Trump may defy WTO trade rulings

Trump may defy WTO trade rulings
US President Donald Trump
PHOTO: Reuters

WASHINGTON - US President Donald Trump's administration said on Wednesday that it will take aggressive action to combat other countries' unfair trade practices and may defy World Trade Organisation rulings that it views as interfering with US sovereignty.

In an annual trade policy agenda document, the office of the US Trade Representative (USTR) said the administration "will not tolerate" unfair trade practices that distort markets, including currency manipulation, unfair government subsidies, intellectual property theft and state-owned enterprises.

The document publicly released to Congress on Wednesday signals that the administration may try to push the limits of what is acceptable under WTO rules in its quest to make good on campaign promises to slash US trade deficits with China and Mexico, and bring manufacturing jobs back to the US.

The document represents a departure from the Obama administration's strict adherence to WTO compliance in its challenges to unfair foreign trade practices.

Read also: Obama was 'dismissive' of business, Trump is more engaged, WPP CEO says

"Unlike earlier presidents, Trump is signalling a willingness to impose import restrictions - especially against a country like China - where the justification under WTO rules for doing so may be highly questionable," said Mr Chad Bown, a senior fellow and trade expert at the Peterson Institute for International Economics in Washington.

"The downside of the United States going down this path is that it is likely that other countries will follow suit immediately," Mr Bown added.

The USTR document said it was not in the interest of the US to let some WTO rulings undermine the use of effective remedies that the Geneva-based trade body expressly allows to fight unfair trade.

"Accordingly, the Trump administration will act aggressively as needed to discourage this type of behaviour - and encourage true market competition," the USTR said in the document.

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Laying out many of Mr Trump's trade plans in writing for the first time, the document said the Trump administration plans to strictly enforce US trade laws, defend US national sovereignty over trade policy, and use all possible leverage to open foreign markets to US exports, the document said.

It makes clear the Trump administration's view that US law supersedes WTO rules - a view that could be invoked should Congress adopt a border tax adjustment plan to impose new taxes on imports that is later challenged as violating WTO tariff rules by other member countries.

"The Trump administration will aggressively defend American sovereignty over matters of trade policy," the report said.

The nominee to be Mr Trump's top trade negotiator, veteran steel industry lawyer Robert Lighthizer, advocated "aggressive interpretations of WTO provisions that might help us deal with Chinese mercantilism" in 2010.

Mr Lighthizer is awaiting confirmation by the US Senate.

He served as a deputy USTR in the Reagan administration, helping to negotiate import quotas on Japanese goods in the 1980s, with the help of powerful trade law provisions that have largely gone unused since the WTO was launched in 1995.

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