USTR Describes the US WTO Reform Agenda, Takes Aim at Dispute Settlement

U.S. Trade Representative Katherine Tai laid out her priorities for reforming the World Trade Organization, providing concrete options that the U.S. and other WTO members can take to reinvigorate the international trade forum. In a Sept. 22 speech at the Center for Strategic and International Studies, Tai said that the biggest tenets of WTO reform revolve around "improving transparency," rebuilding the body's ability to negotiate new rules for new challenges and dispute settlement reform.

On this lattermost point, Tai noted the now-defunct Appellate Body's past "lack of restraint" and harm it caused to members' ability to "defend their workers from harmful non-market policies." She said she's been working with members to offer a better solution.

According to her prepared remarks for the Sept. 22 CSIS event, Tai offered the following three ideas: (1) promoting alternatives to litigation, including "good offices, conciliation, and mediation," for the whole WTO membership; (2) ensuring that dispute panels only speak to "what is necessary to resolve the disputes" and that corrections to decisions are limited to "egregious mistakes"; and (3) ending "judicial overreaching" and restoring "policy space."

In her rebuke of the established dispute settlement process, Tai called out panel reports that say the body can "second-guess Members' legitimate national security judgments." A 2022 WTO panel ruling that said the U.S.'s Section 232 steel and aluminum duties violated WTO rules since they were not adequately imposed in the name of national security (see 2212090060). The U.S. appealed this decision "into the void," barring future action or enforcement on the ruling.

Tai, addressing the need for greater transparency, said that reformers need to "make it easier for Members to share their laws and regulations and for the public to search and view them." She championed the creation of new digital tools that serve this purpose, noting that the U.S. supports the provision of technical assistance for developing countries on this front. Transparency also must become a "meaningful norm of WTO membership," Tai added.

She took aim at the WTO's negotiating function, declaring that rules are needed to better rely on diplomacy and negotiation and not "litigation between [members'] hired guns." Tai said that practices including "industrial targeting or discriminatory interventionist activities of state-owned enterprises," are ways certain WTO members are "skewing the playing field, strategically and systematically." As those members "become dominant suppliers" for many key goods, "they create supply chain concentrations and vulnerabilities -- which in turn become levers for economic coercion." Global economies "need to have real conversations about how the WTO can address these issues," she said.