America's sorry trade performance: whatever happened to all that talk about rule of law?

• Author: Lawrence, Robert Z.
• Position: Illustration

When the Appellate Body of the World Trade Organization recently ruled the United States' steel tariffs invalid, members of Congress complained bitterly. They pointed to the ruling as yet another example of a WTO body exceeding its charge and misinterpreting the rules. But their fingers were pointing in the wrong direction. The steel debacle was simply the latest example of America's chronic inability to play by the safeguard rules. WTO provisions allow countries to apply safeguards when imports are "a substantial cause of serious injury," but in five out of the six times the United States has adopted such measures over the past decade, they have been successfully challenged by affected trading partners. The steel finding marks the fourth year in a row in which the United States has had to abandon a safeguard measure approved by the President. Actions on wheat gluten, lamb meat, and line pipe all met a similar fate at the WTO; a broom corn safeguard was successfully challenged by Mexico under Chapter 20 of NAFTA.

This is not a record of which the United States should be proud. The behavior of its International Trade Commission (ITC) deserves as much attention as that of the WTO. America's international reputation as a law-abiding global trader is at stake. In addition, U.S. industries that merit relief need to be sure that the protection they have been granted can withstand WTO scrutiny. The ITC needs to write decisions that cannot be overturned.

Safeguards play an important role in encouraging countries to sign new trade agreements. Free trade brings benefits in the long run, but it may cause unemployment and require painful adjustments in the short run. By giving countries the ability to invoke temporary protection when imports are more disruptive than expected, the Safeguards Agreement encourages countries to sign WTO agreements in the first place. Safeguard measures also operate as a safety valve, helping to preserve the rules by permitting temporary protection without threatening the entire system. It is ironic, therefore, that this system, set up to preserve the rules, has been associated with so many violations.

These violations raise troubling questions. The United States surely has an interest in creating a trading system based on the rule of law, not to mention preserving its reputation for adhering to international agreements. Indeed, those interests are why, although not without delay and complaint, America has eventually complied with the adverse WTO rulings. But why, as a nation so fond of preaching the virtues of adherence to the law, does the United States...