President Joe Biden has continued two Trump administration tactics that have been criticized as potentially damaging to the international trading system, dashing hopes that Biden might take a more moderate approach to World Trade Organization (WTO) issues.
According to a statement obtained by Bloomberg on Monday, the U.S. delegation to the WTO supported the Trump Administration‘s decision to treat Hong Kong exports as “made in China” and argued that the WTO has no authority to mediate the matter because, under WTO rules, members can take any action to safeguard “essential security interests “.
The U.S. delegation stated that “the situation in Hong Kong, China, poses a threat to U.S. national security and is not amenable to a WTO dispute settlement mechanism to adjudicate national security issues.”
Prior to 2016, WTO members generally avoided defending their trade practices on national security grounds because doing so could encourage other countries to push protectionist policies in droves.
● Steel and aluminum tariffs
That changed in 2018, when the Pugh administration activated a Cold War-era law to justify tariffs on imported steel and aluminum. In response, U.S. trading partners such as Canada, the EU and China filed a dispute settlement lawsuit with the WTO, with a ruling expected within the year.
Since then, other countries, including Saudi Arabia, India and Russia, have also cited WTO exceptions to national security grounds in regional trade disputes, for which trade experts have warned that these practices could undermine the WTO’s ability to mediate disputes.
The Biden Administration said Monday that the U.S. has consistently argued that national security disputes are not subject to WTO review because it would infringe on the right of member states to make judgments about their own security interests.
Despite U.S. opposition, the WTO accepted the Hong Kong-related dispute investigation and will set up a panel of experts to consider and make a decision, which could take two to three years.
The Appellate Body remains paralyzed
In the same meeting, the Biden administration said it did not agree to appoint new members to the WTO appellate body. The seven-member panel has the final say on international trade disputes until 2019.
The Biden administration said it disagreed because, like previous administrations over the past 16 years, the current administration still has “institutional concerns” about the functioning of the Appellate Body.
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