At a hearing on Tuesday to consider the nomination of Joseph Barloon to be the Deputy U.S. Trade Representative in Geneva (and Ambassador to the WTO), there were some questions about the Trump administration's views of the WTO in general, as well as WTO dispute settlement and the WTO e-commerce moratorium in particular. Here's a transcript of some of the key exchanges:
(1:43:45 of the video) Senator Mike Crapo (R-ID): As USTR's former General Counsel, you supervised US litigation in the WTO dispute settlement system. It's not a perfect system, particularly because many disputes drag on for years, but it can be a useful tool, particularly for expanding agricultural market access. While I understand there's a need to reform WTO dispute settlement, we should not discount it as a tool altogether. If confirmed, would you support the United States pursuing offensive WTO cases where appropriate, particularly for America's agriculture industries?
Barloon: Yes, most definitely, I will do so. During my time in the first Trump administration, we did pursue disputes at the WTO. I don't believe there are disputes pursued more recently. But I certainly think that there is a role for the WTO dispute settlement system, particularly to gain access for our farmers and our businesses.
Crapo: The prior administration abandoned key long standing digital trade commitments in the e-commerce negotiations at the WTO. These included (1) promoting the free flow of data, (2) combating forced data localization, (3) preventing forced technology transfer, and (4) promoting open competitive markets for digital goods and services. Can we expect to see the USTR actively promote these digital trade commitments at the WTO, particularly and especially given the policy vacuum that China and Russia will otherwise fill?
Barloon: Yes, I believe that advancing digital trade should be a key component of US policy. And I believe that there are many areas, such as the ones you mentioned, and then discriminatory policies of some of our trading partners regarding digital trade and our companies, that need to be addressed at the WTO. And I very much would look forward to working with you and your office if I'm confirmed on that issue.
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(2:24:10) Senator Maria Cantwell (D-WA): Do you think the President, ... do you or the President support the WTO, or do you think that we should get out?
Barloon: ... I believe that there are significant problems with the WTO. I think that it has gone astray. I think that we've seen that, for example, with the large civil aircraft cases, where for years, there are subsidies that harmed our companies that weren't effectively dealt with ...
Cantwell: So does that mean, in that case, would you think a faster process -- I don't mean to interrupt, but I want to know your thought, how would you fix that example you just gave?
Barloon: I think that's a very good question, because, frankly, you had decades of litigation there, and at the end, although while I was General Counsel, we received the largest award in the history of the WTO, in many ways it was too little too late. I think that you need to look at all the tools in the toolbox, that can include dispute settlement at the WTO, ... but there may be other options that you need to look at as well. Certainly, if I'm confirmed to be the Ambassador to the World Trade Organization, I will work with all of the Members there to try to ensure that they do follow the rules and to advance the interests of the United States.
Cantwell: So you believe in a rules based situation, even though the President isn't really following those rules, and you think that we could promote some changes to WTO for faster results in resolving conflicts?
Barloon: I do believe that there are potential reforms at the WTO. I'd be happy to talk with you and your office about what that might look like. I believe that there have been significant weaknesses and problems with dispute settlement in the past, but that we should engage in good faith with other members to try to see if we can improve the system.
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(2:35:02) Crapo: ... The USTR's five year report on the WTO indicates a poor record and elusive prospects for reform. Some of this is certainly outside the control of the United States, but some of the inability is a result of the prior administration's lack of an active agenda for reform and refusals to tell partners what it wanted. The USTR also relied on outside consultants who only focused on interest based negotiations, whatever that meant, which never yielded results. What would be your approach to encourage progress with WTO reforms?
Barloon: I think that the United States in the past has been a leader at the WTO, certainly a leader in the foundation of the WTO. And if I'm confirmed, I will do my best to work with other Members there and to take a leading role for the United States and to bring about much needed reform.
What should we take from these remarks as to how the Trump administration will approach the WTO? I'm not totally sure, but here are a few thoughts.
On WTO dispute settlement, it's interesting to hear that the Trump administration might file some WTO complaints, after the Biden administration did not file any in its four years in office. With regard to the aircraft cases, they are often cited as an example of WTO litigation taking too long, and they did take an extraordinarily long time, although in fairness they were a bit of an anomaly in terms of length. Nevertheless, it is true that WTO litigation can take quite long and it would be helpful to speed things up. Jim Bacchus and I had some suggestions for making the process faster here.
The "interest based" approach to WTO negotiations that Crapo brought up was something the Biden administration made a big deal of (I quoted former U.S. Trade Rep. Katherine Tai's explanation of it here). I was never quite sure what to make of it, but on the issue of dispute settlement reform, it does not seem to have gotten Members across the finish line. Of course, maybe nothing will do that, but nevertheless I'll be interested in seeing how the Trump administration approaches these issues. My instinct is that in the short term, other Members will just have to go ahead on their own with initiatives such as the MPIA. However, I can't rule out the possibility that the Trump administration will put forward some concrete proposals. For example, they could propose a rule change that says an appeal process is optional in any given dispute and there would be no possibility of an appeal if either party to a dispute objects to using appeals (which the administration could also sell as a way to speed up dispute settlement).
And then finally on digital, that's kind of any easy policy shift for the Trump administration. The Biden folks wanted international trade rules to give more deference to domestic regulation in this area, both in the U.S. and abroad, which explains why they pulled back on previous U.S. positions supporting new WTO rules. By contrast, the Trump administration wants less domestic regulation of digital, both in the U.S. and abroad, so this is an example of a situation where they might be happy to see more WTO and other international constraints on regulation (in practice, that mainly means constraints on foreign regulation, but still).
