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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Congressional Research Service (CRS)

 

World Trade Organization (WTO): Issues in the Debate on Continued U.S. Participation

Raymond J. Ahearn, Specialist in International Trade and Finance

Ian F. Fergusson, Specialist in International Trade and Finance

June 16, 2010

http://opencrs.com/document/R41291/2010-06-16/download/1013/

[full-text, 41 pages]

 

Summary

Following World War II, the United States led efforts to establish an open and nondiscriminatory

trading system with the expressed goal of raising the economic well-being of all countries and

bolstering world peace. These efforts culminated in the creation of the General Agreement on

Tariffs and Trade (GATT) in 1948, a provisional agreement on tariffs and trade rules that

governed world trade for 47 years. The World Trade Organization (WTO) succeeded the GATT in

1995 and today serves as a permanent body that administers the rules and agreements negotiated

and signed by 153 participating parties, as well as a forum for dispute settlement and

negotiations.

 

Section 125 of the Uruguay Round Agreements (P.L. 103-465), which is the law that approved

and implemented the agreements reached during the Uruguay Round of multilateral trade

negotiations, provided that the U.S. Trade Representative (USTR) must submit to Congress every

five years a report that analyzes the costs and benefits of continued U.S. participation in the

WTO. The USTR submitted its report to Congress on March 1, 2010, triggering a 90 legislative

day timetable in which any Member of Congress may introduce a privileged joint resolution

withdrawing congressional approval of the WTO Agreement (to date no withdrawal resolution

has been introduced in the 111th Congress).

 

Most observers maintain that U.S. withdrawal from the WTO is at best highly unlikely for both

substantive and procedural reasons. Substantively, the withdrawal of U.S. participation could

undermine a multilateral system of trade rules and practices, formulated and implemented under

U.S. leadership, that on balance has contributed to increased economic prosperity and security at

home and abroad. Procedurally, a withdrawal resolution would have to pass both the House and

Senate and then surmount a likely Presidential veto via an override with a two-thirds majority

vote. Nevertheless, such a resolution provides an opportunity for Members of Congress

periodically to debate “whether the WTO is an effective organization” and ways it could better

serve U.S. interests.

 

The purpose of this report is to analyze some of the main issues in any debate on U.S.

participation in the WTO and to address some of the criticisms leveled at the organization.

Academic studies indicate that the United States benefits from broad reductions in trade barriers

worldwide, but some workers and industries might not share in those gains. Decisions in the

WTO are made by member governments, which determine their negotiating positions, file dispute

challenges, and implement their decisions. However, some argue that smaller countries are left

out of decision-making and that governments tend to represent the interests of large corporations

disproportionately.

 

The United States has been a frequent participant in WTO dispute proceedings, both as a

complainant and as a respondent. There have been complaints that countries do not adhere to

decisions and that U.S. trade remedy laws have not been judged properly. It is also argued that

this multilateral dispute settlement process is unique and that the United States has successfully

used the process to advance its economic interests.

 

Certain advocates for the environment, food safety, labor, development, and financial regulation

have criticized the WTO. Much of the criticism is based on interpretations of various WTO

agreements or rulings that have been controversial. An appendix sets out the legislative

procedures for the WTO withdrawal resolution. This report will be updated as events warrant.

 

Contents

Introduction ...............................................................................................................................1

Background on the GATT/WTO System .....................................................................................2

GATT ..................................................................................................................................3

WTO ...................................................................................................................................5

Stakeholders in the WTO Debate.................................................................................................8

Economic Costs and Benefits of the WTO.................................................................................10

Decisionmaking in the WTO and National Sovereignty Issues...................................................14

Governance........................................................................................................................15

Decisionmaking ............................................................................................................15

Transparency in the WTO .............................................................................................18

Sovereignty........................................................................................................................19

The WTO Dispute Process ........................................................................................................19

Criticisms of the WTO from Environmental, Food Safety, Labor, Development, and

Financial Regulation Perspectives ..........................................................................................22

Environmental Concerns .....................................................................................................23

Health and Safety Concerns ................................................................................................24

Labor Concerns...................................................................................................................25

Development Concerns .......................................................................................................27

Financial Services Regulation Concerns ..............................................................................28

Possible Consequences of U.S. Withdrawal from the WTO .......................................................31

Tables

Table 1. Summary of GATT Negotiating Rounds.........................................................................4

Table 2. Uruguay Round Tariff Bindings .....................................................................................6

Table 3. Snapshot of Cases Involving the United States .............................................................21

Appendixes

Appendix. Legislative Procedure for U.S. Withdrawal from the WTO .......................................33

Contacts

Author Contact Information ......................................................................................................38

Acknowledgments ....................................................................................................................38

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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