US Defends Its Approach During WTO Trade Review

In her opening remarks, Pagan said countries in the WTO have lost sight of what the WTO should be doing. "Gains from trade for consumers are elevated while the impact on our producers and workers is downplayed. People are workers, not just consumers," she said. "Liberalization has benefits but also comes with costs; fragmented supply chains generate vulnerabilities. De-industrialization decimated some of our manufacturing communities. Economic efficiencies helped keep prices low, but they also encouraged a race to the bottom in protecting workers and the environment."

She said that after the supply chain vulnerabilities exposed by the pandemic, the U.S. must adapt its trade policies. "Being a representative democracy, our government is accountable and responsive to the American people. We expect -- and respect -- the same from other representative democracies. We must consider the human component of our economies and justify the benefits of our policies to all of our people. If the policies and measures we consider do not benefit our people, then we cannot pursue them.

"To the extent these policies and measures implicate our national security, the United States will determine what is necessary. We will not apologize for this. This is a fundamental attribute of sovereignty.

"Some will misconstrue my comments today as a call for unilateral and protectionist policies. This is incorrect," she said.

The EU was one of the major trading partners that questioned new U.S. trade policies, including the Inflation Reduction Act's preferences for North American electric vehicle and battery production.

EU Ambassador João Aguiar Machado said, "I am pleased that following some complicated years, the EU and the U.S. have been able to improve our trade relations. We found temporary solutions for major trade disputes and have started to build a positive bilateral agenda, notably through the Trade and Technology Council.

"Many of the generous subsidies provided for in the Act tilt the playing field in favour of the U.S. producers in key technology sectors including, but not limited to, the automotive sector. Certain elements of the legislation -- such as those subsidies dependent on the use of domestic goods and domestic production -- are discriminatory and need to reconcile with US’ WTO obligations."

Pagan addressed the law in her opening remarks, saying, "We are in the early stages of developing the regulations for this program. We are considering input from all stakeholders as the Department of Treasury moves forward with its public process in implementing these credits. Several of our trading partners already have taken advantage of the opportunity to participate in our transparent process, and there will be future opportunities to engage in this process.

"In discussions regarding electric vehicle measures, the starting point should be the importance of working to achieve our overall climate, supply chain, and related goals in parallel -- and to do so in a way that will have support from our stakeholders."

Both Pagan and the WTO staff noted that the U.S. is one of the most significant importers and exporters in the world. Pagan said the U.S. purchased more than 17% of global exports, and that its average tariff is 2.3% on a trade-weighted basis.

The WTO noted that the U.S. is the world's largest agricultural exporter, but that manufactured goods are 55% of U.S. exports. Vaccines, electronic integrated circuits and natural gas were the fastest-growing exports during the review period, it said.

Both Pagan and Machado talked about the need for reform at the WTO, for both dispute settlement and negotiation. Pagan said the U.S. and allies must address non-market policies that violate fair competition. "The United States was the first Member to table a reform proposal five years ago and we intend to remain at the forefront of these reform efforts. We will work with any Member that is committed, as we are, to the principles and foundational objectives that brought us here many decades ago," she said.

Even as we undertake reforms at the WTO, it is important to acknowledge and support the good work that is happening here. This includes efforts to implement our agreements, particularly on trade facilitation, TBT, and SPS."

Machado said that the EU is serious about restoring dispute settlement by 2024. "In order to achieve this objective, clarity is needed as soon as possible on the types of reforms that the US is seeking," he said. "The EU will engage with any reform effort as long as it respects the core features of the dispute settlement system. This includes the right to appeal review before a standing adjudicative body. We hope and expect the US will be fully invested in this effort."