Reassert ‘Patriotism and Sovereignty’: Reject the WTO

A Chinese man walks past a billboard promoting the country's membership to the World Trade Organization (WTO), in Beijing, on Dec. 10, 2001. (Goh Chai Hin/AFP/Getty Images)

Commentary

In May 1994, during the debate about United States’ entry into the World Trade Organization (WTO), The Washington Post wrote:

“The United States is the world’s largest exporting nation (and an) inability to get grievances resolved has been a cause of enormous losses and frustration for American exporters over the years. The WTO is the remedy.”

The Washington Post, always more than a bit smug when writing of Republicans, told its readers that then-House Republican Whip Newt Gingrich, who opposed U.S. entry into the WTO:

“You will not be greatly surprised to hear that the patriotic issue of national sovereignty is getting a lot of attention these days from protectionists fighting to preserve the regulations that restrict trade and competition.”

There are two ironies in The Washington Post op-ed.

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The first is calling Mr. Gingrich as well as his fellow GOP caucus members opposed to the WTO “protectionists” when they were, at the time, anything but. Indeed, most of the members of the House GOP caucus were strict free-market ideologues, though most—like President Reagan—favored “free but fair” trade.

Counter to some now in the GOP, who embrace unrestricted “free trade” with veritable religious dogma, Mr. Reagan embraced traditionally conservative notions of fairness in foreign trade. He negotiated voluntary quotas and tariffs on everything from Japan’s cars to clothespins. At the time, Japan had enormous non-tariff barriers to imports of U.S. automobiles, while clothespins were being dumped on the U.S. market at below the foreign producers’ cost in order to destroy U.S. manufacturers. Mr. Reagan wasn’t being a “protectionist”; he simply ameliorated unfair trade advantages our foreign trading partners were using to cheat in trade and to harm U.S. businesses.

The second irony that The Washington Post ignored in its editorial was that, by the newspaper’s own admission: “The United States is the world’s largest exporting nation.” That was true, perhaps, in 1994, at the time of the editorial, but it is certainly not true today. Today, that standard is held by the People’s Republic of China, and largely since it joined the WTO in December 2001, albeit with special concessions advantageous to China as a “developing nation” granted by other members.

Second Thoughts on the WTO Mistake

Newt Gingrich ultimately conceded to pressure from the media and the big-dollar donor base and presided as speaker when Congress agreed to join the WTO in 1994. But a quarter century later, Mr. Gingrich now admits U.S. assent to letting China join the WTO was a mistake. Mr. Gingrich told The Hill:

“We thought getting them into a rules-based system would gradually permeate their culture and that’d be a big step in the right direction. That was all wrong. The Chinese, in fact, decided to corrupt the WTO rather than be changed by it.”

China’s substantial advantage in the goods trade with the United States since it entered into the WTO with special advantages can be seen here:

(Source: OECD International Trade: Imports and Exports: Value (Goods): Total for China; retrieved from FRED, Federal Reserve Bank of St. Louis)

Foregoing an Enormous US Advantage—and a Constitutional Requirement

But what Mr. Gingrich, The Washington Post, and lawmakers all missed in 1994, when the United States entered into the WTO, is that the United States was, and is to this day, the largest per-capita consumer market in the world. That gives the United States an extraordinary level of leverage and negotiating power that it ceded when it joined the WTO. That was a mistake, and a shameful surrender of the “patriotic issue of sovereignty” that the newspaper so smugly dismissed.

To wit:

Article I, Section 8, Clause 3 of the U.S. Constitution is clear and explicit: “The Congress shall have power ... to regulate commerce with foreign nations ...” [My emphasis]

Congress—collectively, the House of Representatives and the Senate—are the sole constitutional arbiters of U.S. trade policy stipulated in the U.S. Constitution—not Geneva, where the WTO is located. By joining the WTO, we effectively ceded the authority to make trade policy with foreign nations and to decide with whom we trade.

It never should have been permitted.

A Better, Constitutional, Trade Policy

A better, constitutional, trade policy would restore the American sovereignty in trade policy that The Washington Post so readily dismissed in its 1994 editorial by returning the power to regulate U.S. trade with foreign nations to the Congress.

As the lawmaking body of the world’s largest per-capita consumer nation, Congress, together with the Office of the U.S. Trade Representative (USTR), our chief trade negotiator, could draft a model U.S. trade treaty as our baseline for negotiating a series of bilateral trade treaties that would make the WTO obsolete.

With a model treaty, the USTR would, effectively, set the global standard for international trade arrangements and “fine tune” the model agreement with our trading partners to accommodate their specific needs, if necessary, from a position of strength—and limit any such trade accommodation to particular countries. What’s more, Congress could, on the recommendation of the USTR, vote to sanction trading partners who violate the terms of their individual treaty without, first, securing permission from, and pledging fealty to, unelected foreign bureaucrats in Geneva.

Finally, the United States could simply reject any WTO rules on such things as our choice to subsidize strategically important industries, like defense, aerospace, and critical minerals. We could also decide, for ourselves, whether to give special trade concessions to foreign trading partners who describe themselves as “developing.” (China, for example, has described itself as “developing” and thereby invoked special trade accommodations. The description has been challenged by the United States and Australia, among others, but the WTO has done nothing to reject China’s claim.)

Summary

Trade arrangements are always complex, not least because of the details of all the thousands of goods and services that must be accommodated. It took some seven years to negotiate the WTO. Indeed, given the complexity, I suspect that much of any model treaty we might adopt as the baseline negotiating position for our bilateral trade treaties will be adopted, to a considerable extent, from existing WTO provisions.

But instead of vesting authority for fairness and other determinations in Geneva, under a U.S. model treaty, however modified, those determinations will be determined by Congress and the USTR, as its appointee, and as the U.S. Constitution contemplated.

The Washington Post may not approve, but now is the time to step back from the WTO and reassert that patriotism and sovereignty the nation’s capital “paper of record” so readily disparages.