WTO Report Card II: An Exercise or Surrender of U.S. Sovereignty?

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Critics across the political spectrum allege that the WorldTrade Organization undermines the ability of the United States todetermine its own trade, tax, environmental, and foreign policy.But an examination of how the WTO really works reveals that no suchthreat exists to U.S. sovereignty. The WTO is a contractorganization that arbitrates disputes among its members on thebasis of rules that all have agreed to follow. Like every othermember, the United States has the power to veto any agreement ofwhich it disapproves.

The WTO wields no power of enforcement. It has no authority orpower to levy fines, impose sanctions, change tariff rates, ormodify domestic laws in any way to bring about compliance. If amember refuses to comply with rules it previously agreed to follow,all the WTO can do is approve a request by the complaining memberto impose sanctions -- a "power" that member governments havealways been able to wield against each other. The WTO's disputesettlement mechanism actually makes the use of sanctions lesslikely.

The WTO's basic charter contains explicit exemptions for broadcategories of trade restrictions. Under the WTO charter, memberscan enact trade restrictions for reasons of national security,public health and safety, and conservation of natural resources andto ban imports made with forced or prison labor. Such barriers arenot subject to challenge by other WTO members.

The same dispute settlement mechanism that can render judgmentsagainst U.S. laws has been used effectively to encourage othernations to scrap trade laws that discriminate against exports fromthe United States.

Membership in the WTO is not a surrender of U.S. sovereignty butits wise exercise. The WTO encourages the United States to keep itsown markets open for the benefit of U.S. consumers and import-usingindustries. WTO membership also promotes trade liberalizationabroad, which opens markets and keeps them open for U.S.exporters.

William H. Lash III and Daniel Griswold

William H. Lash III is a professor of law at the George Mason University School of Law in Fairfax, Virginia. Daniel T. Griswold is associate director of the Cato Institute�s Center for Trade Policy Studies.