At the last Trade Policy Review of the United States two years ago, a month before President Trump was sworn into office, I ended the EU statement with the hope that the protectionist rhetoric would end once the President-elect had taken office. Today, unfortunately, rhetoric has turned into reality and the repercussions of tariffs and other restrictions are being felt at the heart of this organisation, and more generally in global growth prospects.
The US has shaped the global trading system decisively since the early days of the GATT, leading multilateral liberalisation by example and helping to develop the sophisticated rules that underwrite international economic relations today. This leadership has driven much of the phenomenal growth of prosperity across the world over the last decades. In deciding to use tariffs as a central plank of its new trade policy, and in suggesting that trade wars can have winners, the US is putting these achievements at risk.
The multilateral trading system is in a deep crisis and the United States is at its epicentre for a number of reasons.
First, it is the most important trading partner of many Members. For example, the EU and US trade about a trillion euros worth of goods and services each year, and we have the largest and most integrated investment relationship in the world. Because of its economic weight and influence, any turns in US trade policy deeply affect its trading partners.
Second, the US has consistently sought to uphold WTO rules, and ambivalence about their value casts a long shadow to the future. As the saying goes, confidence comes on foot but leaves on horseback, and this applies to our collective trust in the stability of our institutions as well.
We read the US Government report with great interest and some concern. We were struck by its tone, in particular. Words like “aggression”, “cheating”, “defence” and “threat” are unusual vocabulary for a WTO Member describing its trade relationships and strategy in a TPR. We were surprised about the remark that “for too long, the rules of global trade have been tilted against U.S. workers and businesses”, considering that the United States played a big – if not the biggest individual – role in crafting the provisions of the GATT. In fact, the US was a key actor during the Uruguay Round, which led to the GATS and the TRIPS Agreement, inter alia, of which the United States was the strongest proponent. The emphasis in the Government report on bilateral trade balances, “buy national” policies, increased unilateralism, and recourse to national security exceptions to pursue narrow industrial policies has also caught us off guard.
However, the EU and many others Members – in the G20 and beyond – do agree with the US that the multilateral trading system has fallen far behind expectations and needs to be reformed urgently. As we need to move from the current impasse to a new contractual relationship, we are eager to get to the next stage, in which the US can convey its vision for the WTO’s direction of travel, and puts forward concrete proposals for reforming the WTO.
The EU deeply regrets the current crisis in the Appellate Body. But we do not share the US’ assessment that one reason for the WTO’s shortcomings is that “activist judges impose their own policy and institutional preferences on Members”. The task of the WTO dispute settlement body is to apply and interpret relevant WTO rules independently and impartially, and the DSB has been faithful to its mandate. This said, we acknowledge concerns with certain aspects of its functioning. For this reason, the European Union, together with 11 other Members, presented proposals for the amendment of the Dispute Settlement Understanding to the General Council last week. We look forward to engaging on these proposals quickly, as the number of remaining Appellate Body judges kept falling as the months have passed.
In this spirit, the EU would like to work with the US and all Members to modernise the WTO through dialogue and negotiation, and discourage unilateralism, disengagement or an “aggressive enforcement of [national] trade laws” at the cost of bending WTO rules. Harm to the independence of adjudicators will not lead to reform but rather to a collapse of the multilateral trading system that has benefitted us all.
We take heart from reading that the US “wants to help build a better multilateral trading system and will remain active in the WTO”. Indeed, the US is one of the most active Members in the work of the regular committees as well as ongoing negotiations; it shows leadership and commitment to the objectives of this organisation in the implementation of the Trade Facilitation Agreement, e-commerce negotiations and many other areas. The EU is pleased to have co-sponsored with the US and others a proposal on improving notification compliance in trade in goods and wants to continue this constructive cooperation in other areas in need of modernisation. We are equally heartened to see that despite its critique the US continues to use the dispute settlement system, which to us reflects a continued underlying belief in the value of the WTO.
Allow me to highlight some of the written questions the EU has submitted to the United States on various specific issues:
We remain concerned about the limitations on the US procurement market, in particular through “Buy American” legislation.
Another long-standing EU concern is the low uptake of international standards developed by ISO/IEC in the US, resulting in unnecessary trade barriers.
Insufficient protection of Geographical Indications has also given rise to questions.
We reiterate our concerns over the Jones Act, which puts heavy restrictions on maritime transport but has implications far beyond this sector.
On agricultural support, we are looking for clarifications and reassurances regarding the 12 billion USD package of so-called trade mitigation programmes announced in July.
The world is also closely following US regional and bilateral trade policy, in particular the recent signature of the US-Mexico-Canada Agreement (USMCA). The EU must express concern about certain aspects of this agreement which affect other WTO members, such as the new rules of origin in the automotive sector which, in our view, do not reflect either the spirit or the rules of this organisation.
The European Union looks forward to continue working with the United States in a sense of shared responsibility to strengthen the multilateral trading system. On behalf of the EU, I wish the United States a productive review.
 US Government report (WT/TPR/G/382), page 5, paragraph 1.5
 US Government report (WT/TPR/G/382), page 5, paragraph 1.8
 WT/GC/W/752 and WT/GC/W/753
 US Government report, page 4, paragraphs 1.6-1.7: “Aggressive Enforcement of U.S. Trade Laws”
 US Government report, page 5, paragraphs 1.8
 International Organization for Standardization and the International Electrotechnical Commission