This is my last HODs meeting. I never expected that someday I would represent my country at the World Trade Organization. It has been a great privilege, and I will always be grateful to President Trump and U.S. Trade Representative Robert Lighthizer for this opportunity.
I want to thank my WTO colleagues for their warmth and openness. From day one, you have welcomed me and extended the hand of friendship. You have helped make my experience a deeply enriching one.
My thanks also go to former Director General Roberto Azevedo, the four DDGs, and the entire Secretariat team for the professionalism they consistently display. I have benefited from the Secretariat’s expertise, which they have generously shared.
In particular, I want to thank Alan Wolff for his passion and commitment and frequent words of wisdom and thank you, Karl Brauner, for your steady hand in keeping the WTO running during the pandemic while protecting the health of us all. You have done an outstanding job.
I wish to acknowledge the members of the U.S. delegation, who each day – by their words and actions – contribute immensely to the work of this institution.
Finally, I want to thank the government of Switzerland for allowing the Shea family to enjoy the delights of this beautiful country.
As I reflect on my nearly three years at the WTO, one of the roles I think I have played is to expose problems that pre-existed my arrival in Geneva, but were largely ignored despite requiring more forthright attention.
So, in that spirit, please allow me now to offer some final thoughts and observations.
I have been hearing recently that what ails the WTO is a “lack of trust” among its members. I respectfully disagree with this diagnosis.
Colleagues, when each of you takes the floor here at the WTO, I trust that you are faithfully representing the views of your governments. And I believe you trust that I, too, have been conveying the views of the United States government, hopefully with some clarity and persuasiveness.
As I see it, the core problem at the WTO is not a lack of trust but a lack of like-mindedness. We simply disagree on some fundamental issues. These divides make progress here at the WTO exceedingly difficult and threaten the institution itself.
Let me point out three areas where I believe the lack of like-mindedness is most pronounced and problematic.
First, the WTO is designed to support free and fair trade based on market competition. As one of the main architects of the multilateral trading system, the United States has always believed that adherence to market-based policies among trading parties was essential if this system is to work effectively and fairly. We held this belief when we joined the GATT, agreeing to rules dedicated to openness, transparency, and fair, market-oriented competition grounded in the rule of law. We held this belief when we signed the Marrakesh Declaration with its commitment to “open, market-based policies.” And we held this belief when we have insisted in literally dozens of WTO accessions that the acceding party undertake domestic reforms to reduce the role of the state in the economy and increase market orientation.
Unfortunately, some WTO members apparently do not believe that market orientation is part of the WTO’s DNA. In their view, the WTO is agnostic between market and non-market economies – both belong here on an equal footing. This is not just a philosophical difference; it also has a practical impact.
In 2001, when China acceded to the WTO, there was much hope that its economy would further open up, liberalize, and embrace market principles. Regrettably, this future has not fully materialized. In fact, we have witnessed significant retrenchment, a process that has been ongoing for well over a decade.
Today, we see an economic system in China in which state-owned and -influenced “national champions” are lavishly funded by state-owned banks, charged with meeting state-determined industrial policy goals, assisted in this effort by state-sanctioned intellectual property theft and cyber espionage, and supported by a panoply of policies that discriminate against foreign competition. Add to this mix the absence of an independent judiciary where business disputes can be decided fairly, highly restrictive information controls, increasing Party involvement in state-owned and private enterprises alike, and an overall lack of transparency, and the playing field becomes even more unlevel.
Such a state-led, non-market economic system is incompatible with the WTO and its norms. To believe the WTO can manage this system’s trade-disruptive impact under current rules and through the dispute settlement process is fantasy.
Second, the United States has long believed that greater integration into the international trading system through compliance with WTO rules is good – a net positive – for a nation’s economic development. While the U.S. has always supported special and differential treatment for LDCs and less developed nations, we believe the ultimate goal of everyone should be full compliance with the rules as laid out in the various WTO agreements.
Unfortunately, it seems today that the overriding preoccupation of far too many WTO members is to be exempt from the rules. This situation is made worse when some of the world’s largest trading nations and advanced economies claim entitlement to SD&T as of right. So the question becomes: If you don’t want to abide by the rules of this organization, why be a member?
I’ll answer that question: Clearly, participation in the global trading system results in benefits. That’s why WTO membership is valuable. But the system cannot be sustained if members continue to extract benefits without making commensurate contributions.
The third area where the lack of like-mindedness is pronounced is, of course, dispute settlement. As expressed in the Dispute Settlement Understanding, the WTO membership never charged the Appellate Body with creating a corpus of international trade jurisprudence – its role was to promptly make recommendations that would assist the DSB in resolving individual disputes. The role of issuing authoritative interpretations of the WTO agreements that are binding on all Members has always been reserved to the Members themselves, acting in the Ministerial Conference or the General Council.
The intended mandate of the Appellate Body was therefore always a limited one – to correct legal errors by panels and to do so expeditiously.
The debate over the past three years demonstrates that some WTO Members have a fundamentally different vision for appellate review than the limited role set out in the DSU. They see the appellate reviewer as an independent international court charged with establishing binding precedent, enforcing “coherence,” filling gaps in the agreements, and creating a global common law of trade.
This clash of visions simply can’t be papered over with a few word tweaks here or there. It requires a much deeper conversation, one that the U.S. has repeatedly sought.
And let me add that concerns about Appellate Body overreach and rule-breaking are longstanding and shared across the political spectrum in the United States.
With these wide divergences among the membership, it’s no wonder that the WTO has underperformed over the past 25 years – just one multilateral agreement, the Trade Facilitation Agreement, and no multilateral outcome that reduces tariffs and improves market access.
On fish, it is true we have made some progress thanks to the efforts of Santiago Wills with help from Didier Chambovey and despite this year’s unique challenges. But let’s be serious: this negotiation has been ongoing for nearly twenty years, and by that measure, progress is very modest. This is certainly not the timeline of an organization aspiring to be effective and relevant.
Where the WTO goes from here, I do not know. But, in my view, building greater like-mindedness and a sense of shared purpose around a common set of values will be essential if the system is to survive and live up to its significant potential. To those who wish to engage in this enterprise, I will be rooting for you.
I hope my candor has made some contribution to the WTO reform effort. Most of all, I hope that you and your families stay safe and well, and I wish each of you much happiness in the years ahead.
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