WTO Stance on AD/CV Duties Seen as Self-Imposed Problem

The World Trade Organization's nearly unanimous rejection of antidumping duties and safeguard duties has hurt the ability of countries to use AD/CV duties and safeguard tariffs, according to Jennifer Hillman, a former member of the WTO appellate body and now Georgetown University law professor. "Well over 50 percent of all WTO disputes have been in trade remedies," Hillman said during a Washington International Trade Association panel on April 13 about the WTO.

She said when companies are accused of dumping or when they make products that are hit with safeguard tariffs, "there is a temptation to go to your government and say, 'Can't you do something about this?'" Warren Maruyama, the panel moderator and a former USTR general counsel, said the U.S. has "won just about every offensive case we've brought, but we've lost just about every case on our trade remedies."

Hillman said that pattern was not foreseen when the WTO binding dispute system was agreed to in 1995. "We wanted to enforce our market access rights. What we didn't think about was what it would look like when we were on the defensive," she said. Hillman said the U.S. has brought 117 cases at the WTO over the years, but has defended itself in 136. "That was certainly not anticipated," she said.

"It's not that we lose every case," Stewart and Stewart managing partner Terry Stewart said. "Everybody loses every case." He said that more than 90 percent of cases that are brought to the WTO are won. "Will the WTO self-destruct? It certainly seems like it's heading in that direction."

Meanwhile, President Donald Trump seemed to soften his critique of the multilateral rules-based system on April 12. "We're starting to get better results at the World Trade Organization because they know we're not playing games any more," Trump said. "I mean, if you look at it 25 years ago, or whatever it is, it was really set up to take advantage of the United States as far as I'm concerned. But we're getting much better results."

The U.S. has complained for years about what it sees as a too-slow appellate body that goes beyond legal interpretation to creating law. For nearly a year, the U.S. has been blocking nominations to replace members whose four-year terms are expiring (see 1708310008). The experts predicted America's refusal to even discuss appointing new appellate body members will eventually lead to that body having too few members to consider appeals. Each appeal requires three panelists, and they predicted the U.S. will continue blocking nominations until just two panelists are left. There are currently four appellate body members, one of whom has a term ending in September. "There are very few leverage points in a system like the WTO," Stewart said. "I view what they're doing as trying to make the system work."

Bruce Hirsh, former USTR chief counsel for dispute settlement, thinks the tactic is too risky. He said the WTO keeps trade disputes from escalating, and recent news events have shown the value of that. If the appellate panel is too small to take up cases, the U.S. will be stymied when it wins cases on other countries' market distortions, Hillman said. A country that loses a case doesn't have to comply once it has filed a notice of appeal, until that appeal is completed. "The appeal would simply pend forever," she said.