If you are looking for indications as to how the Trump administration trade policy team might approach changes to WTO dispute settlement, this new report by Terry Stewart and Elizabeth Drake, entitled "How the WTO Undermines U.S. Trade Remedy Enforcement," might be a good place to start. This is from the recommendations section:
Policy makers should make it a priority to counteract these trends and protect domestic trade remedy laws from further erosion. Possible steps to consider, including both new efforts and the strengthening and expanding of existing efforts, include:
■ Vigorously defending U.S. trade remedy decisions at the WTO and seriously considering whether and how to implement any adverse decisions depending on the weakening effect they may have on enforcement;
■ Forming a coalition with other WTO members concerned about trends in the dispute settlement system’s trade remedy decisions to mount a coordinated campaign to critique and reform the decision-making of panels and the Appellate Body;
■ Investing in efforts to educate other WTO members, particularly developing countries, about the importance of trade remedies in the international system and the economic contribution they make by reducing market distortions and enabling balanced economic growth;
■ Refusing to agree to the nomination or re-nomination of Appellate Body members who have failed to adhere to the standard of review and shown a willingness to overreach and “interpret” WTO agreements rather than merely apply them as negotiated by the members;
■ Protest any statements by the WTO Director General and other WTO officials that paint all trade remedy measures with a broad brush as protectionist without acknowledging the historical recognition that such measures play a key role in facilitating legitimate trade;
■ Impressing on other WTO members that further expansion of WTO agreements and routine implementation of adverse decisions is at risk if the dispute settlement system is not effectively reformed to reduce overreach by panels and Appellate Body members;
■ Establishing an independent Commission of legal experts to determine whether a WTO panel or the Appellate Body has exceeded its authority or deviated from the applicable standard of review in making a decision adverse to the United States, and creating procedures for Congress to respond to Commission determinations with appropriate action regarding U.S. negotiating positions and membership in the WTO; and
■ Working with Members of Congress, the media, and academia to build strong public support for effective trade remedy enforcement that strengthens the hand of U.S. negotiators in Geneva to underscore the political importance of real reform in the WTO dispute settlement system.
I have a couple thoughts on all this.
First, at some point I think the critics of WTO dispute settlement decisions on trade remedies will need to get specific. For example, if they object to how the standard of review, in AD Agreement Article 17.6(ii) or elsewhere, is being applied, they should put forward an alternative approach (either new text, or a new interpretation of how the existing text should be applied). Or they could offer alternative interpretations of some of the substantive legal standards for which they object to what WTO panels and the Appellate Body have done. If they come up with specific proposed changes, we can then have a discussion of the merits. To me, this seems like the most effective way to have proceed on these issues.
Second, the larger issue here is the role of trade remedies in the world trading system. This conversation is long overdue. I have a different view than the authors of this report, but nevertheless I think WTO Members should have a wide ranging discussion about this. I'll kick it off with the following.
We can all agree that every safeguard measure is protectionist, right? There is no evidence of "unfair" trade before imposing such measures. These measures are purely about protecting domestic producers from import competition.
Moving to anti-dumping, there is a theoretical basis for saying that some pricing practices are unfair, and should be penalized in some way. The problem is, the anti-dumping laws do not evaluate pricing behavior on this basis. There is no examination of whether any practices (e.g., predatory pricing) that might be considered unfair are taking place. The practices looked at in an anti-dumping investigation -- below cost sales or international price discrimination -- are not in and of themselves enough to say that pricing is unfair. As a result, anti-dumping laws are an extremely blunt and overbroad instrument. They could, in theory, incidentally address some actual unfair practices, but they are not designed to focus on such practices, and in reality they are mostly used for protectionist purposes. It would be an interesting idea to reform anti-dumping laws so that they tried to identify specific unfair trade practices. Perhaps some government would be willing to get behind this.
On subsidies and countervailing duties, the WTO has pretty good disciplines that can be used to challenge subsidies directly through WTO dispute settlement. An analysis of how these rules are functioning and whether they could take the place of countervailing duties would be useful. Which approach, WTO subsidy claims or countervailing duties, is more effective at addressing market distortions?
The broader problem I have with trade remedies is that they have contributed to the widespread notion that everyone else is cheating. My sense is that, in every country around the world, there is a somewhat widely held view that other countries are cheating on trade. This belief comes in part from the constant trade remedy legal claims that are reported in the press as another country cheating. My concern is that, as currently practiced, the use of trade remedies leads to an atmosphere where everyone believes they cannot trust their trading partners, which makes it difficult to negotiate any new trade liberalizing agreements. Thus, rather than pave the way for trade liberalization, trade remedies undermine it.