Why the WTO Still Matters
Mar 11, 2015
Although the lack of progress on Doha Round negotiations since 2008 is a great source of frustration among advocates of trade liberalization, the World Trade Organization (WTO) as an institution is still an important mechanism for resolving trade disputes among member countries. The WTO represented a major advancement in this area over its predecessor organization, the General Agreement on Tariffs and Trade (GATT), which did not have a binding dispute settlement process.
There is no economic sector in which combating trade barriers is more important than for the world agricultural market, and U.S. agriculture has probably on net benefited from dispute settlement cases under the WTO that involve the U.S. as a party, even taking into account the setback from the Brazil cotton case.
Since the WTO was launched in 1995, there have been 490 dispute settlement cases initiated, although a significant share have not moved past the bilateral consultation phase. Overall, the United States has been a party in 47 percent of those cases, either as complainant (109) or as respondent (123). Cases involving agricultural products account for 76 of the total, or just over one-third. Of the ag-related cases, 11 are still not fully resolved, including the two cases with Canada and Mexico over the U.S. Country-of-Origin Labeling (COOL) rules on beef and pork, which the U.S. government is currently appealing on compliance issues. Of the 65 other cases, 16 never proceeded past the bilateral consultation phase, three cases had a panel authorized but never seated, and 14 disputes were settled or terminated outside of the formal WTO process.
Of the 31 ag-related disputes that have gone through the full WTO process since 1995, in the 17 cases filed by the U.S. government, the panels agreed with the U.S. claims in full or in part on 16 occasions. Of the 14 cases in which the U.S. government was the respondent, four were either repeat filings on the same set of issues, such as the various stages of the U.S.-Canada softwood lumber dispute in 2001-02, or cases filed by multiple parties against the same U.S. trade policy, such as by both Australia and New Zealand against U.S. safeguard measures on lamb imports in 1999.
The Obama Administration continues to pursue these types of cases against alleged WTO-inconsistent policies by our trading partners. On February 11, 2015, Ambassador Michael Froman, the U.S. Trade Representative, announced that the U.S. had initiated consultations under the WTO dispute settlement process with China, over its use of illegal export subsidies in seven separate sectors, including fruits and vegetables and textile products. In addition, a recent study by DTB Associates, which was commissioned by several U.S. commodity groups, found that several emerging market economies, including China, India, Brazil, Turkey, and Thailand, have been providing financial support to their producers in the last several years, either as price supports or export subsidies, that far exceed their amber box domestic support or export subsidy limits under their respective Uruguay Round commitments. This study may provide the impetus for the U.S. government to undertake additional cases in the next few years.
Over the lifetime of the WTO, the United States has generally been successful in pursuing questionable policies and practices by our trading partners in the world agricultural market. For this reason, we need to recognize and support the importance of the WTO as the pre-eminent trade forum in the world, even as the current stalemate in the Doha Round continues.