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United States
CommentUnited States
Zhou Xiaoming
Zhou Xiaoming

Opinion | Disregard for WTO shows US is a destructive force for the rules-based global economic order

  • Washington says it wants WTO reform but, in reality, it simply does not want to be beholden to a rules-based order it helped create
  • By blocking key WTO functions over its grievances with China, the US has turned a platform designed for cooperation into a cockpit for power contests

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Illustration: Craig Stephens
Zhou Xiaoming
Washington’s Inflation Reduction Act, a US$430 billion package that offers subsidies and tax credits for US-manufactured products, is prompting countries – including America’s own allies – to cry foul. France and Germany, for example, are considering taking Uncle Sam to the World Trade Organization (WTO). However, Washington’s latest move is just another case of the US undermining the rules-based global economic order.
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Decades ago, the US led the creation of trade rules for the world. Now, in a peculiar twist, it is leading in undermining these rules and multilateral institutions. While demanding other countries comply, Washington frequently flouts multilateral trade rules that are not aligned with its interests.

In a move indicative of Washington’s disregard for WTO procedures, the Trump administration unilaterally slapped punitive tariffs on trading partners in 2018, notably China. And, despite a WTO report in September 2020 that found the US to be contravening WTO rules, current US President Joe Biden has kept the unfair duties on some US$360 billion worth of Chinese imports, pushing the US’ average tariff rate on Chinese goods to over 19 per cent, from 3 per cent before the trade war started.
In another apparent violation of WTO principles, Washington stripped Russia of its “most favoured nation” trade status, a privilege to which any WTO member is entitled, and removed Russian banks from the Swift international payment system, after Russian troops advanced on Ukraine. More recently, the White House spearheaded a price cap on Russian oil sales, a move that could violate the WTO’s “most favoured nation” status rule and provision on quantitative restrictions.

Washington, while winning the vast majority of its WTO disputes, often refuses to implement rulings that are not in its favour. Over the years, a total of 15 cases, the largest number of all WTO members, have been lodged against the US for its non-compliance of the adverse rulings.

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As a result, multilateral trade rules, critics say, are to Washington what a coat is to a man. He wears it in times of need, but quickly takes it off on a sweltering day. More probably, though, these trade rules were not intended to bind the US in the first place, as a flashlight is not designed to be directed into the face of the one holding it.

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