September 18, 2017 / 4:13 PM / in a month

US trade envoy says WTO dispute settlement is 'deficient'

WASHINGTON (Reuters) - The WTO dispute settlement system is “deficient” and has often ruled in favor of free trade that overlooks details of a trade agreement, U.S. trade envoy Robert Lighthizer said on Monday.

U.S. Trade Representative Robert Lighthizer addresses the media to close the second round of NAFTA talks involving the United States, Mexico and Canada at Secretary of Economy headquarters in Mexico City, Mexico, September 5, 2017. REUTERS/Edgard Garrido

Speaking at the Center for Strategic and International Studies, Lighthizer, a trade lawyer, made clear that the administration was poised to push for major changes to the global trade system during upcoming meetings of the Geneva-based trade body. WTO member countries will meet in Buenos Aires on Dec 10.

U.S. President Donald Trump called the World Trade Organization a “disaster” during his presidential campaign and his administration has sought to unilaterally go after countries like China that it thinks is breaking trade rules.

“There are a number of issues on which there is pretty broad agreement that the WTO dispute settlement understanding is deficient,” said Lighthizer, highlighting problems with WTO staffing and transparency.

“The United States sees numerous examples where the dispute settlement process over the years has really diminished what we’ve bargained for or imposed obligations that we do not believe we agree to,” he said.

He added: “There have been a lot of cases in the trade remedies laws where in my opinion the decisions are really indefensible.”

Since its launch in 1995 the WTO has become the main venue for resolving trade disputes between countries. The Trump administration has begun to launch trade investigations under statutes seldom used in the WTO era, including a “Section 301” probe of China’s intellectual property practices.

Lighthizer did not threaten a U.S. withdrawal from the WTO, but emphasized his own dissatisfaction with some of its rulings.

In a letter in March, the Trump administration made clear that U.S. law supersedes WTO rules -- a view that could be invoked should Congress adopt policies that are later challenged by other member countries as violating WTO rules.

“We’ve had tax laws struck down, we’ve had other provisions where the WTO has taken...the decision they were going to strike down something they thought shouldn’t happen, rather than looking at the agreement as a contract,” he said.

Lighthizer emphasized that the Trump administration was reviewing all trade agreements and would seek to renegotiate those that did not benefit U.S. workers and businesses.

“I believe, and I think the president believes, that we must be proactive,” he said, “We must demand reciprocity in home and international markets. So expect change, expect new approaches and expect action.”

Additional reporting by David lawder; Editing by Chizu Nomiyama

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