Learning to Love the WTO

Marcus Noland

From Foreign Affairs, September/October 1999

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Summary:  U.S. trade policy is adrift and under siege. America's traditional commitment to open markets is now buffeted by both left and right, from labor unions and environmentalists to big business and "America First" isolationists. Fortunately, the advent of the World Trade Organization offers Washington a chance to balance the protectionist threat. If the United States cooperates with the WTO to settle trade disputes multilaterally, it can dilute both protectionist pressure at home and anti-American resentment abroad. But robust leadership and commitment will be needed, and neither Congress nor President Clinton seems up to the task.

Marcus Noland is Senior Fellow at the Institute for International Economics and former Senior Economist at the Council of Economic Advisers. Copyright (c) 1999 by the Institute for International Economics.

CLUELESS IN SEATTLE

As the WTO gears up for its biannual ministerial meeting this November in Seattle, American trade policy is adrift and under siege. From unions and corporations seeking protectionist favors to idealistic nongovernmental organizations (NGOs) battling for the environment, special interests are trying to sideline Washington and increase their own leverage within U.S. trade policy. Neuralgic American isolationism from both left and right continues to resist U.S. participation in the World Trade Organization, while traditional allies like Europe balk at what they see as America's unilateralist arrogance in settling disputes.

Washington must revive its traditional commitment to trade liberalization across the globe. Opening new markets and slashing trade barriers should remain its top priority. The United States should vigorously support the continued liberalization of agriculture and services that began in the 1992 Uruguay Round trade negotiations and press for further tariff-slashing in manufactured goods. It should also push the WTO to rein in antidumping laws and develop a coherent antitrust policy to tackle trade disputes.

Most important, the United States must remember that the advent of the WTO has radically changed today's trade environment. However well robust unilateral sanctions against protectionist nations may once have served American interests, the playing field has now become more level. Instead of using its economic muscle to pry open markets unilaterally, the United States now must work within multilateral institutions to advance liberal trade and rebuild trust among partners. Just as important, it must address the challenge posed by the new unilateralists in the American debate: the NGOs. Washington should adopt a multilateral strategy to accommodate the environmental and social issues encroaching on the trade debate without letting their interest-group patrons hijack the U.S. trade agenda. The best way to do this is by encouraging other international bodies to tackle the host of new issues and discourage the haphazard use of trade policy to promote these concerns. Only then can the WTO remain free to focus on liberalizing trade and settling disputes rather than, say, saving sea turtles. And the NGOs will find more appropriate forums for their agendas without distracting Washington or the WTO.

Ideally, Washington should support a two-part deal that recognizes a role for other international institutions and forswears unilateral extraterritorial action. For the first part, the United States could help establish multilateral institutions (or support existing ones) that work on environmental, labor, and human rights issues; it could also help alter WTO rules to permit certain trade restrictions as part of these new institutional enforcement mechanisms. For example, a global environmental organization (called, say, the GEO) might conclude that saving sea turtles warranted action. If a member country threatened their survival, the GEO could offer a menu of sanctions (travel and trade restrictions, embargoes, etc.) that other countries could chose to enforce without violating WTO and GEO obligations. At the same time, member countries (including the United States) would not be allowed to apply trade restrictions to support domestic laws that are not part of the global ...

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