To save the global economy, kick the US out of the WTO

Kristen Hopewell is a professor and Canada research chair in global policy at the University of British Columbia. She is the author of “Clash of Powers” and “Breaking the WTO.”

With U.S. President Donald Trump threatening to jack up tariffs to massive heights starting July 9 — including 50 percent tariffs on nearly all goods from the EU — the global economy hangs on a cliff edge.

Last week, the bloc floated the idea of creating an alternative to the World Trade Organization (WTO), cooperating with like-minded countries to maintain the rule of law in trade. But there is a better option: Keep the WTO, but kick out the U.S.

Since his reelection, Trump has essentially launched a full-scale assault on the global trading system, terrorizing countries around the world with a seemingly endless barrage of tariffs and threats. The U.S. leader isn’t even pretending to abide by WTO rules anymore.

Moreover, his tariffs threaten to send the world back to the 1930s, when the spread of trade protectionism and beggar-thy-neighbor policies — spurred by America’s Smoot-Hawley Tariff Act — exacerbated the Great Depression.

Under these circumstances, allowing the U.S. to remain a member makes a mockery of the institution and its principles. And countries committed to preserving a rules-based trading order need to fight back and defend the system, punishing his blatant violation of WTO rules.

Today, the U.S. accounts for only about one-tenth of world trade. The global trade regime can survive without it — but only if the rest of the world continues to follow the rules. | Olivier Hoslet/EFE VIA EPA

The international legal order governing trade can only be sustained if countries face penalties for noncompliance. But by disabling the WTO Appellate Body, the U.S. has made it impossible to enforce global trade rules. Now, any country that loses a WTO dispute can block the ruling by simply filing an appeal to the defunct body. And by doing this in repeated disputes challenging its WTO-illegal policies, the U.S. has been able to break the rules with impunity.

In addition to the substantial harm caused by Trump’s policies, the broader danger here is that rule violation will spread, leading to the collapse of global trade. If his brazen rule-breaking goes unpunished, why should other countries abide by the rules?

Today, the U.S. accounts for only about one-tenth of world trade. The global trade regime can survive without it — but only if the rest of the world continues to follow the rules. It won’t, however, survive other countries imitating Trump’s rule-breaking, tariffs and other protectionist measures. This risk of contagion represents a grave threat to global economic security.

This is why WTO members must come together in a clear rejection of Trump’s trade aggression and show that it won’t be tolerated. What once would have been inconceivable has now become a necessity: The only way to preserve the rules-based system is to expel or suspend the U.S.

The mechanism to do this exists. Although the WTO has no specific procedures for expelling a member, it is possible under Article X, which sets out procedures for amending the WTO agreement. The U.S. could be expelled from the organization by a two-thirds majority vote to alter the agreement. If it refuses to accept the changes, then a three-fourths majority would be required.

The U.S. shouldn’t be allowed to continue enjoying the benefits of membership without any responsibility to uphold its obligations. And denying it the rights of WTO membership could finally create the necessary leverage and force Trump to abandon his destructive tariffs.

The U.S. president has repeatedly threatened to withdraw from the WTO — it’s time to call his bluff. 

The economic harm would be considerable: The U.S. would lose its access to global markets at favorable WTO tariff rates and could be subject to tariffs without limit. It would also lose market access for its services exports and protections for its intellectual property, which are the foundation of America’s contemporary economic success and its dominance in leading high-tech sectors. It would lose the WTO’s protections against trade discrimination too, which would allow other countries to impose export restrictions that could cut off its supply of vital goods.

Trump has made the U.S. a rogue state on trade, showing a total disregard for international law — and even the notion that trade should be governed by the rule of law. Casting the U.S. out would make clear its status as an international pariah.

It’s true, no country has been expelled from the WTO before. But the magnitude of Trump’s rule violation is entirely without precedent, and thus demands an unprecedented response. Without a functional Appellate Body, there’s now no other way to enforce WTO rules against the U.S. Supporters of the rules-based trading order should come together and seek broad support for an amendment to suspend or revoke the U.S.’s membership.

If the U.S. comes to its senses and abandons Trump’s tariffs, showing that it’s willing to abide by the rules, the rest of the world would happily welcome it back to the rules-based trading system with open arms. Until then, the WTO must take steps to counter and contain the disastrous effects of his misguided policies.

To combat Trump, we must be prepared to construct a WTO without the U.S.