The Advantages of the Multilateral Track


The advantages of focusing U.S. efforts on trade liberalization through the WTO are considerable. First and foremost are the econom- ic benefits that come from liberalization under the WTO rubric. Because all of the major trading states are members of the WTO, the benefits from liberalization in that context would be consid- erable. In contrast, the effects of trade liberalization with coun- tries targeted for bilateral FTAs are anticipated to be small. Many of the other candidate FTA countries on the list, such as the Unit- ed Arab Emirates, would have a minimal effect on the American economy.

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The WTO’s enhanced dispute-resolution process is another rea- son to push for liberalization in the multilateral venue. In contrast to the old GATT regime—in which any member country, includ- ing those involved in the trade dispute, could veto any recommended enforcement action—the current dispute-resolution process has greater autonomy in authorizing punishment for violating coun- tries. The creation of the Appellate Body provides a useful layer of review that increases legitimacy for and confidence in the institution. The relative speed with which the dispute-resolution panels can issue decisions is another advantage of the WTO process. The efficiency of the process has improved to the point where a high percentage of cases are completed without appeal. In its first decade of existence, the WTO process has reviewed more than 325 complaints, a much higher rate than in the GATT era.

The enhanced dispute-resolution process, the expertise of WTO officials, and the accumulation of legal precedents gener- ated from panel rulings has endowed the WTO with significant legal authority over trade matters. Statistical analyses of Ameri- can trade disputes reveal that a favorable WTO panel ruling vastly increases the likelihood that a trading partner will make the desired concessions.That is true regardless of whether trade sanc- tions are threatened inside or outside the WTO process. In terms of the major U.S. trading partners, this finding holds with par- ticular force with regard to Japan. (Panel rulings have had less impact



White Paper D: The Multiple Tracks of Trade Diplomacy


on the European Union.) The ability of the WTO to ensure national compliance with trade rules and regulations has been of considerable benefit to the United States. The progress that has been made in getting other countries to enforce IPR would not have taken place without the backing of the WTO.

The WTO’s legitimacy among foreign governments will prove to be useful as the organization continues to tackle trade-related issues beyond the scope of tariffs and quotas. There are a num- ber of barriers pertaining to trade policy that the WTO is only beginning to tackle: trade in financial services, procurement reg- ulations, investment-related issues, and the movement of service professionals across borders. All of these issues affect industries in which the United States possesses a comparative advantage, and thus further progress on these fronts would be a boon for the Amer- ican economy.

Finally, there are two foreign policy motivations for pushing greater trade liberalization through the WTO process.The first is to cor- rect the perception—deserved or not—of the United States as a “rogue superpower” since the September 11, 2001, terrorist attacks. For the United States, the WTO represents the ideal type of mul- tilateralism: an institution run by member governments that pro- motes clearly articulated norms and the vigorous enforcement of those norms. It is in the U.S. national interest to reward those inter- national organizations that best reflect these American principles.

The second political reason is to send the necessary signal to non-WTO members about the value of membership. Although the WTO currently has 148 members, many countries have yet to be granted membership.These governments include the Russian Federation, Vietnam, Ukraine, Iran, Serbia, Libya, and Kaza- khstan. U.S. interests with regard to all of these countries would be better served with a greater respect for the rule of law. At the present moment, all of these countries have signaled a willingness to make significant concessions for WTO admission. If the Unit- ed States were to deemphasize its paramount commitment to the



U.S. Trade Strategy: Free Versus Fair


organization, these countries would be less likely to take steps toward promoting the rule of law.

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