US Mission at WTO Says MFN's Era Has Passed

A reform agenda at the WTO should re-examine the most-favored nation principle, the U.S. argues, as well as the right of WTO panelists to second-guess actions taken under a national security rationale, such as Section 232 tariffs on kitchen cabinets and Canadian-assembled minivans.

It should also discuss the role of the Secretariat, which the U.S. says has outgrown its britches.

"The United States has serious concerns with the trading system embodied by the WTO, given that the system has overseen and contributed to a world of severe and sustained imbalances. These imbalances, which are driven in part by overcapacity and concentration of production, have created dangerous dependencies and vulnerabilities for many countries and have undermined many countries' legitimate aspirations to develop or maintain industrial capacity," the document said.

The U.S. said it has raised these "systemic problems at the WTO" since "at least 2016."

"When a country subsidizes its steel firms at 10 times the rate at which other countries subsidize their firms and develops capacity for almost twice the number of vehicles its own market purchases, global trade is distorted," the U.S. argued. "When a country pursues such a beggar-thy-neighbor economic model, its output growth comes at the rest of the world's expense."

The document called the U.S. goods trade deficit "absurd," and said it "cannot reasonably be explained as the result of real comparative advantage."

The document pointed out that the U.S. tried to get countries to live up to their transparency commitments at the WTO, with a consequence for chronic neglect of these rules.

"But the Membership, as a whole, has not accepted this basic principle," the U.S. said.

On natural security, the U.S. said that WTO panels have passed judgment on actions taken to protect "their essential security interests. Litigating sovereign matters of essential security at the WTO undermines public trust in the WTO by dragging the organization into inherently political matters."

The U.S. complained that self-definition as a developing country means large trading economies can choose not to accept obligations, or to phase them in more slowly. "It is ... untenable for WTO rules to apply to some Members, and not others, in perpetuity."

With regard to the Secretariat, the U.S. complained that it has sought to influence the work agenda and has "advocated for specific outcomes at the negotiating table and has leveraged its tools to apply pressure to Members that hold different views."

The Secretariat should be administrative, the U.S. says, and should not advocate for any policy. Moreover, the U.S. complained that delegates to the WTO reflexively support more trade, and stability in trade rules.

"Adhering to the status quo with a severely distorted playing field can lead to only one result: further concentration of production and Members' loss of productive capacity," the U.S. argued.

"Our collective reform efforts should be directed at making changes that recognize the limitations of the organization and strengthen what Members can realistically achieve through the WTO," the U.S. said, such as allowing plurilateral agreements whose benefits only flow to signatories.

The document concluded, "The United States welcomes opportunities to speak candidly about the organization's problems and limitations. If the WTO does not reform by making tangible improvements in those areas that are central to its mission, it will continue its path toward irrelevancy."