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Outside In | Why the US war on the WTO is a greater threat to global trade than its tariffs attack
David Dodwell says the US’ desire to control the trade dispute resolution process is apparent in its actions at the World Trade Organisation and its demands for changes to other multilateral trade agreements
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The world’s trading system is under threat, but the threat does not come from US President Donald Trump’s tariff wars or even his theatrical threats this week to withdraw completely from the World Trade Organisation (WTO). Rather, it comes from the stealthy strangulation of a process most of us have never heard of – the WTO’s dispute settlement process.
There is a real danger that, by the end of next year, the ability of the WTO to settle trade disputes will have fully ground to a halt.
At the Washington-based Peterson Institute, Tetyana Payosova, Gary Huffbauer and Jeff Schott pull no punches, noting that “the dispute resolution mechanism is in crisis” and that “failure to resolve this crisis runs the risk of returning the world trading system to a power-based free-for-all, allowing big players to act unilaterally and use retaliation to get their way”.
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This might suit Trump and his ambition to “make America great again”, but it would suit almost no one else.
Many regard the dispute settlement process as the main achievement of the decade-long Uruguay round of negotiations to set up the WTO that was completed in 1994. Not only did the Uruguay round agreement bring tariffs down and reduce many other barriers to trade and investment, it also established rules by which economies could settle trade disputes.
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Since all attempts to move beyond the Uruguay round have since abjectly failed, cynics would say it is the WTO’s only accomplishment.
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