Recent US statements calling for restoring a fully functioning World Trade Organization (WTO) dispute settlement system by 2024 have triggered a wave of optimism that the US blockade of the dispute system may finally be coming to an end. Due to US opposition, the WTO dispute system has been crippled since 2019 and unable to enforce WTO obligations, leaving the WTO in a crisis.
These optimistic sentiments are misplaced. Despite its reassuring rhetoric, the United States has no intention of restoring the dispute system to its full powers. The Biden administration boasts that it has adopted a new and transformative modern American industrial policy based on hundreds of billions of dollars in subsidies paid to the US semiconductor, electric vehicle, renewable energy, and other high technology industries. Key elements of this US industrial policy and US trade policies towards China violate US WTO obligations. A fully restored WTO dispute system will allow China, the European Union (EU) and other competitors to attack and overturn current US industrial and trade policies or subject the United States to massive financial penalties. To immunize US policies from attack, the United States wants and needs a WTO dispute system that remains disabled for the indefinite future, if not permanently.
Journal of World Trade