This archive report was first published on 9 December 2019.
On December 9, 2019, the World Trade Organization (W.T.O.) was at the center of a heated trade war between the United States and its trading partners. While the W.T.O.'s ability to facilitate trade negotiations was largely paralyzed, its dispute settlement system had been much more active, reviewing dozens of cases a year.
The W.T.O. has the power to impose punishments along with its verdicts, allowing countries to recoup losses through retaliatory tariffs when they are found to have suffered from another's trade practices. In October 2019, the W.T.O. gave the United States permission to add tariffs on up to $7.5 billion of European products annually, after deciding that Europe had illegally subsidized its largest plane maker, Airbus.
However, the Trump administration is facing numerous challenges to the president's aggressive use of tariffs to punish trading partners. Japan, Canada, China, the European Union, and other governments are relying on the W.T.O. system to determine whether Mr. Trump's tariffs on steel and aluminum violated global trade rules.
Supporters of the dispute settlement system have credited it with bringing the rule of law to an international trading system that formerly allowed strong countries to dominate weak ones. However, critics say the system exerts too much control, especially at the final stage when the seven-member appellate body makes a binding determination.
