years ago, the United States was one of the three largest trading nations worldwide. U.S. enterprises have benefitted profoundly from the rules-based trading system and market access provided by the multilateral organisation. No other WTO member has used the organisation’s dispute settlement mechanism nearly as often to resolve potential violations by other Members (124 cases at the end of 2020). There are, however, several aspects of the organisation that already significantly disturbed Washington before President Trump took office.

Dissatisfaction with the WTO

To date, despite years of negotiations, it has not been possible to reach the necessary consensus among the now 164 members to substantially open up the markets of the emerging markets, in particular. The U.S. government is losing more and more faith that international competition – especially with China – can be made fair with the help of the WTO. In fact, the European Union (EU) also shares the view that, for example, notification obligations on trade measures cannot be sufficiently enforced and that existing multilateral rules on subsidies or the protection of intellectual property and state-owned enterprises do not go far enough.

The United States is also particularly dissatisfied with the WTO’s dispute settlement system. This is not only because the United States regularly loses in disputes in which other countries take action against the United States’ anti-dumping practices. In addition, Washington criticises excessively long proceedings and an alleged transgression of jurisdiction by the Appellate Body. On the whole, the United States finds it difficult to accept international, independent, and binding arbitration awards and internationally agreed-upon agreements.

The Crisis of Multilateralism

While the situation of the WTO was already difficult due to the failure of the Doha Development Agenda Round and disagreement on how to proceed, the U.S. stance has now plunged the WTO into a fundamental crisis. Not only has the United States imposed additional tariffs in the last two years (on aluminium and steel imports, numerous imports from China, etc.), which affected states that consider the United States to be in violation of WTO law. Washington is also blocking the appointment of judges to the Appellate Body, so that this decisive body has not been able to decide on any new cases since mid-December 2019.

The United States has also prevented in the fall of 2020 the appointment of a new WTO Director-General. While the majority of WTO members had agreed on the Nigerian candidate, the United States instead demanded that the South Korean candidate to be appointed, since she is considered to be more friendly to the United States.

Todate, the Trump administration has not yet sufficiently responded to the reform proposals of other WTO members, which were intended to address the U.S. criticism of the dispute settlement system and unblock the Appellate Body. In other areas, the U.S. administration is working more constructively on reforming the WTO. This applies, for example, to a reform of the transparency regulations, the negotiation of new rules for electronic commerce, and also the Trilateral Initiative proposal to reform the Agreement on Subsidies and Countervailing Measures.

Joe Biden is much more open to multilateral organisations and negotiated solutions and plans to rejoin the Paris Climate Convention. He sees a great need for reform at the WTO but recognizes that this could be an “effective tool” with the participation of the United States. In addition, Biden emphasises the importance of the Western community of values and gives rise to hope that transatlantic cooperation can be intensified – also in WTO reform.

It is time for the United States to return to the WTO negotiating table. Washington should also bear in mind that important WTO members will only agree to reforms if the United States, for its part, demonstrates respect for international rules and no longer blocks the settlement of disputes.