The World Trade Organization shines a spotlight on US trade policy

Next week, the Biden administration will be in the hot seat in Geneva.

The World Trade Organization (WTO) will conduct its bi-annual Trade Policy Review of the U.S. on Dec. 14 and 16. The last review had been slated for 2020 but was postponed because of COVID-19. Back in 2018, countries asked the Trump administration a slew of tough questions. The Biden administration will face some of the same questions, foremost among these being whether the U.S. can finally explain what it wants in exchange for “unblocking” the WTO’s Appellate Body (AB)?

Anticipating this question, the U.S. made some interesting comments at a WTO meeting in November. It said the US “is not prejudging” what reform should “look like,” and asked that other countries “approach the conversation with an open mind.” This doesn’t come close to an answer. Truth be told, the U.S. seems to be perfectly content with the status quo, since it can appeal losses into the legal void.

Q&A is always the best part of any Trade Policy Review. The U.S.’s 2018 installment was no exception. Countries pressed the U.S. about its blocking of the AB. “Could the United States explain the rationale of this decision and the way forward?” “What action does the United States propose be undertaken to improve the WTO dispute settlement system?” “Could the US explain what kind of a mechanism or solution is envisaged to make the WTO dispute settlement system work better in this regard?”

Eight times, the U.S. responded with the exact same 280-word answer. It starts by insisting that the U.S. “has been raising serious concerns” for 15 years, complains the AB is too slow, swipes at jurists who exceed their tenure and then finally turns to the crux of the matter: precedent. In two sentences, the U.S. demands that the AB “may not assert that its reports serve as precedent,” and “may not change Member’s substantive rights or obligations….” Next week, countries should ask the U.S. why these two sentences are being conflated as one complaint?

The WTO already prohibits legislation from the bench. If the U.S. complaint is that there is no ability for WTO members to review and correct any such overreach, that can be fixed. That’s the second sentence. As for the first sentence, the U.S. likes to distinguish between AB rulings that provide “guidance” versus rulings that command “strict adherence.” But what does this mean in practice?

Take, for example, the case of Mexico’s ban on biotech corn. Just two weeks ago, Sens. Joni Ernst (R-Iowa) and Charles Grassley (R-Iowa) wrote Ambassador Katherine Tai, urging the United States Trade Representative to “intervene on this issue” by suing Mexico pursuant to the U.S.-Mexico-Canada Agreement (USMCA). This is a good case, but a USMCA arbitral tribunal is the wrong court. As I have written before, this dispute should be filed at the WTO, especially because a win would inhibit China and other countries that also maintain biotech regimes that defy science.

The backstory, in brief, is that Mexico says glyphosate is a carcinogen and that U.S. biotech corn puts Mexican corn at risk. The Mexican government defends its ban as “precautionary” but cites the Rio de Janeiro Earth Summit in this regard. USMCA and the WTO allow for the use of a provisional measure if the science is “insufficient.” That said, even a provisional measure must be based on the science that exists, and must be constantly updated.

But Mexico does have science. For example, the country’s Interdepartmental Commission for Biosecurity of Genetically Modified Organisms reports that, between 2005 and 2019, it issued 671 permits on biotech products, 202 of which were on corn. From 2009 to 2013, the government authorized 177 projects to research and experiment with biotech corn. Mexico eventually soured on biotech corn in 2020, but because the government wanted to boost domestic production, not because of health and safety concerns about imports from the U.S.

The World Health Organization’s International Agency for Research on Cancer did say that glyphosate is “probably carcinogenic to humans.” But this is because the institution uses a hazard approach, which considers only the possibility of harm. USMCA and the WTO expect a risk-based approach, one that involves assessing the probability of harm under real-world conditions.

A WTO panel would invariably rule in favor of the U.S. Mexico would appeal. A functional AB would uphold the panel’s ruling, following just a little case law. In Q&A, countries should ask the U.S. how we would know whether this use of case law would be evidence of the AB considering prior decisions as mere guidance, or as commanding strict adherence.

As a follow-up question, these countries should also ask the U.S. why it insists on conflating precedent with judicial activism. Although the Biden administration is highly unlikely to budge on AB reform, debunking this narrative would help American producers and other stakeholders who rely on a functional WTO dispute settlement system to serve their interests hold it accountable for its recalcitrance.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University. Follow him on Twitter @marclbusch.