Former USTR General Counsel Defends Tack on WTO, Tariffs
NEW YORK -- A former WTO appellate body panelist criticized the administration's trade policies as chaotic and ineffective and former U.S. Trade Representative General Counsel Stephen Vaughn defended them, while a top WTO official tried to see the good in both arguments. They were all speaking on the state of world trade at an International Trade Symposium co-sponsored by Finastra and The Economist on Nov. 6.
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"I think the strategy’s working very well," Vaughn said. "We have a very strong economy right now, very low unemployment, very low inflation." He said trade is continuing to flourish, with 2018 exports and imports higher than in each of the previous two years.
Vaughn said the end of the appellate body at the World Trade Organization would encourage more trade liberalization negotiations, and that Geneva is over-reliant on litigation. He said things worked fine before 1995, under the General Agreement on Tariffs and Trade (GATT) system, where there was no way to appeal decisions, and countries could block panel decisions they disliked.
"Right now the United States has no practical leverage; our tariff rates are so low, everyone already has the access they want to the American market," he said. "Countries like India, some of these other countries we deal with, we do need to find a way to get more leverage to U.S. negotiators."
The administration has argued for a legislative change that would give the president the power to hike U.S. tariffs to match trading partners' tariffs (see 1908090034). Jennifer Hillman, a former appellate body panelist and Georgetown Law professor, said that if that bill became law and was used, the U.S "would have 164 different tariff schedules. As a purely practical matter, it does not work," she said.
She said it's disingenuous for the administration to trot out the 10 percent European tariff on autos when it describes the problem. The U.S. has a 2.5 percent tariff on autos and a 25 percent tariff on light trucks. Hillman said in a previous round of negotiations on GATT, the U.S. did not push for a lower European tariff on cars, because American companies who had factories in Europe didn't want them. Instead, it convinced European countries to lower tariffs on other goods, and she said, "a lot of European tariffs on other goods are lower than our tariffs."
Vaughan said there may have been good reasons in the 1950s for negotiating priorities, but that's not a reason to freeze tariff rates where they are now. He also said the president would not have 164 tariff schedules.
Alan Wolff, deputy director general at the WTO, agreed with points both Vaughn and Hillman were making. "Of course you want reciprocity with countries of like negotiating status," he said, but that doesn't mean every product is taxed the same. He said when you look at the European Union-Mercosur agreement, the South American countries lowered their tariffs on cars and Europe lowered its barriers to South American beef. "Foster your interests with your trading stock," he said.