The US mulls leaving the World Trade Organization. "If they don't shape up, I would withdraw from the WTO," said President Donald Trump in an interview with Bloomberg News on Aug.30. The president wants the organization to adopt rules more favorable to America. He believes the US is not treated fairly though it’s Washington who is pressing challenges against other states, including close trade partners, not vice versa. According to Mr. Trump, the 1994 agreement to establish the WTO "was the single worst trade deal ever made". Two years ago, then presidential candidate Trump told NBC's "Meet the Press," that the "World Trade Organization is a disaster."
The president had repeatedly asked his advisers about the possibility of withdrawing from the organization used, as he put it, to "screw the United States." It has been reported that the president has ordered to prepare a “United States Fair and Reciprocal Tariff Act”, or FART Act to change the nation’s trade policy. The act essentially bestows president with the power to determine any current or future tariff rates with countries outside of the WTO jurisdiction. According to news website Axios citing a source familiar with the bill, “It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal.” This information has not been neither confirmed nor denied as yet.
So, the conflict between Trump’s protectionist policies and the open trade system protected by the WTO has come into the open. Two world wars and the Great Depression were required to create conditions for establishment of a world body to set the general rules of trade. Now the US, the country that led the global process to establish the WTO, wants to it to be dismantled.
The US has recently blocked the appointment of new judges to the WTO’s Dispute Settlement Body (DSB) or the Appellate Body. The move will impede the DSB’s ability to issue judgments. With appointments blocked, appeals will be prevented entirely by December 2019.
The president needs congressional approval to pull out but his attitude and statements are already “hollowing out the WTO from within.” Uncertainty has been created. With the organization’s Appellate Body stymied, it could forget about the WTO and do its own thing even if Congress rejects the proposal to pull out.
But if the WTO succumbs to US pressure, other members will follow suit and impose barriers to their heart content to emasculate the organization and make it redundant. The free trade order will collapse. The US president has already openly disregarded the WTO rules by imposing steel and aluminum tariffs. The policy of sanctions runs counter to the WTO fundamental principle of free trade. Parties should maintain government restraints on the movement of goods at a minimum, and if changed, the restraints should be reduced, not increased. The conditions of trade, including the level of tariffs and other, must be discussed and agreed on within a multilateral framework.
This is also the time the US is dismantling NAFTA to replace it with another agreement reached on Washington-dictated terms. Last year, the US left the Trans-Pacific Partnership (TPP), which would have covered 12 nations and about 40 percent of global gross domestic product. The talks on the Transatlantic Trade and Investment Partnership (TTIP) have been stalled since President Trump took office with little hope to revive them amid the ongoing sanctions war. The US pulled out from the Paris climate accord last summer.
In June, the US left the United Nations Human Rights Council. Last October, the US withdrew from the UN education and culture organization UNESCO. Its relationship with the United Nations is complicated. In 2017, the numbered H.R. 193 to remove all US involvement from the United Nations was introduced by Rep. Mike Rogers (R-AL3). Sen. Rand Paul (R-Ky.) has suggested that the UN should be dismantled.
It’s widely believed that the US undermines NATO credibility. It is ready to create a new economic and political bloc with the UK after it leaves the EU. The US is setting up its own defense partnership in Europe with Sweden and Finland, it is developing a special military relationship with Poland as well as is in the process of forming an Arab NATO. It strives for a closer partnership with India and Vietnam to oppose China. It has just concluded a bilateral trade agreement with Mexico, waiting for Canada to join and thus bury NAFTA. The list can go on. The United States is gradually reshaping the entire structure of its foreign policy relationships with old allies being alienated and new ones emerging to conclude separate deals.
Other nations will do likewise, forming new relationships and alliances. Getting rid of the old architecture without a definite final goal is a dangerous policy. Relationships are easy to ruin and difficult to build. The policy implies constant confrontation and use of pressure to achieve the desired results in favor of America’s interests as the administration sees them.
The US is trying to reshape the world pursuing its own selfish interests. Pressure is the tool. Diplomacy cedes place to the policy of ultimatums. Other nations with all the difference between them have to adapt to the new conditions. The world will be changing but the pattern of America’s absolute and overwhelming global domination is not guaranteed. Step by step, other countries will learn to live without the United States, leaving it isolated and by far not as influential as it strives to be. Believing in its exceptionalism and the inalienable right to press others, the US may be bringing the era of Pax Americana to a long-predicted end.