President Donald Trump’s assault on the World Trade Organization -- and the global system of rules that guide international businesses -- may be quietly scoring a major victory.
Thanks to a U.S. veto on new appeals judges, the WTO’s dispute arm is expected to start slipping into the institutional equivalent of a coma at the end of this year. That has set off a scramble by the European Union, Canada and other countries to set up a temporary alternative allowing the use of arbitrators rather than three-judge panels to hear appeals.
But by creating that system, WTO members may be giving Trump and aides -- who, like him, have deep-rooted skepticism of multilateral institutions -- the very thing they want.
“The U.S. went into the dispute settlement system thinking that it was going to be an arbitration process that would be limited in its ability to force members to do things that they had not agreed to,” said Stephen Vaughn, who until earlier this year oversaw the Trump administration’s attack on the WTO’s appellate body as the U.S. Trade Representative’s general counsel.
Arbitration would above all provide the flexibility the U.S. is after, Vaughn said. It would see disputes treated as individual cases, avoiding the precedent-dependent system the WTO appellate body has become.
“It doesn’t have to be a one-size-fits-all system,” said Vaughn, who argues the WTO should allow members to “not only set up different dispute settlement systems between different countries but also varying dispute settlement systems from one case to the next.”
The only shortcoming that Vaughn, now a partner at law firm King & Spalding, identifies in the EU-Canada arbitration system is that the U.S. is not included. The U.S. has been both the biggest user and target of the WTO’s dispute settlement system, according to WTO data.
“It may be that inviting people to participate in a dispute settlement process that does not involve the United States is like inviting people to see the E Street Band without Bruce Springsteen,” he said.
Vaughn, like former boss U.S. Trade Representative Robert Lighthizer, is a former lawyer for the steel industry, which has long harbored a grudge against the WTO for repeatedly rejecting how the U.S. calculates what trading partners have long complained are exorbitant anti-dumping duties.
He and Lighthizer also share a broader skepticism of the WTO. In one of his first public appearances in 2017, Lighthizer spoke wistfully of how disputes were resolved behind closed doors before the WTO’s 1990s creation. In written testimony submitted to the Senate Finance Committee this week Lighthizer again enumerated a list of grievances about the appellate body ranging from its disregard of a 90-day deadline for decisions to what the U.S. claims has been the body’s “over-reach” on issues such as anti-dumping duties.