‘All talk and no walk’: America ain’t back at the WTO

Biden is in no rush to revive the World Trade Organization from the deep freeze that Trump pushed it into.

BY SARAH ANNE AARUP

GENEVA — U.S. President Joe Biden declared back in February that “America is back,” but it doesn’t feel that way in Geneva.

In the run-up to the World Trade Organization’s most important gathering — the ministerial conference usually held every two years — there is wide dismay that Washington isn’t leaping back into multilateral trade with gusto, but is still skeptical of re-engaging with an institution that it sees as failing to counter China’s state-led economic model.

The ministerial powwow for the WTO’s 164 members will run from November 30 to December 3, but there is scant hope the lakeside meetings will rescue the moribund trade body from its cryogenic freeze.

Few diplomatic fora were so looking forward to the end of the era of U.S. President Donald Trump, who lambasted the WTO for being soft on Beijing and brought the world’s top trade court to a halt by vetoing the appointment of its judges. But Biden is bringing changes of style rather than substance. His administration is just as fixated with Beijing’s massive state subsidies as Trump’s was, and the WTO’s supreme court is still rudderless because of Washington’s veto.

Admittedly, U.S. Trade Representative Katherine Tai sounds more accommodating toward the organization than her predecessor Robert Lighthizer. “Let me begin by affirming the United States’ continued commitment to the WTO,” she said during a trip to Geneva last month. “The Biden-Harris administration believes that trade — and the WTO — can be a force for good.”

That’s more polite than Trump, who even threatened to pull Washington out of the WTO, but her words fell flat with diplomatic delegations in Geneva.

“There were really high expectations with regards to what she was going to tell us about potentially more concrete re-engagement at the WTO,” one Geneva-based trade diplomat said, describing a room full of ambassadors. “But that didn’t happen. It was a big disappointment.”

Pascal Lamy, the former director-general of the WTO and a former EU trade commissioner, echoed that sentiment. “I think what has happened since a year roughly — at least since [the U.S.] started talking a bit about trade — and what Katherine Tai has been doing, is all talk and no walk,” he told POLITICO. “If you look at where they have moved, so far, zero concrete moves.”

In the run-up to the WTO’s conference (dubbed MC12), the U.S. has few tangible proactive proposals to boast of, be it in trade and health or WTO reform.

Tai told reporters last month that her Twitter announcement in May about Washington supporting an intellectual property waiver for COVID-19 vaccines was “an exercise of leadership.” But the U.S. hasn’t presented any concrete text proposal over the past year and is remaining relatively neutral and cautious during meetings. What’s more, Washington is also trying to water down a political declaration on trade and health being prepared for the ministerial meeting.

Washington sees red

The cold war between the U.S. and China is at the heart of many of the problems behind the attempt to revive multilateralism.

During last month’s WTO review of China’s trade policy, Washington lashed out against Beijing, insisting that the international trading system is failing to counter China’s unfair practices 20 years after it joined the trade body.

“China has used the imprimatur of WTO membership to become the WTO’s largest trader, while doubling down on its state-led, non-market approach to trade, to the detriment of workers and businesses in the United States and other countries,” said David Bisbee, chargé d’affaires at the U.S. mission to the WTO.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics think tank in Washington, suggested multilateral legal frameworks were failing to keep pace. “There is a big concern that the current rules don’t cover the types of Chinese practices that cause the most problem.”

But Schott cautioned that America’s strongarm tactics weren’t an effective response either. “The United States using unilateral coercion was unable to get anywhere on the state support for public enterprises in China. The approach that the Trump and Biden administration has taken so far have gotten nowhere, let’s be honest about that,” he added.ADVERTISEMENT FROM EQUINORabout:blankSCROLL TO CONTINUE WITH CONTENT

Even the WTO’s sustainability-focused talks to curb subsidies that lead to overfishing are now caught up in the broader U.S.-China struggle. In May, Washington proposed new wording for the fisheries negotiations to recognize the link between forced labor and illegal, unreported and unregulated fishing. The switch to an approach targeting “forced labor” is widely seen as an attack against China, which doesn’t want these kinds of labor practices being wrapped into the trade debate, especially as Beijing tries to dismiss mounting evidence of repression and forced labor in the Xinjiang region.

“The text that [the Americans] proposed is actually quite innocent, so to say, so nobody can really argue with the content,” another Geneva-based diplomat said. “The problem is, of course, the systemic angle, and there, the Chinese are afraid” that this could set a precedent for other WTO talks.

Diplomats and observers read the American move to call out forced labor in illegal fisheries more as tactics than substance. “If they really want something substantive on forced labor, it could only happen at the International Labour Organization. So the political intentions behind this proposal are clear,” the first Geneva-based diplomat said. “Whereas we really need substance on vaccines and that the entire world is calling for it, the Americans are silent. But when it comes to forced labor … they mobilize.”

The choices the U.S. is making at the WTO — aggressive toward China and passive on key topics like health or reform — are dictated by domestic constraints. “Those who believe that a trade policy is an international policy get it wrong. A trade policy is a domestic policy,” said former WTO chief Lamy.

Although “America First” is no longer officially the U.S. mantra since Biden stepped in, “Buy American” and nationalist sentiments are still taking a toll on U.S. trade policy. “A lot of Americans feel that trade liberalization has been unfair,” said Jean-Baptiste Velut, who researches American political economy at the Sorbonne Nouvelle University in Paris. There’s “strong nationalist resentment in the U.S. that Biden can’t ignore,” he added.

The administration isn’t willing to burn its political capital in Congress on trade and WTO reform at a time when Biden is focused on countering China and on his landmark Build Back Better legislation. “The short-run constraints of domestic politics in the United States are affecting the actions that the United States is willing to take [at the WTO],” Schott said.

Happy with the status quo

Countries, business groups and experts are nervous about the lack of U.S. drive ahead of MC12.

Tai remained non-committal in her Geneva speech, telling reporters: “What success will feel like for me is that the day after MC12 concludes, that I feel a hope and invigoration for continuing the work that we’re doing at the WTO … If there are a couple of trophies and badges that we have from the work at MC12, all the better.”

The EU’s ambassador to the WTO, João Aguiar Machado, said last month that “so far, we have not seen engagement” on the dispute settlement court that the U.S. froze. “It may well be that the new administration is still considering what sort of reforms they want, [but] there have been no proposals made by the U.S., and there has been no discussion whatsoever since the system became paralyzed in December 2019.”

Clete Willems, a former White House trade official under the Trump administration who now works for law firm Akin Gump, said he thinks Washington is being proactive in the fisheries talks and discussions on intellectual property for vaccines, but does wish the U.S. would take more of a lead on the trade and health declaration and WTO reform. “It is in the U.S. interest to actually start making proposals” on reforming the institution, Willems said. Now, American business groups are also calling for “urgent U.S. leadership” ahead of MC12.

“The feeling here in Geneva is that there’s an expectation of a more strategic positioning of the U.S. It’s obvious that what they’re sustaining now is the status quo, and the status quo suits them more than just fine — especially regarding their blockage of the Appellate Body, which allows them to have ample leeway on trade policy. It’s pretty clear that they aren’t ready to give up this impunity at the WTO,” the first Geneva-based trade diplomat said.

U.S. trade officials reject the premise that there’s a lack of American leadership and drive at the WTO. “We are deeply engaged, and I can’t think of a member that is more engaged than the United States is across the organization,” an official from the Office of the U.S. Trade Representative (USTR) said. Another USTR official added: “We have lots of proposals, and we are active in every single venue. So I’m not sure how anybody who is paying attention could say that we are not out in front and leading on issues.”

On reforming the institution, the officials said that Washington is advancing carefully. “We need a serious conversation on reform, and not one that is jammed through in a month or two,” the second USTR official said. “We are taking a much longer-term view. Ambassador Tai has repeatedly said the important thing is that we have a functioning WTO to return to in January to begin serious work.”

They declined to say whether the U.S. will be in favor of committing to WTO reform in a ministerial declaration. “Certainly, whether that sentence [on reform] is used or not, we are committed to fixing this organization and making it relevant,” the first USTR official said.

Doug Palmer and Barbara Moens contributed reporting.

Link to the Politico article