Trade: U.S. is "World's Biggest Loser"

Manufacturing News today (sorry, not linkable) says that the U.S. is the "world's biggest loser - by far" in terms of the WTO dispute resolution system.

The World Trade Organization has ruled against the United States in 40 of 47 cases... That number is "astounding," according to Robert Lighthizer, a partner in charge the international trade group at the law firm of Skadden Arps Slate Meagher & Flom. The United States "has suffered disproportionately from the problems with the WTO dispute settlement system, having been named as a defendant in far more cases than any other WTO members."
(Note that Public Citizen's dispute database shows that the United States has lost 43 of 50 cases. Since Manufacturing News doesn't elaborate further on its statistics, we're not sure where the discrepancy arises.) Lighthizer goes on to say,

"As a result of this judicial activism, our trading partners have been able to achieve through litigation what they could never achieve through negotiation... The consequent loss of sovereignty for the United States in its ability to enact and enforce laws for the benefit of the American people has been staggering. The WTO has increasingly seen fit to sit in judgment of sovereign acts running the gamut from U.S. tax policy to environmental measures to public morals."

All this is true, but it's not just the United States that loses at the WTO. Pretty much all defendants lose WTO disputes. According to Public Citizen's WTO disputes database, while the United States has lost 86 percent of its cases as a defendant under the WTO Dispute Settlement Understanding (DSU), out of all DSU cases, the defendant loses 88.7 percent of the time. So the United States is roughly in line with the rest of the world in terms of having its domestic laws overridden by the WTO.

So claiming the United States loses at the WTO is accurate, but also misses the bigger picture a bit. As Dani Rodrik says as quoted in my earlier post, what's really needed is to rethink the whole system.

Has the WTO threatened us? - World Trade Organization ruling against US - Column

Well, it happened: the World Trade Organization ruled against an existing law, and people are up in arms. Candidates Dole and Buchanan have suggested that this is on the order of the British navy moving in to restore the crown as sovereign in U.S. affairs.

Here is the quarrel. Brazil and Venezuela, in recent months, attempted to bring into the United States what we might as well call "dirty oil," meaning that it is oil that contains a higher density of pollutants than is permitted by the Clean Air Act. So, we denied that oil access to the American market.

A suit was filed with the WTO by Brazil and Venezuela, which asserted, correctly, that the same quality of oil turned down at our frontier was in fact being pumped, sold, and burned within the United States. This is, plain and simple, discriminatory, and of course the General Agreement on Tariffs and Trade exists in order to protest discriminatory practices.

Now the United States has several defenses, none of them conclusive -- they are an attenuation of the violation rather than an excuse for it. It happens that the load of oil being permitted to market notwithstanding its high pollution content was something on the order of an exception. The franchise was given with a view to saving a considerable deposit of oil, on the understanding that the international standard would be invoked beginning in 1998.