Spike in litigation shows World Trade Organization still has value

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President Trump argues that the World Trade Organization treats America “badly.” According to the White House, the WTO unfairly ties America’s hands while other countries freely discriminate.

Trump’s rhetoric – and his tariffs – have some predicting that the WTO is dying. Yet, a recent spike in trade litigation suggests many countries still turn to Geneva to defend their interests.

The cornerstone of the organization is its dispute settlement system. In simple terms, WTO rules allow countries to sue one another for alleged discrimination.

After years of relatively modest activity, 2018 is seeing a sharp spike in new dispute filings, particularly against the United States.

There have been 13 filings against the United States as of August 1, 2018. That’s a significant number.

First, it’s close to the WTO’s total annual caseload – across all members – for 7 of the last 10 years.

Second, 13 is an outlier for the US. It’s more than three times the average annual filings against the US since 2002 (about 4 cases).

 
 

Almost all of these cases are a response to Trump’s steel tariffs. That’s no coincidence. That last time the US faced so many filings was 2002, when there were 12 separate filings against Bush-era steel protection.

Of course, perhaps the US is just getting sued more because more cases are being filed. It’s certainly true that the total caseload already exceeds any year since 2003.

But it’s revealing that exactly half of all filings by August 2018 target America. This again hearkens back to 2002, when the US was also the target of 50% of all filings.

 
 

Some will look at these patterns as proof that Trump is right; the US is being targeted while trying to protect its interests. But this response to steel tariffs was entirely predictable. If anything, it shows that the rest of the world still looks to the WTO for reinforcement.