America Wins Often With Trade Referee That Trump Wants to Avoid

  • U.S. has above-average success rate in WTO-mediated disputes
  • China hasn’t fared well in disputes since joining WTO in 2001

President Donald Trump.

Photographer: Andrew Harrer/Bloomberg

President Donald Trump has hinted the U.S. is prepared to ignore rulings by the World Trade Organization. He may not have to bother, because America’s lawyers often win anyway.

The U.S. has a better-than-average rate of success in arguing cases at the WTO, according to a Bloomberg analysis of the 524 cases lodged at the Geneva-based organization since it was founded in 1995.

“On balance, it’s been a pretty good system for the U.S.,” said Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute of International Economics in Washington. “The U.S. has gotten other countries to change their practices, where it would have been much harder through the old ways of diplomatic negotiations or unilateral retaliations.”

Trump has blamed competition from China and trade deals such as the North American Free Trade Agreement for costing American jobs and hollowing out the nation’s manufacturing sector. As a candidate, he threatened to pull the U.S. out of the WTO, which grew out of the system of global trade rules that countries developed after the Second World War.

In a recent outline of its trade agenda, the U.S. government noted that the country isn’t bound by decisions made at the WTO. “The Trump administration will aggressively defend American sovereignty over matters of trade policy,” according to a report by the Office of the U.S. Trade Representative.

When the U.S. has complained against the trade practices of other countries, it won 86 percent of the time, slightly more than the WTO average, according to data compiled by Bloomberg. For WTO cases filed against the U.S., it lost less often than the average -- about 75 percent of the time compared to more than 84 percent for all nations.

The WTO declined to comment on Bloomberg’s analysis, which excludes cases that remain unresolved or were settled. The USTR didn’t respond to a request for comment.

Trump’s nominee for USTR, Robert Lighthizer, has been critical of those who pushed for China to be admitted to the WTO in 2001. In 2010, when he was still a trade lawyer, Lighthizer testified that China’s entry into the WTO drove up the trade deficit and eliminated manufacturing jobs, without delivering the promised benefits.

But at least at the WTO’s dispute-settling tribunal, China hasn’t fared so well. It has lost all but one case when it’s been the target of a complaint, while winning only six out of the nine cases it has brought forth.

Governments that believe other countries have violated international trade rules can bring complaints to the WTO, which establishes panels of three to five experts to hear the evidence.

Hufbauer said complainants usually win because countries try to only file complaints they know they have a good chance of winning. America’s successful record is probably due to a number of factors, including the relative fairness of the country’s trade practices and the skill of U.S. government trade lawyers, he said. “U.S. cases are well researched and presented.”

In his Senate confirmation hearing this month, Lighthizer said he planned to “bring as many actions as are justified” to the WTO when he takes over as USTR. The government plans to be stronger at enforcing America’s trade laws, he added.

— With assistance by Bryce Baschuk

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