WTO needs progress on ‘non-market’ practices, dispute settlement -USTR’s Tai

© Reuters. U.S. Trade Representative Katherine Tai testifies before a Senate Finance Committee hearing on President Biden’s trade policy agenda on Capitol Hill in Washington, U.S., March 31, 2022. REUTERS/Jonathan Ernst

By David Lawder

WASHINGTON (Reuters) -U.S. Trade Representative Katherine Tai on Friday called for meaningful progress in making changes to the World Trade Organization by a ministerial meeting in February, with better tools needed to handle China’s “non-market” practices.

The U.S. was committed to a reformed WTO that was focused on its “foundational goals,” marked by “openness, transparency, and fair-market-oriented competition”, Tai said in remarks to a trade forum in Washington.

She said that in recent years, the WTO has failed to address non-market practices by some countries, seeking to “dominate key industrial sectors, promote national champions and discriminate foreign competitors, massively subsidize key sectors and manipulate cost structures.”

Her remarks did not name China directly, but she later said she was referring to China.

“These practices are unfair and disadvantage workers in developed and developing countries, like the very people this system should be empowering and lifting up,” Tai said at the Center for Strategic and International Studies event.

“Real conversations” were needed on how the WTO can address issues, Tai said.

The 13th Ministerial Meeting of the WTO is scheduled for Feb. 26-29 in Abu Dhabi. Tai called on the trade body’s 164 member countries to “lock in” any reforms where they can find consensus, “rather than continue to preserve an unsatisfying status quo until some theoretical point in the future where we agree on everything.”

The WTO is a consensus-based organization where any member country can block proposals, and negotiating rule changes has proven extremely difficult since its 1995 founding.

But there had been progress such as a deal last year to cut billions of dollars in harmful state fishery subsidies, which Tai cited as evidence that differences could be bridged.

WTO Director Ngozi Okonjo-Iweala, speaking at the same forum, insisted that the trade body’s members were working through tough negotiation and said she was hoping for reform, including to the dispute settlement system, by February.

“We have a lot of work ahead to deal with level playing field issues, including trade distortions from industrial, agricultural and other subsidies,” Okonjo-Iweala said. “And we certainly need to reform our dispute settlement system.”

The United States has for years rendered the WTO’s Appellate Body inoperable by blocking the appointment of new judges, arguing that the organization’s dispute appeals process has overstepped its mandate.

“The United States wants a WTO where dispute settlement is fair and effective and supports a healthy balance of sovereignty, democracy, and economic integration,” Tai said.

She said the U.S. also wants a WTO “where all members embrace transparency. Where we have better rules and tools to tackle non-market policies and practices and to confront the climate crisis and other pressing issues.”

Tai has long pushed back against China’s “non-market” economic and trade practices from China, raising fresh objections to its state-led approach during a late May meeting with Chinese Commerce Minister Wang Wentao in Detroit. She also has long argued that China has failed to embrace the market-oriented principles that it committed to follow when it joined the WTO in 2001, and that the trade body has been unable to counter China’s subsidies and support for state-owned enterprises.

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