Trade agreements are generally mutually beneficial contracts for the international exchange of goods, either signed as unilateral or bilateral agreements. The governments of signing countries are supposed to be protecting the interest of its citizens and exporters, though, at times, the reciprocity of the arrangement can run amuck. More specifically, one country may allege that another country has failed to comply with the agreement terms, with the end results being a damaging partnership. For the United States, there has been a lot of attention to the global trading system. Not only has President Trump gotten into a trade conflict with China, but his administration has also taken great strides against the North American Free Trade Agreement. However, his greatest afront to the global economy might come down to his fight against the WHO.
Though poor global trading policies didn’t cause the Great Depression, high tariffs and taxes kept the United States from engaging in productive trading at the turn of the 20th century and post-World War I. However, under the Roosevelt Administration, Secretary of State Cordell Hull pushed the U.S. away from restrictive trade policies into freer trade agreements and lower tariff rates. In turn, countries around the world lowered their tariffs on U.S. exports. As World War II raged on, the U.S. foreign policy was just as focused on expanding the global trading systems as it was about establishing the U.S. as a leading global military power. With this new position, the postwar order revealed expanded market access to American exporters. By the end of 1947, there were 23 countries that banded together and enacted the General Agreement on Tariffs and Trade (GATT). This became the rule books for international commercial policy and reduced tariffs across the board.
The Evolution of the WHO
After the ratifying of GATT, a global economic boom occurred as trade volumes explored. Because of this success, Japan and much of Europe were able to successfully rebuild. Through the leadership of the U.S., several additional rounds of negotiating occurred to continue lowering nontariff barriers and reducing tariffs. While GATT worked well until the 1970s, several flaws came to light that highlighted the need for a dispute settlement arm of the organization. The United States continually flexed its economic might and often imposed unilateral tariffs in an attempt to force open markets that European countries had kept closed through secret alliances. Though unsuccessful in opening new trade options, these actions did successfully anger many of the trading partners. The results of a U.S.-against- the-world negations led to the transition of the GATT into the World Trade Organization, with the U.S. giving up its aggressive tactics and the Europeans agreed to a dispute settlement system. The Appellate Body is the highest court of international trade and it hears cases of trade disputes and other trading interests. For the United States, the Appellate Body has been an ally in targeting foreign protectionism, and the U.S. has won about 85% of the cases it brought before the court.
The Lonely Road of Economic Policy
The Trump administration has found a new way to flex its economic might, as the administration continually block nominees to the Appellate Body, but also denies support for some globally beneficial resolutions. One of the most recent oppositions came against a movement to promote breastfeeding. As a newly elected WHO executive officer, the Honorable Volda Lawrence from Guyana has long emphasized the benefits and importance of breastfeeding for the health of both infant and mother. According to several investment records and announcements by the Guyana Bank for Trade and Industry, there are several U.S.-based companies exploring oil drilling contracts in the tiny country of Guyana. While the Trump administration may be against the breastfeeding resolution since there is a distrust of international regulatory actions that could impede corporate prerogatives, fractures with the WHO may lead to complicated relationships with our trading and commerce partners around the world. Trump has already circumvented the WHO in his efforts to hold China accountable for alleged trade misconduct, but this could just be the start of a lonely road of vigilante global policies.
Abandoning the System
When it comes to trade agreements, there are two sides to every story. Some realize the benefits they bring, while others prefer to enumerate the negative consequences of limited free trade. However, for the system of dispute resolution that is in place, nothing good can come from snubbing the rules that have largely worked for the past three decades. While there are some countries that may need more aggressive action than can typically be administrated by the WHO, the multilateral system that was largely constructed by the influence of the U.S. has been productive in resolving disputes. As an initial creator, there is a larger sense of responsibility for the United States to honor its investment or approach the members with ideas for new negotiations. Subverting the WHO authority doesn’t demonstrate strength, but indicates a lack of respect for peers, global partners, and the interest of the U.S. population.