The WTO is a symbol of the post-Cold War international order, that of global free trade governed by a set of commonly-agreed upon rules. Notwithstanding the tumultuous history of this global standard, and the WTO’s institutional shortcomings, the body has played the part of independent arbitrator in countless trade disputes since its inception in 1995, making or breaking the fortunes of economic heavyweights the world over with the mere stroke of a pen.

The advent of the Trump administration in the United States seemed to harken the end of an era for the WTO, as its erstwhile champion in Washington turned inward. Free trade advocates had hoped that President Biden would reverse this trend. But early signs from the administration suggest that Trumpian trade policy was no glitch in the system.

Analysis

Like any legal regime, the WTO only functions so long as its’ proscriptions are viewed as legitimate, and this legitimacy stems from both moral authority (are the rules representative and applied universally?) and coercion (are there significant costs for breaking the rules?).

The body has long been the subject of criticism with regard to the former, that of the moral authority of WTO regulations. But more recently it has suffered a significant erosion of its coercive capacity to inflict repercussions for breaking global trade rules. And, perhaps surprisingly given the organization’s history, the United States has been the main inflictor this erosion.

There are two ways the US has effectively de-fanged the WTO: through the intentional infliction of institutional paralysis, and the hitherto avoided invocation of a national security prerogative.

Institutional paralysis at the WTO

Viewing the WTO as a governing entity, the appellate body would be its judicial branch. This seven-member council hears appeals brought by countries that have lost disputes via the conventional dispute settlement mechanism. After considering the case, the appellate can rule to uphold, modify, or reverse the original ruling.

But here’s the catch: the appellate body can only function if its seven-member body is staffed, and these nominations require a consensus vote from all 164 WTO members. The Trump administration began blocking the re-appointment of appellate members in 2017 and, since it requires a minimum of three judges to pass judgements, the body ceased to function when its membership dwindled to two in late 2019.