The US must withdraw from the WTO

It will take years to fully understand the impact COVID-19 has unleashed on our country, but one thing we know for certain is that the pandemic has exposed the dangerous and indefensible public health and national security threats of hyperglobalization. It has revealed the frightening truth that after decades of corporate-rigged trade agreements and the outsourcing of U.S. manufacturing jobs and capacity, we are incapable of supplying our own citizens with critical materials essential to saving lives and combatting this public health emergency.

We cannot afford to wait years to address this vulnerability.

Simply strengthening medical supply chains won’t end this crisis, adequately prepare us for the next crisis – whenever and whatever it may be – or address structural failures that go far beyond just this emergency.

We need new rules for the global economy and new policies at home that will enable us to efficiently rebuild U.S. manufacturing capacity and spur the innovation and resilience domestic production capacity fosters.

The goal is not U.S. self-sufficiency. Rather, we must both ensure significant domestic production capacity while diversifying our trade relationships in order to end overreliance on imports of critical goods from a few countries, most problematically, China.

However, U.S. participation in the World Trade Organization (WTO), as it exists today, is a barrier to this necessary evolution. This isn’t a gut reaction or flamboyant rhetoric – there is a clear track record that shows the WTO has been a disaster for the U.S.

That’s why I introduced legislation to start the process of withdrawing the U.S. from the WTO.

Twenty-five years after the WTO was established, it’s obvious that replacing the General Agreement on Tariffs and Trade (GATT) with the WTO was an even worse idea than many who opposed the WTO could have imagined. The WTO’s expansive non-trade terms prioritize corporate rights and low wages at the expense of democracy, social resiliency, and well-paying jobs here at home.

Since its establishment in 1995, but even more so since China joined in 2001, the WTO’s ban on Buy American and other domestic procurement preferences, its protections for foreign investors, and its lack of rules against currency misalignments and other forms of unfair trade practices have promoted the outsourcing of American production capacity and decimated well-paying manufacturing jobs.

These are the facts: a quarter of U.S. manufacturing jobs – roughly 5 million – lost. Sixty thousand U.S. factories shuttered. A U.S. goods and services trade deficit explosion of 265 percent, from $170 billion in 1994 to $617 billion in 2019.

The WTO has promoted corporate protectionism while banning commonsense consumer safeguards. In fact, WTO terms required the U.S. to extend for three years monopoly protections for pharmaceutical firms that they use to charge sky-high prices. It has also driven environmental destruction and led to the importation of unsafe and low-quality “throw away” products.

The WTO rules and dispute settlement system are so lopsided that the U.S. has lost a staggering 90% of the cases attacking U.S. policies.

To continue with the WTO as-is would be an endorsement of the failed status quo, which serves the interests of Wall Street, not the interests of working people.

A withdrawal vote would put our trading partners on notice that after decades of trade deals and systems that have led to weakened supply chains, structural trade imbalances, and massive income inequality, there is bipartisan appetite for transformative change.

As the largest economy in the world, the U.S. has a powerful hand to play, and we should use it to advocate for new rules, including strong and enforceable labor and environmental safeguards, and a more level playing field. In doing so, we can — and we must — address the understandably immense frustration among Americans whose lives have been ruined by trade policies that put corporate profits over working people.

At a moment where authoritarian nationalism is on the rise, it is also essential that the U.S. bring the world’s democracies together to make the case for a fair and resilient form of global cooperation, encouraging multilateral responses to the pandemic crisis, shared security, marginalization, and climate change.

America has an important leadership role to play in the world – not to continue to enable an untenable hyperglobalization status quo, or to promulgate an America-only doctrine. We have a duty to usher in a new era for the global economy, one that ensures that American workers get a fair shot and a fair stake in our future prosperity.

Rep. Peter DeFazio is the chair of the House Committee on Transportation and Infrastructure and has been an outspoken opponent of unfair trade agreements.