With international trade tensions growing by the day, it makes sense that several lawmakers advanced resolutions for a vote on U.S. withdrawal from the World Trade Organization in May, but it isn’t good news for America. The move could significantly weaken our ability to influence international trade rules, putting producers and consumers at a serious global disadvantage. And as the world struggles to deal with the COVID-19 pandemic and recover from its economic fallout, the results from withdrawal could make matters worse.
Proponents of withdrawal, such as Republican Sen. Josh Hawley of Missouri and Democratic Reps. Peter DeFazio of Oregon and Frank Pallone of New Jersey, claim that the WTO has been instrumental in China’s increasing economic power, hurting American interests along the way. These claims are misguided. The WTO brings a breadth of free trade benefits, and leaving it would do nothing to constrain or challenge China.
Hawley has long been a vocal critic of the WTO. In a May opinion article for the New York Times, he lambasted the organization, claiming it has forced American workers to compete with Chinese labor, allowed China to maintain trade barriers, and failed to punish Chinese transgressions.
Hawley makes a brief mention of its positive contributions, but he doesn’t give the WTO nearly the grace it deserves. These contributions shouldn’t be so easily dismissed. Millions of people in the United States have benefited immensely from WTO membership. Its rules against discriminatory trade barriers have opened up new markets, reducing costs for businesses and keeping prices down for consumers. In the age of COVID-19, these benefits are as important as ever.
Of course, the WTO withdrawal will be another impetus for President Trump, no longer bound by the organization’s rules, to get tariff-happy once again. That would encourage other countries to retaliate in kind, which threatens businesses. It’s unclear what, if any, tariffs that the U.S. would impose should it withdraw from the WTO, but recent trade wars with both China and the European Union are cause enough to worry.
Apparently, that’s how Hawley and company would prefer to operate, pressuring these nations from the outside. Meanwhile, China, a key player in the WTO, would be left on the inside, getting cozy with every other nation that the U.S. leaves behind.
The U.S. has already tried this tactic, and it failed. As Georgetown University Professor Marc L. Busch explains, the current administration’s efforts to punish China for intellectual property theft and unfair trading practices by imposing tariffs have done little, if anything, to give the U.S. any leverage over Chinese policy. All that came of it was a spiraling trade war that has hurt producers and consumers.
Ultimately, there’s no real point to pulling out of WTO, and doing so at this moment would be especially reckless. The pandemic is a crisis without borders, and since COVID-19 began its spread, free trade has proven absolutely essential to the distribution of supplies such as medical tools and personal protective equipment. As the world hunts for a vaccine, international cooperation will be critical, and the WTO will likely play a vital role in these efforts, potentially facilitating the commercial distribution of a vaccine.
The U.S. needs to stay in the club. In fact, if we play our cards right, we could finally show some strength as an international leader during all the chaos. Storming off from the WTO, claiming the others aren’t playing fairly certainly won’t improve our own position, nor will it keep other nefarious power players in check. Instead, we should lead by example and fight for the liberal values on which we helped found the WTO: non-discrimination, openness, and competition.
Ever since our founding, these principles have brought success and prosperity. We can’t afford to put those principles up on the shelf for the sake of throwing meaningless barbs at China. As we already know, they simply won’t land.
Alice Calder is a contributor for Young Voices and TradeVistas, writing on issues in trade, the future of work, and the intersection of economics and culture. Follow her on Twitter @AliceCalder.
