Former USTRs Address WTO's Future, Congressional Inaction

The former USTRs discussed the collapse of political support for opening markets, and the new bipartisanship around trade, which is largely an agreement that having supply chains that rely on China for anything critical for health or advanced manufacturing is a mistake.

Michael Froman, USTR at the end of the second Obama administration, said free trade advocates can't wish away politics. "There are groups of people who feel left out and alienated by the system. They may attribute that to immigrants; they may attribute that to trade agreements," he said. He said politicians have not spent enough time figuring out how to address that alienation effectively.

CSIS's Bill Reinsch, moderator, asked the panel about the future of the Generalized System of Preferences benefits program and the African Growth and Opportunity Act, which expires in 2025.

Susan Schwab, USTR at the end of the second George W. Bush administration, said that because GSP keeps expiring, it doesn't really help emerging economies as it should -- "not even mentioning that it excludes a whole lot of things."

She said, "I think it’s incomprehensible we let GSP expire again."

Ron Kirk, USTR during the first Obama administration, said it's not that surprising Congress can't get GSP passed. "We have a fractured government at home," he said. "My frustration is we are at a moment in our politics that we can't agree whether an election is fair or not. Or whether Joe Biden is president or not. Or whether what we all saw on January 6 was a bad thing or not. And that's a dangerous place to be."

The topic of the tariffs on Chinese imports came up, and Carla Hills, who negotiated NAFTA as USTR during the George H.W. Bush administration, stood alone in believing they could be removed. "In the past we have worked with China," she said. "I think that there’s an opportunity there to take small steps, each of us, that will tend to reduce the friction." She imagined high-level talks on specific items, with each side agreeing to roll back tariffs on a subset of the products, then another group, then another group. She said there are ways to find win-wins.

Kirk said, "I don't think it's in our best interest to look for win-wins. I think we’ve got to be very sober about the fact it’s a very different China."

Froman said that unless China moves back toward market reforms, there's not really any way to reconcile. "The bulk of the problem on resolving the U.S.-China relationship, I hate to say it, lies with China," he said.

Schwab said, "I agree entirely. We can’t be negotiating with ourselves."

Reinsch asked the panel about the World Trade Organization, and whether the appellate body would ever be reanimated, and does it matter if it's not.

Hills said the U.S. should sign onto the changes proposed by New Zealand's ambassador to the WTO, known as the Walker Principles (see 1912090031)

Schwab said she's feeling more optimistic about the future of the WTO after visiting it in Geneva, but she's not sure an appellate body will ever be reinstated. "I am very sympathetic to the complaints about the appellate body," she said.

She said criticism that the U.S. is prolonging the impasse by not going public on what changes would convince it to lift its block on appellate body appointments is misplaced. "I suspect that all of us agree that if the U.S. walked into the General Council with a paper: 'This is what we want,' they would be laughed out the room."

But she said delegations are talking about how to fix dispute settlement, and she said the U.S. delegation "is very much engaged" in those discussions.

Froman said dispute settlement "lost so much credibility" over the years. "By the time you won a case, the industry you're defending has already gone out of business. We can’t go back to that."

Portman also talked about the WTO in his remarks, noting he introduced a bill authorizing the administration to negotiate sector-specific plurilateral agreements that don't offer the benefits of the agreements to countries that are not signatories. Generally, plurilateral agreements at the WTO have lowered tariffs or other barriers for all countries, whether they participated or not, but the government procurement agreement is an exception.

Portman said this approach could be used for digital and services agreements, or for tariff reductions on environmental goods and medical goods. He said it could be used to "move supply chains away from our adversaries."

Schwab said the WTO member countries should have agreed to eliminate tariffs and other trade barriers on products and services that reduce greenhouse gases. "It is a no-brainer," she said. "That has been held up by, primarily, China. There was an agreement on 54 products -- you guys could have closed it except for bicycles."

Reinsch said it was a little more complicated than that, though the high antidumping duties in Europe on Chinese bicycles -- and the EU's unwillingness to allow its domestic industry to die -- were definitely a major issue.

"More interesting to us is why hasn’t it restarted? We haven’t restarted it because we think China will be the biggest beneficiary and we don’t want to support this," he said.

Schwab said, "Climate would be the biggest beneficiary."

Portman said the CHIPS Act was in part "motivated by real concerns that trade -- particularly with China -- have hollowed out America's industrial base, making it difficult to compete. I share these concerns."

He said his Level the Playing Field 2.0 proposal -- a major revision to antidumping laws, to the benefit of complainants -- is needed. But, he said, "I'm also concerned that this debate sometimes causes us to lose sight of the benefits of trade."