In search of a clearer tune: Understanding America’s frustration with the WTO

We can all agree that there is a lot happening in the trade space these days. A lot of noise. I hope that this is simply like the cacophony of noises from an orchestra before the start of a performance. Perhaps at some point along the various "90-day pauses," a clearer tune will emerge.

We are only just starting to discern what the future may bring. The General Terms for the United States and UK Economic Prosperity Deal and the recent talks between the United States and China provide a hint, but not much more. While we wait for clarity, it may be useful to understand how we got here.

If there is interest in finding a collective way forward, we have to understand this. I offer the following reflections.

A United States perspective

Over the years, and particularly during my time as U.S. Permanent Representative to the World Trade Organization from March 2022 to January 2025, I’ve been struck with how people speak about "free trade" and the much vaunted "rules-based, international trading system with the WTO at its core". It is almost in religious tones.

But, that trading system is merely the collection of rules and norms that sovereign nations have decided to follow when they engage in trade. In deciding whether to agree to follow a set of rules, certain political bargains are struck – between nations and within each nation or entity. If, with the passage of time those bargains are no longer mutually beneficial, then support for the trade rules will flag. So, let’s look at some fundamental bargains the United States believed it had achieved.

When I started my career in trade policy some 32 years ago, one of the very first things drilled into my young trade-lawyer brain was the importance of sovereignty. In the Statement of Administrative Action for the Uruguay Round Agreements Act, one of the very first sections is on "U.S. Sovereignty". It makes clear that the willingness of the United States, and importantly Congress, to enter into the WTO, centered on the recognition that U.S. sovereignty was "fully protected under the WTO Agreement" and that "the WTO will have no power to change U.S. law". Furthermore, it was made clear that "only Congress and the Administration can decide whether to implement a WTO panel recommendation and, if so, how to implement it".

On top of that, add what the WTO Appellate Body did in the trade remedies space. Here again, we have an issue that was of great importance for the United States to be able to agree to the "rules-based multilateral trading system". The willingness to liberalize trade – to lower tariffs in particular – was to be counterbalanced by the ability to ensure that trade was fair and, if it was not, that the unfairness could be redressed. So we have the WTO Anti-Dumping and Subsidies and Countervailing Measures agreements. There was also the need to provide for redress for changes in trade patterns that cause harm even if trade is not "unfair", so we have the Agreement on Safeguards. However, the U.S. believes the bargain it struck had been eroded through the dispute settlement system.

Erosion of the ability to use trade remedies led to erosion in the belief across the United States in the legitimacy of the system. It wasn’t just about trade remedies, but the erosion of the faith in trade remedies is key to why we are where we are. Why is it not legitimate to question whether the bargain that we struck is still worth it?

I understand there is a lot of frustration with the onslaught of tariff actions by the Trump administration. I do hope that the United States becomes more strategic, and clear, about what it seeks in negotiations and who it goes after – do we really expect and need Lesotho to have balanced trade with the United States? I don’t think so.

The United States will need others in order to be able to achieve some of its goals. So, going after everyone may, in the long run, be the wrong strategy. In addition, it is clear from my experience that WTO members don’t want to have to choose between the United States and China. On certain issues I certainly wish they would, but there are no easy answers in this space. I hope that going forward, the United States is more thoughtful when it takes certain actions, not necessarily just in the trade space, so that it is not needlessly pushing countries to other side. In this regard, I would say that the elimination of USAID¹ was a gift to China.

Has the system lived up to expectations?

At most meetings in the WTO, you will likely hear a version of the following conversation. Developed country members will say, "The rules are great, we need to protect the rules-based multilateral trading system with the WTO at its core". Then many – though not all – developing country members will say that the rules have done nothing for them and have even prevented them from developing, the latter usually in reference to intellectual property rights. So, whatever you think the system is or should be, there seems to be plenty of dissatisfaction with it all around.

There are a few other areas where the rules-based multilateral trading system – or more specifically, its denizens – falls short.

First, a word on tariff liberalization. Up until very recently, the United States has kept a very open economy with very low tariffs. In addition, the United States has very little water in its tariff bindings, meaning the difference between the tariff levels it commits to at the WTO and its actual applied tariff. For the most part, U.S. bound tariffs are its applied tariffs. That is not the case for many other WTO members. Tariff negotiations are always seen as a two-way street. But the United States does not have much more tariff water to give except in sensitive sectors. Conversely, other members do. So it does not take much to see, perhaps, the roots of the United States’ frustration with the system it built and the concessions it offered to other members of such a system.

Next, there is transparency. There is nothing more basic than providing transparency about one’s trading system. And here, the United States is, if not the best, certainly among the best. And one must understand that transparency makes it easier for others to sue the discloser. You can’t monitor, assess, and sue others if you can’t even find the most basic information about what they are doing. This is an issue with many WTO members, but in particular with China. This is an area where the rules simply don’t apply in the same way to all members.

We welcomed China into the WTO in 2001 with faith and hope that, over time, its non-market economy would become more like the open market models upon which WTO rules are based. That did not happen. And we have found that rules that were created with market economies in mind simply do not apply in the same way to non-market, non-transparent economies. Is it fair to complain that you are retreating from international rules and norms if those rules and norms are incapable of addressing the very clear negative consequences of the Chinese economy and of its failure to follow through on moving toward becoming a market economy?

Should the United States say good-bye to the WTO?

Does this all mean that the United States should walk away from the WTO? My answer is no. A lot of good work still gets done, particularly at the technical committee level. At least during my time in Geneva, the United States has been present, and leading, in many areas. I hope that continues. It is a good sign that someone has been nominated by the Trump administration to be my successor as U.S. Permanent Representative to the WTO.

However, I don’t see any other way. It seems impossible that the United States – or any other Member for that matter – would ever agree to be subject to substantive rules it hadn’t consented to.

So, where does that leave us? As various parties negotiate bilateral trade "deals" with the United States, we will see the true appetite for "sticking to the rules". Early indications suggest that self-interest will prevail. There is nothing wrong with that.

While these negotiations are happening bilaterally, outside the WTO, the players are WTO members. There should be no silos between those who do bilateral negotiations and those who walk the corridors of the WTO. Perhaps members will look at plurilaterals in a different light. Sectoral arrangements may start making more sense. Perhaps bespoke but transparent arrangements can provide more certainty over the long run than blanket rules that may have worked in the past when the world was a very different place.

It is a new world. In the 30 years since it was founded, the WTO has not kept pace with the changing demands of global trade. We need to solve this. We need to get creative.

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[1] United States Agency for International Development.

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