Optimism v pessimism: what to make of Katherine Tai’s Geneva speech

‘If you will listen to us, we will listen to you, and let’s start the reform process from there.’ But was USTR Tai being disingenuous?

US position: Tai speaking in Geneva, October 14, 2021 | YouTube

By Peter Ungphakorn

The reaction among experts to US Trade Representative Katherine Tai’s speech in Geneva on October 14, 2021, has been mixed, some welcoming the optimistic tone, others disappointed at the lack of specifics.

“Unpopular take: Tai’s Geneva speech was actually quite good and clarifying at this stage,” said one privately. “I heard her as being noncommittal but also not prejudging.”

“Sorry I’m with the pessimists on the Tai speech, if nine months into a US administration the best that can be offered is that something might be considered in the future,” said another.

Tai was speaking at the Graduate Institute in Geneva, just over a month before an important WTO Ministerial Conference, when members are supposed to tackle some serious problems confronting the organisation.

Her speech (see the text) and her replies to questions (watch on YouTube) covered a wide range of subjects. Interlocutor Richard Baldwin found her tone optimistic.

Tai reiterated the Biden administration’s commitment to the World Trade Organization (WTO) and multilateralism in trade.

She repeated the US line that trade must benefit workers, including getting rid of forced labour in fishing.

She noted that WTO members are still split on whether to waive intellectual property protection to tackle the COVID-19 pandemic, but offered no view on what the US wants.

‘Not enough members listened’: but is the US listening? | YouTube
‘Not enough members listened’: but is the US listening? | YouTube
Dispute settlement: course correction to where?Back to top

However, the issue that most divided trade experts was on WTO dispute settlement where the US has blocked the appointment of appeals judges so that the Appellate Body cannot function — all existing judges’ terms have now expired.

What Tai said on dispute settlement is discussed at length in this blog post by Simon Lester, who is in the pessimists’ camp.

The debate between the optimists and pessimists focuses most on this part of Tai’s answer to a question:

“I can also point you to […] reams of documentation, papers, statements that the United States has made over the course of 15 years and three different administrations, where we were saying to the members of the WTO, we have concerns with the way the dispute settlement system is functioning, and we think there needs to be a course correction.

“And frankly I think that over the course of those 15 years, not enough members listened.

“So I want to take that lesson, in this moment of reform, to say, if you will listen to us, we will listen to you, and let’s start the reform process from there.”

(From 43’38” in the video.)

The optimists zoomed in on “if you will listen to us, we will listen to you, and let’s start the reform process from there.”

But perhaps this part is more damning: “over the course of those 15 years, not enough members listened.” (My emphasis.)

Tai was careful to avoid saying “no one listened”. Even so, the statement is disingenuous.

The US has said a lot about its “concerns”. The “reams of documentation” include a 174-page report from February 2020 issued under the Trump administration by Tai’s predecessor, Robert Lighthizer. Tai seemed to be associating herself with that.

The US has said almost nothing on what the “course correction” should be. Does it still believe in a two-stage system allowing for appeals? How precisely would it change the rules on dispute settlement?

Tai’s only comment in Geneva was that dispute settlement should not be about one country defeating another in litigation but about encouraging members to resolve disputes among themselves.

This resonates with Lighthizer’s view that the old pre-WTO dispute settlement — under the General Agreement on Tariffs and Trade (GATT) — was better, because countries could block rulings that went against them, forcing the parties in a dispute to negotiate a resolution.

Simon Lester says the danger in this approach is the use of power to settle disputes: “I would note that the option for litigation may be particularly important for smaller and developing countries that have less leverage in settlement negotiations.”

Optimism: interlocutor Richard Baldwin was encouraged by Tai’s speech | YouTube
Optimism: interlocutor Richard Baldwin was encouraged by Tai’s speech | YouTube
Who’s listening?Back to top

Worse, Tai’s accusation that “not enough members listened” overlooks the fact that 44 WTO members have listened and offered some solutions to the problems that the US has raised.

They are about a quarter of the membership and include most of the influential WTO members: Australia, Canada, China, Costa Rica, the EU, Iceland, India, South Korea, Mexico, Montenegro, Norway, New Zealand, Singapore and Switzerland.

The EU itself has even more detail in a 2018 Concept Paper on WTO Modernisation.

So while the US accuses other countries of not listening, they could justifiably counter that it’s the US that is not listening.

Finally, Tai argued that reforming dispute settlement and reviving negotiations are linked.

She was following the US view that dispute settlement rulings, particularly appeals, have reached beyond their agreed purpose by interpreting the rules (the WTO agreements) in a way that was not originally negotiated. Dispute settlement should be about whether a country has infringed existing rules. Any gaps in the rules should come from negotiation, according to this argument.

This misses two points.

Firstly, agreements are sometimes deliberately unclear because that might be the only way to conclude a negotiation — the well-known “constructive ambiguity”. Interpretation is then left up to a legal process.

Tai never mentioned the role of dispute settlement in interpreting deliberately vague rules. Her response would probably be that the gaps should be filled by further negotiation. Then why go for “constructive ambiguity” in the first place? Or that when there is doubt, countries can go ahead with their own interpretation.

Second, “accommodating each other” doesn’t have to be done at the dispute settlement stage. Tai overlooked work in the WTO that serves to avoid dispute settlement before it is needed — scrutiny and discussion on how countries are implementing the agreements in the WTO’s regular committees.

Tai did speak of improving the work of the committees, but without linking it to reducing disputes.

That’s the equivalent of focusing only on medical treatment and hospitals in isolation from public health. If doctors have to consider prevention as well as cure, then trade lawyers also need to think about implementation, peer review and consultation to pre-empt litigation.

All three areas of WTO work are linked.

Updates: None so far
Image credits: YouTube

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU

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