US risks breaking WTO with protectionist policies, 2 Cato experts say

In a sharp critique of U.S. trade policy, two experts from the Cato Institute argue that Washington is actively undermining the World Trade Organization, threatening the stability of the global, rules-based trading system it was instrumental in creating. The analysis suggests that four successive U.S. administrations have prioritized insular political issues over international cooperation, effectively crippling the institution's ability to function.

"You can’t complain about the rules of the game after you stop playing and strangle the referee," Clark Packard, a trade policy fellow, and Scott Lincicome, Vice President for Economics and Trade at the Cato Institute, wrote in a recent Wall Street Journal op-ed. They contend the U.S. has been a "bad-faith abuser of the rules it helped write."

The authors point to several specific actions, including the long-standing U.S. practice of blocking appointments to the WTO's Appellate Body, the organization's highest dispute settlement authority. This has effectively neutered the WTO's ability to resolve trade disputes among its 164 members. Furthermore, the op-ed highlights the U.S. invocation of narrow national security exceptions to justify maintaining former President Trump's global tariff wall, a move that blows past agreed-upon tariff limits.

The broader implication is an erosion of the international trade rules that have governed the global economy for decades, potentially leading to increased uncertainty for multinational corporations and sectors reliant on stable supply chains. While the authors concede the WTO needs reform to address issues like its consensus-based decision-making, they argue such reform is impossible "if the U.S. keeps pretending it didn’t help cripple the institution it’s now eulogizing." The piece counters the narrative that trade, particularly with China, is the primary driver of U.S. manufacturing job losses, citing productivity gains as the main cause long before China's WTO accession.

This article is for informational purposes only and does not constitute investment advice.