Transatlantic Trade & WTO Reform: An Institutional Change Perspective

As of December 2019, the appellate judicial body for dispute settlement at the World Trade Organization (WTO) has ceased to function. The obstruction, from the US, to appoint new judges leave the world’s largest multidisciplinary trade forum without the appellate body in place for the first time since it was established. When the Uruguay Round of the WTO, in 1995, established the dispute settlement mechanism, the world was emerging from the end of the Cold War. Liberal institutionalism was the guiding framework for international relations. Nearly three decades later, waves of protectionism have run through the western countries, that were the founding members of the WTO predecessor, the General Agreement on Tariffs and Trade (GATT). The governance of EU-US trade and global trade is shifting, which provides for perspective on recent decades and pathway forward in trade policy and international relations. The absence of the appellate judicial body at the WTO leaves the world with one less forum for resolving trade disputes. In recent years, trade between the EU and US has been contentious. The US administration has proposed, and in some instances applied, tariffs based on thinly veiled arguments of national security. Since March 2018, the threat of applying tariffs on aluminum and steel of exports from the US, would inhibit the automobile and industrial sectors for instances. In October 2019, the US administration applied tariffs on the EU, as a measure for the Airbus-Boeing aircraft disputes. Just two months later, it applied targeted tariffs on France in response to digital taxes. A framework for addressing and resolving trade disputes is important for the EU-US trade relationship and economic partnership. This research provides a theoretical framework for viewing trade tensions between the EU and the US. It examines available remedies for the EU-US relations regarding international trade. The analysis focuses on recent years, since the referendum on Brexit, in June 2016, and the election of the US president in November 2016. In the meantime, the continued rise of China in trade and FDI, through the “One Belt, One Road” initiative launched in 2013, remains a powerful force with which to contend in global trade and international relations. The research provides historical analysis of recent tensions in EU-US relations in trade policy and governance, and potential paths forward bilaterally and in a reformed WTO in the future.