In the 2026 Trade Policy Agenda report submitted by Greer to Congress last month, there is this passage on enforcement of U.S. trade agreements and U.S. trade laws:

Pursue Robust Enforcement of Agreements on Reciprocal Trade, Other Trade Agreements, and United States Trade Laws

In addition to striking new deals with our trading partners, USTR will pursue robust enforcement of all of our trade agreements and trade laws. In 2026, USTR will closely monitor implementation of existing ART commitments and those embodied in forthcoming ARTs, as well as other existing trade agreements, and enforce when necessary. ...

Here are some questions I have related to enforcement of the Agreements on Reciprocal Trade (ARTs) in particular:

• Will USTR notify the public and/or Congress when it is pursuing enforcement of specific obligations under the ARTs?
• Related to this, the ARTs have a provision on requesting consultations with the other party to the agreement. Will USTR notify the public and/or Congress when it has requested these consultations? Will these requests be made public?
• Will USTR document for the public and/or Congress the enforcement actions it has taken under the ARTs and the results thereof?

I raise these points because it will be difficult to evaluate the impact of the agreements without evidence relating to enforcement activity. Ideally, the public should know as much as possible about what has been happening here. At the least, though, I would think Congress would want to know, and this hearing is an opportunity to emphasize this.

While we are on the subject of questions for Greer, I would add the following to the list of things that members of Congress might ask:

• Could you provide updates on whether and to what extent the countries with which the Trump administration has negotiated ARTs have lowered tariffs or modified statutes, regulations, practices, or policies pursuant to the agreements?
• Have you seen an increase in exports to the ART countries relative to exports to other trading partners, and if so in which products/services?

He might not have full details on these questions off the top of his head, but they could be submitted in writing later as questions for the record.

And then finally, just for fun, here is one more question that members of Congress could ask him:

• Unlike WTO rules, the ARTs do not address anti-dumping/countervailing duties. What is the administration's strategy for dealing with AD/CVDs imposed by U.S. trading partners?

UPDATE:

The House Ways and Means Committee hearing on the 2026 Trade Policy Agenda has been scheduled for April 22.

Last week, President Trump announced that the United States would be imposing new tariffs of 50 percent of the value of any product coming from any country that sells weapons or provides military aid to Iran.

Some commentators questioned what statutory authority the president would use as a legal basis for these tariffs since the president’s announcement was silent on that point. Kevin Hassett, Director of the National Economic Council at the White House, publicly argued that the president could impose these tariffs under the International Emergency Economic Powers Act (IEEPA) because the United States is “in a state of conflict [and] the IEEPA policy is exactly designed for that.” Even within the Trump administration that view did not appear to command a consensus, with U.S. Trade Representative Jamieson Greer noting that, while IEEPA can be used to impose embargoes, it can’t be used for tariffs after the Supreme Court’s February decision in Learning Resources.

The Supreme Court made clear that IEEPA does not authorize the president to impose tariffs or increase tariff rates. Moreover, the Court noted that IEEPA is a peacetime statute. It expressly reserved the question of whether the president might have the power, either under the Constitution and/or other statutes, to impose tariffs during a war.

Putting to one side the fact that Congress has issued no declaration of war nor authorized the use of force against Iran, what, under the Constitution, could the president do during a war? We have written about the complexities of the Constitution’s “foreign commerce power” in a forthcoming article. There, we note that, at the time of the nation’s Founding, and in the early years of the Republic, the Founders made clear that the president does not have any foreign commerce power of his own. Nothing in the Constitution or in the practice of lawmakers in the late eighteenth century suggests that the president can impose tariffs without congressional authorization, regardless of whether the nation is engaged in an armed conflict. The power to regulate commerce with foreign nations is a power held exclusively by Congress. Nothing about being at war changes that.

In the recent Learning Resources case, the government made several arguments in support of its claim that IEEPA authorizes tariffs. As relevant to war powers, the government argued that the president enjoys the constitutional power to impose tariffs during wartime. While conceding in Learning Resources that the United States was not at war, the government—borrowing from an amicus brief by Aditya Bamzai—contended that Congress had ultimately codified that authority in IEEPA as applied to peacetime emergencies.

The government’s argument did not, however, win the day. As the Chief Justice wrote:

According to the Government, those precedents acknowledge an inherent Presidential power to impose tariffs during armed conflict. And, the argument goes, Congress in TWEA [the Trading With the Enemy Act], and then in IEEPA, codified those precedents. But this argument fails at both steps. Insofar as the Government relies on our wartime cases themselves, they are facially inapposite. Regardless of what they might mean for the President’s inherent wartime authority, all agree that the President has no inherent peacetime authority to impose tariffs.

 Other justices also addressed these issues. In his concurrence, Justice Gorsuch commented in a footnote:

Whatever the full scope of the President’s Article II war powers may be (and the briefs before us reveal a healthy debate whether they include the power to impose tariffs), those powers are not implicated here.

And in his dissent, Justice Kavanaugh embraced the ideas advanced by the government. He wrote that:

U. S. history from the 1800s through IEEPA’s 1977 enactment illustrates how the statute came to incorporate the President’s long-recognized authority to impose tariffs during wartime. Long before the initial 1917 enactment of the Trading with the Enemy Act, which was IEEPA’s predecessor, the President possessed inherent wartime authority to prohibit commercial relations with enemy nations.

We disagree with Justice Kavanaugh’s claim when it comes to any “inherent wartime authority” the president might have to regulate foreign commerce. Justice Kavanaugh is right that, long before the enactment of TWEA, presidents imposed commercial restrictions on enemy nations, but they did so as authorized by Congress. A congressional declaration of war—essentially, a delegation to the president to prosecute a war—was thought also to grant the president the power to embargo commerce with the enemy.

The more difficult question arises with respect to countries with whom the United States was not at war but whose commercial policies implicate U.S. interests in war.

Here, President Trump seeks to impose tariffs not on products from Iran, which is already subject to sanctions, but on countries that engage in military trade with Iran. These so-called secondary tariffs have become a popular tool in recent months. Last year, the president sought to impose secondary tariffs on products from countries, such as India, importing Russian oil and on products from countries importing Venezuelan oil, for example. He relied on IEEPA to impose those tariffs, and after February's Supreme Court decision, he declared those additional duties to be no longer in effect. Justice Gorsuch, in his Learning Resources concurrence, spoke only of direct tariffs on enemy states, noting: “IEEPA is not a wartime statute, nor does the President claim we are at war with the countries whose goods are subject to the tariffs.” (And, to be sure, the TWEA expressly requires a congressional declaration of war before using the same language as IEEPA concerning "regulate . . . importation".)

But in the early years after the Founding, even where foreign commercial policy was critical to U.S. policy toward warring European nations, presidents did not act alone in imposing restrictions on foreign commerce with those nations. That is, presidents still regularly sought congressional authorization for embargoes of trade with countries against whom Congress had not issued a declaration of war.

For example, Washington’s 1793 Neutrality Proclamation did not itself create an embargo. As Sai Prakash and Michael Ramsey have explained, the Proclamation merely announced a policy binding only on those within the executive branch, one that could only be enforced against the general public to the extent that private actions violated existing criminal laws. It was not until Congress passed statutes in 1794 authorizing embargoes that the president enjoyed the authority to impose an embargo as such. And as we explain in our article, the presidential practice of seeking congressional authorization for embargoes continued through the Jefferson and Madison administrations, including during the War of 1812 with respect to European nations other than the United Kingdom.

As one of us explained in an amicus brief in Learning Resources, the examples marshaled by Professor Bamzai and relied on by the government and Justice Kavanaugh are not to the contrary, and in particular do not speak to the president’s ability to impose tariffs on imports from noncombatant nations into the United States. They rely on three examples of the president imposing monetary exactions during wartime. During the Mexican-American War and the Spanish-American War, the United States collected duties on imports into occupied foreign territories to offset the costs of the war and occupation. In a series of cases, the Supreme Court upheld these duties as lawful on the grounds that they were imposed on foreign, occupied territory during wartime. They were not imposed on imports into the United States proper. Indeed, in Fleming v. Page, the Supreme Court rejected the argument that paying duties to the United States in an occupied Mexican port, when such duties were collected solely pursuant to the president’s commander-in-chief power, could count as paying duties upon import into the United States. The president lacked the power to change U.S. customs laws, even if he had the power to collect duties in occupied territory. The third example involved President Lincoln’s decision to collect license fees on cotton from the Confederate states during the Civil War, pursuant to a congressional authorization to regulate commerce with the rebel states by way of licenses. How this example could support an inherent authority to impose tariffs against third countries during wartime is unclear. In short, when the president’s foreign affairs powers do overlap with Congress’s foreign commerce powers, Congress prevails.

So, while the Supreme Court in Learning Resources expressly left open the question whether the president might be able to impose tariffs pursuant to his constitutional warmaking powers, the historical record from the years immediately after the Constitution’s ratification suggests that the answer to that question is that he cannot.

Rough: The joint statement last August with the Europeans filling out the Turnberry agreement that the President struck with Commission President von der Leyen said that "the United States and the European Union commit to addressing unjustified digital trade barriers." Then came the European DMA investigation announcement into cloud computing, among other steps that led to a mid-December tweet viewed around the world from your office expressing some dissatisfaction with the EU and EU member states on "a continuing course of discriminatory and harassing lawsuits, taxes, fines and directives against U.S. service providers." Where do we stand now that we are sitting here in almost mid-April on digital trade between the U.S. and the EU?

Greer: I would say that this is a fragile issue. So in the Turnberry agreement, where it talks about, what was the wording again?

Rough: "The United States and the European Union commit to address unjustified digital trade barriers."

Greer: Unjustified digital trade barriers. So that means something different to me than it does to [the EU Ambassador] or to others in the Commission, which is a problem. This is a big issue. We have a situation where U.S. companies who are large tech companies, and that is the nature of how they have developed, who offer essentially free services, many of them to EU citizens at the retail level, and then offer a lot of productivity gains at the enterprise level to businesses in Europe. This is a huge productivity gain and welfare gain for Europe. They have introduced laws like the Digital Markets Act and other laws that don't even think about consumer welfare, they just make a prima facie decision that bigger is bad, and therefore we're going to take action. And it's a huge problem. It disproportionately affects U.S. companies.

There's a set of talking points that every European Ambassador comes in with, and they just say, "Well, this is not discriminatory, it applies to everybody equally." Yeah, but only if they make above a certain amount globally, etc, and have business models that happen to track U.S. company business models. So you know, we're not fooled by any of that. I keep telling these European officials, we're not fooled. You can give us these talking points, and we still won't be fooled. And so we're very concerned about this. We are having discussions with the European Commission, I would say, really, for the first time ever on DMA, we've always been stonewalled. ... Steve Forbes put out an op-ed today saying, Jamieson, just move forward with the Section 301. Do it now.

So there's a lot of pressure out there to take action. Obviously, our goal is to have an outcome where U.S. companies can operate without discrimination. They can operate as freely as European companies do here in the United States. And if American companies don't have that opportunity, then we will control European service providers in the United States.

I would like to hear more from Jamieson on how he sees the standard for non-discrimination. Is he saying that any disparate impact on U.S. tech companies is sufficient for a determination that regulations are discriminatory? If so, that's a very broad approach to international governance of domestic regulations, one that limits policy space/regulatory autonomy/sovereignty considerably. And if it were applied to, say, certain U.S. environmental laws and regulations it could have a significant impact on the ability to regulate.

Or is he saying that there is something in particular about the design and structure of the DMA (and other European tech regulations) that suggests the law favors European companies over their American competitors? If he would look for something more than just disparate impact in relation to the design and structure, what would he be looking for?

Or is it something else entirely? What exactly is the non-discrimination standard he has in mind?

Whatever he is saying, it is a significant departure from what we heard during the Biden administration from Katherine Tai, who emphasized the importance of understanding the intent of the foreign regulation ("we have to really be cognizant that measures that may look like they have a discriminatory effect may or may not be advanced with a discriminatory intent").

I'll have more to say on all this soon, but I'm just flagging it for now.

But despite our best efforts, a "review and term extension" provision made its way in there as Article 34.7 of the USMCA. The way the provision works is that there is a 16 year term for the agreement, with a joint review by the three governments taking place 6 years after the July 1, 2020 entry into force. On the six year mark (July 1, 2026), the governments can make a decision on whether to extend the agreement for another 16 year term. If that extension does not happen, there will be annual reviews of the agreement, through which there will be subsequent opportunities for the three governments to decide to extend.

Now that the review and extension decision are almost upon us, we'll find out if Inu and I were right to be concerned. At this point, I will confess that I have very little idea what is going to happen. Even without everything else going on in the trade policy world, it would be a tough prediction to make, but combining the USMCA review with so much other trade policy chaos makes things particularly difficult.

Over at CSIS, Diego Marroquín Bitar and Bill Reinsch have mapped out six scenarios for what will happen with the USMCA extension decision:

I don't disagree with any of that, but I do want to highlight a bit of possible political strategizing here. It feels to me as though in both domestic politics and international affairs, everyone is waiting for the midterm elections. The thinking is that if the Democrats win one or both houses of Congress, it would significantly change the power President Trump has in U.S. politics, and perhaps make dealing with him a bit easier. With that in mind, I wonder if Canada and Mexico have an incentive not to go for the "painful extension" option. Instead, they could hold out until after the midterms, in the hopes that they would be in a better negotiating position. And if it turns out their position is not much better then, they could even try waiting until after the 2028 presidential election.

One risk with this strategy is that it could trigger a Trump withdrawal from the agreement. However, while we might see threats along those lines (which we have seen before), I'm skeptical there would be follow-through here. The stock market fall such an action would likely trigger is probably enough to prevent this.

I also want to mention that if I'm reading USMCA Article 34.7, paragraph 4 correctly, if the extension does not happen on July 1, it can be agreed to at any point thereafter:

If, as part of a six-year review, a Party does not confirm its wish to extend the term of this Agreement for another 16-year period, the Commission shall meet to conduct a joint review every year for the remainder of the term of this Agreement. If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16 years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.

(emphasis added)

I don't mean to make a definitive prediction that extension will take place at some random time under this part of the provision. However, I will note that if at some point a particular political leader decides a "win" would be useful, a decision to extend the USMCA could be made, even if we are outside the joint review window.

With the caveat that I have a low degree of confidence in my trade policy predictions these days, my current view is that it would be surprising if there were a decision to extend the USMCA on July 1 or soon thereafter. But given everything going on in international affairs, I can imagine some sort of package deal that comes together a few months or so later, bringing in a few non-trade issues as well. At the same time, I can also imagine we just slide into the annual review option for the next couple years. That may not be ideal, but it does leave plenty of time to make the extension decision prior to the agreement's expiration. (And if this decision is made after 2029, people could even think about using the review process to eliminate the expiration provision, and just have normal reviews instead.)

(As I was working on this post, U.S. Trade Rep. Jamieson Greer commented on the USMCA joint review as part of a think tank event yesterday:

Well, remember, the joint review, what happens on July 1? This is the question, right. On July 1, what has to happen is, the United States tells Canada and Mexico what we intend to do. Do we intend to just rubber stamp this thing and say, all right, renewed, everything's fine, let's hold hands and move on. Or do we say this is not sufficient, we have to have modifications to this agreement, we have to change it. And so we'll enter into a period, we'll be on the path to going out, which is actually a 10 year period, but we'll be in negotiations during that time and try to resolve something sooner rather than later. So my own sense is we want to resolve as much as we can. We've worked really closely with the Mexicans over the past year, they resolved a lot of issues. The Canadians, we have some issues with them that haven't been resolved yet. So I think, I don't want to get ahead of myself, because I have to tell Congress on June 1 what we're going to do. ... I think that we aren't probably going to be able to resolve all issues by July 1, but I think we are on track to resolve many of them and to move as quickly as we can.

So factor that into any predictions as well.)

As a result of these developments, the moratorium has, for the moment, expired. Does that mean we are about to see a flood of TRIPS non-violation – or the even less well-known situation – complaints? As much fun as that would be in various ways, I doubt it, and I think the following may help explain why.

At the WTO General Council meeting in December, the moratorium was discussed by various governments, including two that appear to have particularly strong views. Colombia put the issue on the meeting agenda, and made its case for continuing the moratorium:

26.4. In our daily conversations with other WTO delegations, the intellectual property moratorium seems somewhat strange and overly technical, but the fact is that it is a recurring WTO decision that has significant effects on our economies and, in particular, on the health of our populations.

26.5. Allow me to explain the matter briefly. In general, disputes in the WTO involve a country's allegations that a country has violated an agreement or broken a commitment. But in some situations, a government can go to the Dispute Settlement Body even when an agreement has not been violated.

26.6. This is called a non-violation complaint. It is allowed if one government can show that it has been deprived of an expected benefit because of another government's action, or because of any other situation that exists. Non-violation complaints are possible for goods and services, but not in the field of intellectual property. At the time of the negotiation of the Marrakesh package, Members decided not to allow these non-violation disputes under the TRIPS Agreement. Why?

26.7. In what situations could non-violation complaints based on the TRIPS Agreement pose a problem? Various scenarios are conceivable and the Secretariat made a list of them 10 years ago, but one stands out: price controls on medicines.

26.8. All our countries have policies to control medicine prices – all of them. For example, as I remarked at a previous General Council meeting, one economically advanced country used price controls to slash the monthly cost of insulin for patients with diabetes from USD 400 to USD 35. We thought this was wonderful, because it clearly improved access and many patients with diabetes surely benefited.

26.9. One could claim that, even if patent protection is observed and even if the intellectual property protection system is in order and working properly, price controls nullify or impair the expected benefits from a patent.

26.10. It is as simple as that – an enormous risk that no-one has wanted to take since 1995. This discussion is taking place in the TRIPS Council and remains unresolved. It is very important for this decision to not allow non-violation complaints to be renewed in Cameroon and to be made permanent once and for all, as the risks to our economies and budgets are the same now as they were in 1995, and as they will be in the future.

For Colombia, allowing non-violation complaints under the TRIPS Agreement risks undermining established and widely used health policies such as price controls for medicines.

In response, the U.S. argued for letting the moratorium lapse and allowing non-violation and situation complaints in the TRIPS context:

26.13. The United States' position on this issue remains unchanged. We reiterate our support for allowing the current moratorium to expire so that Members may bring non-violation and situation complaints in the future, as appropriate.

26.14. The United States has provided detailed and extensive analysis in each of our statements under this item over the past several years. We have explained the legal basis for non-violation and situation complaints in the GATT and TRIPS Agreement texts, the extensive safeguards that exist to protect Members' rights and obligations under the TRIPS Agreement, and concrete descriptions regarding how such disputes would work in practice.

26.15. As we have detailed in past interventions, non-violation and situation claims have a long lineage in the WTO and in international trade. The availability of such claims under the WTO agreements is the rule; their non-application is the exception. The TRIPS Agreement moratorium is the exception.

26.16. We continue to believe that WTO Members are being deprived of an important tool to enforce their rights under the TRIPS Agreement, which is why we support the expiration of the current moratorium so that complaints of this type might be brought under the TRIPS Agreement.

26.17. While we remain of the view that the text of the WTO agreements provide Members with sufficient guidance on the application of non-violation and situation complaints under the TRIPS Agreement, the United States remains open to considering specific proposals from Members wishing to further examine the scope and modalities for complaints of these types.

In reaction to these arguments, I have a couple questions and comments.

First, what are the chances of a complainant winning a non-violation complaint under the TRIPS Agreement? Colombia mentions price controls on medicines as a measure that might be targeted, and if we apply the conventional non-violation elements, it seems to me that a complaint against these price controls might be tough to win. As the Japan - Film panel explained in discussing one of the key elements of a GATT non-violation claim:

10.76 ... in order for expectations of a benefit to be legitimate, the challenged measures must not have been reasonably anticipated at the time the tariff concession was negotiated. If the measures were anticipated, a Member could not have had a legitimate expectation of improved market access to the extent of the impairment caused by these measures.

My sense is that price controls on medicines are widely used, and therefore they shouldn't come as a surprise to other Members. Arguably, then, any price controls should have been anticipated. Could there be a particular type of price control that could not have been reasonably anticipated? It's possible, I guess, but I'm not sure what that would be.

Second, building on the first point to some extent, what purpose do non-violation complaints serve these days, either in the TRIPS Agreement or other contexts? In the early years of trade agreements, these agreements could have been seen as "incomplete," and the non-violation remedy may have been useful for circumstances in which a particular issue was not covered by the agreement. Today, by contrast, aren't the WTO agreements in general, as well as the TRIPS Agreement in particular, fairly "complete" in terms of their scope as a contract? Arguably, these agreements establish a comprehensive regime for what is permitted and what is not, and there is no need to supplement this regime with the non-violation remedy as a gap-filling tool.

In terms of specific examples of circumstances where the governments who support the non-violation remedy would like to see it applied under TRIPS, Colombia pointed to a Secretariat note from 10 years ago. I see this note from 2012, which may be what they meant (although there could be another note that I couldn't track down on WTO docs online). But even with these examples, at this point the scope and implications of such a remedy are fairly speculative, as we just don't have any practical experience with using it. It's very hard to say how a WTO panel would apply it.

As to what's coming next, my best guess is that we will see the moratorium extended at some point, providing a bit more certainty here. But even without the extension, I doubt we are likely to see any complaints. Note that the U.S., which is one of the biggest proponent of the remedy, hasn't filed any WTO complaints at all since 2019. On the other hand, U.S. Trade Rep. Jamieson Greer recently talked up the non-violation remedy, so maybe it could actually happen? I would bet against it though.

Law prof Daniel Gervais also has a post on the failure to extend the moratorium: "The TRIPS non-violation moratorium has expired: What happened in Yaoundé, and what comes next." For those looking for more background on these issues, you can check out the discussion at recent TRIPS Council meetings: November 2025; June 2025; March 2025; November/December 2024; July 2024; April 2024; October 2023/February 2024; June 2023; and March 2023. Other resources for people who want to dive deeper are:

• 1999 Secretariat Note: Non-Violation Complaints and the TRIPS Agreement
• 2000 U.S. communication: Scope and Modalities of Non-Violation Complaints under the TRIPS Agreement
• 2002 Secretariat Note: Non-Violation and Situation Complaints (Rev. 1, Rev. 2)
• 2002 communication from Argentina, Bolivia, Brazil, Colombia, Cuba, Ecuador, Egypt, India, Kenya, Malaysia, Pakistan, Peru, Sri Lanka and Venezuela: Non-Violation and Situation Nullification or Impairment under the TRIPS Agreement (Rev. 1)
• 2014 U.S. Communication: Non-Violation Complaints under the TRIPS Agreement

China, the EU (European Union), and the U.S. have in recent weeks all tabled in writing their views regarding the future of the WTO.[1] The end result should leave no one in doubt that coordination costs between the three dominant players in the trading sphere are very high (if not insurmountable altogether):

• China and the EU share a commitment to compulsory third-party adjudication;
• EU and US are roughly in the same wave-length as far as the future shaping of the MFN (most-favored-nation) clause is concerned: it should be conditional, the contingency being the extent of trade deficit of the granting nation, an attitude reminiscent of previous times, as reported in Bhagwati and Irwin (1987);
• China and US agree on none of the above. 

Why did I single out MFN and compulsory third-party adjudication? Well, arguably these are the two quintessential features of the multilateral edifice. One could imagine a WTO where antidumping is replaced by enforcement of domestic competition laws. It is hard to imagine a WTO without MFN. And what is the use of negotiating and signing the WTO if enforcement is not on the cards? 

A recent McKinsey report shows that in the last two years (2024, 2025) trade has grown faster than the world economy, even though trade between “geopolitically distant” players has been reduced, substantially so. Disagreements between U.S. and China have translated in reduced trade between them. So has trade between Ukraine and Russia, the EU and Russia etc. Trading nations have been engaging in a quest for security in supplies through either intense preferential integration with like-minded players, or recourse to industrial policy, or both.[2] 

To be fair, the world economy has shown remarkable resilience, were one to take into account the multiple hits it has suffered: AI (artificial intelligence)-related shipments have increased considerably; China has managed to find new markets (since the U.S. market has been closed in part to its exports); U.S. has increased its volume of imports from other South East Asian countries; and finally, because President Trump does trade policy for “optics, not for outcomes”, as Baldwin (2026) put it. A number of announced tariff-restricting measures were either not implemented, or simply abandoned.

But for how long?

What matters most for this discussion, is that the world economy has shown resilience, despite the absence of a provision on economic security in the WTO framework. And if the current trend were to be confirmed, then trade risks evolving away from a multilateral dimension. Economic security is the revealed preference of the world trading community, and this by construction implies trade should be conducted with countries that represent no threat to the attainment of this objective. The WTO, as is, makes no room for that. 

The link between trade and power was known before the advent of the multilateral system. First Hirschman (1945), and then Viner (1948) warned that trade openness is welfare-enhancing but comes with vulnerabilities.[3] The ITO (International Trade Organization) did include a Chapter (Chapter V) dealing with Restrictive Business Practices (RBPs) which could be used in cases of refusal to sell and other market-segmenting measures which could be costly from a trade-perspective, but could increase the power of the implementing actor. The ITO never saw the light of day. During the GATT-era (General Agreement on Tariffs and Trade), the predecessor of the WTO, the absence of provisions on economic security proved to be no issue, as those with bargaining powers did not abuse. After all, the GATT was a trade-cum-security agreement. It was in no one’s interest to weaken the alliance. The WTO did not buy insurance policy against the risk of linking trade to power, either. It was negotiated at a moment in history where all believed we were moving into a unipolar world. “Weaponization” of trade was simply not in the cards anymore.[4]

And now? Well, Evenett et al. (2025) have provided sufficient data to demonstrate that economic security tops the agenda as justification for industrial policy worldwide. 

Can WTO Address What it Must?

Personally, I was not swayed by the (lack of) outcome in MC14. I was not expecting anything anyway, so I would not call it a “failure”. It was the natural consequence of an ongoing “waning” of the multilateral framework. In part, this is due to the fact that the WTO is not in sync with today’s anxieties of trading nations, which find a safe haven in FTAs (free-trade areas), and not in the WTO anymore. For the WTO to become relevant again, this trend must be corrected. 

Trading nations will not give up on economic security. The “trust” between some of the leading trading nations has been severely damaged. Trust is hard to build and easy to break. The “negativity bias” suggests that (risk-averse) nations will find it hard to behave paying no heed to what they have gone through in recent years. There is a definite need to bring in “economic security” within the four corners of the WTO.[5] But how? Should we try to define it? There is a risk that when doing so, one might end up equating economic security to autarky, and thus issue a death knell on trade openness. 

In Palacios and Mavroidis (2026), we advance a modest proposal on how to make economic security a negotiable instrument, inspired by the attitude of the GATT framers who instead of defining “protection” reduced it to one negotiable instrument. But to do even that, the political impetus is necessary. In the absence of a hegemon, who will push for similar solutions? Carvalho, Monte and Ornelas (2026) have persuasively argued that in the world we currently live in, where there are three dominant players (instead of one hegemon), a return to a rules-based system is unlikely. Practice so far confirms. The best bet for rules-based regimes at this stage, is that offered by FTAs. The wider they are, the better. In the meantime, there is value in preserving the WTO even as a “talk club” with little enforcement powers while awaiting better days ahead.

References

Baldwin, Richard. 2026. Why Didn’t Trump Tariffs Wreck the World Trade System, Richard Baldwin Substack, available at https://rbaldwin.substack.com/p/why-didnt-trumpian-tariffs-wreck

Bhagwati, Jagdish, and Douglas A. Irwin. 1987. The Return of the Reciprocitarians: US Trade Policy Today, The World Economy, 10: 109-130.

Carvalho, Cecilia, Daniel Monte, and Emanuel Ornelas. 2026. Equilibrium Trade Regimes: Power- vs. Rules-Based, Mimeo. Sao Paulo School of Economics.

Evenett, Simon, A. Jakubik, J. Kim, F. Martín, S. Pienknagura, M. Ruta, S.Baquie, Y. Huang, and R. Machado Parente. 2025. Industrial Policy Since the Great Financial Crisis, IMF Working Paper 2025/222.

Gertz, Geoff. 2025. Guest Post: The Case for Bringing Economic Security Priorities into U.S. Trade Agreements, Part I, available at https://ielp.worldtradelaw.net/2025/11/guest-post-the-case-for-bringing-economic-security-priorities-into-u-s-trade-agreements-part-i/

Gertz, Geoff. 2025a. Guest Post: The Case for Bringing Economic Security Priorities into U.S. Trade Agreements, Part II, available at https://ielp.worldtradelaw.net/2025/12/guest-post-the-case-for-bringing-economic-security-priorities-into-u-s-trade-agreements-part-ii/

Hirschman, Albert O. 1945. National Power and the Structure of Foreign Trade, California University Press: Berkeley, California.

Lester, Simon. 2025. Economic Security in Trade Agreements: My Response to Geoff Gertz, available at https://ielp.worldtradelaw.net/2025/12/economic-security-in-trade-agreements-my-response-to-geoff-gertz/

McKinsey. 2026. Geopolitics and the Geometry of Global Trade, McKinsey Global Institute: New York City, New York, available at https://www.mckinsey.com/mgi/our-research/geopolitics-and-the-geometry-of-global-trade-2026-update

McLaren, John. 1997. Size, Sunk Costs, and Judge Bowker's Objection to Free Trade, American Economic Review, 87: 400- 420.

Palacios, Mario, and Petros C. Mavroidis. 2026. Reviving the WTO, A Sectoral Agreement on Semiconductors to Promote Economic Security, Elgar Publishing: Cheltenham, United Kingdom (forthcoming)

Rotunno, Lorenzo, and Michele Ruta. 2025. Trade Partners’ Responses to US Tariffs, IMF Working Paper WP/25/147, IMF: Washington, D.C., available at https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025147.pdf

Viner, Jacob. 1948. Power versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries, World Politics, 1: 1-29.

[1] WTO Docs. WT/GC/W/989 of February 18, 2026 (China); WT/GC/W/984 of December 15, 2025 (US); and WT/GC/W/986 of January 21, 2026 (EU). The U.S. came back with a second paper (WT/GC/W/998 of March 23, 2026).

[2] Rotunno and Ruta (2025).

[3] For a recent exposé, see the excellent contribution of McLaren (1997).

[4] We discuss this point in detail in Palacios and Mavroidis (2026).

[5] Gertz (2025) and (2025a) and Lester (2025) offer an excellent basis for debating this point.

Article 24.5
Initiation of panel procedures

...

5. The Trade Committee may decide to entrust an external body to provide assistance to panels established under this Chapter, including administrative and legal support. Such decision shall address the conditions of the entrustment, including the costs arising from the entrustment. Where applicable, any panel request shall also be delivered to the external body.

What do they have in mind here in terms of this "external body"? The WTO Secretariat, which many people over the years have suggested could assist with FTA disputes? The Permanent Court of Arbitration, which handled the UK-EU sandeel fishing dispute? Could someone create a new entity that would serve this purpose?

I looked around a bit to see if there have been similar provisions in other trade agreements. This is not necessarily a comprehensive list, but I found several examples.

First, the EU-NZ FTA has the most similar language, as it, too, refers to "providing administrative and legal support":

Article 26.4
Initiation of panel procedures

...

2. The request for the establishment of a panel (hereinafter referred to as "panel request") shall be made by means of a written request delivered to the other Party, and to any external body entrusted pursuant to paragraph 4, if applicable. ...

...

4. The Trade Committee may decide to entrust an external body with assisting panels under this Chapter, including providing administrative and legal support. The Trade Committee's decision shall also address the costs arising from such entrustment.

In addition, there are several agreements that talk only about support for "administrative tasks":

EU - Japan Economic Partnership Agreement (which I blogged about in 2018):

Article 21.25
Administration of the dispute settlement procedure

1. Each Party shall:

(a) designate an office which shall be responsible for the administration of the dispute settlement procedure under this Chapter;

(b) be responsible for the operation and costs of its designated office; and

(c) notify the other Party in writing of the office's location and contact information no later than three months after the date of entry into force of this Agreement.

2. Notwithstanding paragraph 1, the Parties may agree to jointly entrust an external body with providing support for certain administrative tasks for the dispute settlement procedure under this Chapter.

UK-NZ FTA:

Article 31.17
Administration of the Dispute Settlement Procedure

1. Each Party shall:

(a) designate an office that shall be the Party’s point of contact, and which shall be responsible for providing administrative assistance to panels established under Article 31.6 (Establishment of a Panel); and

(b) notify the other Party of the location of its designated office by the date of entry into force of this Agreement.

2. Notwithstanding paragraph 1, the Parties may agree to jointly entrust an external body with providing support for certain administrative tasks for the dispute settlement procedure under this Chapter.

UK-Australia FTA:

Article 30.21
Administration of the Dispute Settlement Procedure

1. The Parties may agree to jointly entrust an external body with providing support for certain administrative tasks for the dispute settlement procedure under this Chapter.

2. The expenses of the external body shall be borne by the Parties in equal share, unless the Parties agree otherwise.

It seems clear that some government officials think this idea is worth exploring, as it is has been raised in trade negotiations and made it through to some final texts, and the specific language used has been evolving. Implementing it will be complicated, though, and it remains to be seen if something along these lines can be made operational.

As the European Union's Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase, India confronts a fundamental challenge to differentiated responsibility under the Paris Agreement. With default values imposing 30% markups by 2028 and verification requirements disproportionately burdening developing producers, CBAM tests whether unilateral measures can override the principle that developed nations bear greater responsibility for atmospheric carbon depletion.

On 1 January 2026, the European Union's (EU) Carbon Border Adjustment Mechanism (CBAM) transitioned to enforcement, triggering financial obligations for importers to purchase certificates reflecting embedded emissions. For India, whose steel exports to Europe account for more than 60% of the sector's total exports, CBAM raises questions about whether unilateral measures can impose uniform carbon pricing without considering the differentiated responsibilities outlined in the Paris Agreement. Between 2020 and 2024, India formally objected 29 times at the World Trade Organisation (WTO), articulating that CBAM violates WTO non-discrimination provisions and climate justice principles.

Default Value Penalties as Structural Barriers

Under the implementing acts adopted on 17 December 2025, importers without facility-specific verified emissions data must apply country-specific default values with punitive markups: 10% in 2026, 20% in 2027, and 30% from 2028. For Indian steel, the default emission intensity is 4.32 tonnes CO₂ per tonne. With a 30% markup, this becomes 5.616 tonnes CO₂ per tonne. At projected 2026 EU Emissions Trading System (ETS) prices of €83-92 per tonne CO₂, default values impose certificate costs of €466-517 per tonne. Producers providing verified data reflecting the national average of 2.5 tonnes of CO₂ face costs of only €79 to €88 per tonne after benchmark adjustments are applied. Default values impose costs nearly six times higher.

For India's secondary steel sector, which accounts for 40% of national production and is dominated by Micro, Small, and Medium Enterprises (MSMEs), verification presents insurmountable barriers. These facilities lack continuous emission monitoring and cannot afford ISO 14065-compliant verification. National Accreditation Bodies are already at high capacity and unlikely to begin mass accreditation of third-country verifiers. MSMEs cannot afford verification, yet they face default values that render exports commercially unviable without it. CBAM assumes sophisticated monitoring infrastructure characteristic of developed economies, without transition mechanisms for countries building such capacity.

WTO Compatibility and Shrimp-Turtle Constraints

CBAM's WTO legality hinges on Article XX of the General Agreement on Tariffs and Trade (GATT) environmental exceptions. Prima facie, CBAM violates Article II (tariff bindings). Whether it also violates Article III:4 (national treatment) is contested: scholars disagree on whether production process distinctions can differentiate otherwise physically identical products. The Article XX chapeau analysis is dispositive regardless. The EU invokes Article XX(g), which permits measures relating to the conservation of exhaustible natural resources, subject to the chapeau requirement that such measures not constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail.

The Appellate Body's Shrimp-Turtle jurisprudence provides controlling precedent. India, Malaysia, Pakistan, and Thailand challenged a US ban on shrimp imports from countries not certified as requiring turtle excluder devices that meet US standards. The Appellate Body held that the measure failed because it provided Caribbean countries with technical assistance and a three-year phase-in, whereas it gave Asian complainants only four months. Critically, Article XX does not permit measures that impose a rigid and unbending standard, forcing trading partners to adopt essentially the same comprehensive regulatory regime.

CBAM exhibits parallel defects. First, benchmarks derived from the 10% most efficient EU installations require third countries to match best-in-class European production. Second, CBAM provides no differentiated treatment based on development status or technological capacity. Third, default-value penalties discriminate against countries lacking verification infrastructure, mirroring the differential phase-in discrimination in the Shrimp-Turtle case.

The chapeau's same conditions language is dispositive. Legal scholars argue that the Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) constitute relevant conditions that justify differential treatment. India's historical emissions account for 3.4% of the cumulative global CO₂ emissions, compared to the EU's 22%. India's per capita emissions are 1.9 tonnes of CO₂ annually, compared to 7 tonnes in the EU. These facts establish materially different conditions permitting differential treatment under the chapeau's express terms.

CBDR-RC as Structural Constraint

Common but differentiated responsibilities and respective capabilities, as enshrined in the United Nations Framework Convention on Climate Change (UNFCCC) Article 3.1 and the Paris Agreement Article 2.2, stipulate that parties should protect the climate system... based on equity, with developed country Parties taking the lead. CBDR-RC operates as a structural constraint on multilateral action. Under the Paris Agreement, it permits differentiated nationally determined contributions, justifies the financial obligations of developed countries under Article 9 for climate finance, and informs the assessment criteria for the Global Stocktake.

CBAM reflects a different logic: uniform carbon pricing benchmarked to European standards, with no categorical exemptions for development status and no revenue recycling. The Organisation for Economic Co-operation and Development (OECD) estimates that CBAM would reduce global emissions by only 0.54%, raising proportionality questions: whether minimal environmental gains justify measures that transfer revenue from developing to developed country treasuries, while undermining multilateral cooperation.

India's Carbon Credit Trading Scheme: Cooperation or Coercion?

Under the EU-India Strategic Agenda, adopted in September 2025, the EU committed to deducting the carbon prices effectively paid in India from CBAM financial adjustments, offering potential for cooperation. India's CCTS establishes an intensity-based baseline-and-credit system covering nine sectors. Expected to commence mid-2026, it will cover over 700 million tonnes CO₂ equivalent. The EU Commission's December 2025 review acknowledged that carbon prices effectively paid under different compliance schemes can be deducted. However, whether India's system qualifies for such deductions remains a matter of contention.

Fundamental incompatibilities remain. CCTS operates as an intensity-based system, whereas the EU ETS imposes absolute caps with auctioned allowances. Whether Carbon Credit Certificates constitute effectively paid carbon prices requires complex equivalency determinations. India's accelerated development of CCTS responds explicitly to CBAM pressure, raising questions about whether this represents voluntary action or coerced convergence. If CBAM compels the adoption of EU-style carbon pricing, it may violate the Shrimp-Turtle prohibition on conditioning market access on the adoption of an essentially the same regulatory regime.

Conclusion: Toward Justice-Oriented Border Adjustments

The India-CBAM dispute reveals whether climate-trade architecture can accommodate differentiated responsibility or fracture into competing blocs that impose asymmetric burdens. Justice-oriented reform necessitates structural changes that extend beyond technical adjustments. First, default value markups must recognise capacity constraints through differential schedules based on World Bank income classifications. Second, revenue recycling mechanisms must channel CBAM revenues to source countries for monitoring infrastructure and decarbonisation investments, transforming CBAM from an extractive penalty to cooperative financing. Third, multilateral governance must replace unilateral design through WTO plurilateral agreements establishing shared methodologies and mutual recognition.

The December 2025 definitive phase marks a turning point, not a conclusion. India must pursue both the operationalisation of CCTS and international advocacy for CBAM reforms, in line with its Paris commitments. The EU faces the question of whether CBAM can evolve from a unilateral instrument into a platform for North-South collaboration. The integrity of multilateral climate governance may depend on resolving whether environmental ambition can coexist with trade justice, or whether border measures will fracture the consensus that differentiated responsibility must guide global responses to atmospheric carbon depletion.

Since then, the U.S.-EU trade deal has stumbled a bit, slipping on some icy patches and having to recover. I haven't followed all the twists and turns, but I see that the European Parliament took a vote last week on the legislation to implement it in EU law, giving strong approval albeit with some conditions attached. There are still hurdles that might emerge, but it seems as though there is a good chance the deal will be finalized and implemented.

What interests me for the purposes of this post is that as part of the implementing legislation, Parliament added some language in a recital that formalizes the concerns about security in relation to the Ukraine war:

(1f) In view of Russia’s war of aggression against Ukraine, as well as other conflicts in the Union’s neighbourhood that undermine the security of the Union and its citizens, it is imperative for the Union to maintain and further strengthen its partnership with a key ally at a time when such relations are of critical importance. In that exceptional context, the Union is required to adopt extraordinary and temporary measures, duly justified under Article XXI of the GATT (Security Exceptions). However, such unilateral measures should not set a precedent and should remain strictly exceptional, proportionate and time-limited, reflecting their specific nature as actions justified on security grounds.

The Ukraine security part is not too surprising, but I'm not sure what to make of the reference to GATT Article XXI. If it is just about confirming what European leaders have in mind as the political justification for this deal (along the lines of the quotes in my earlier posts), I can see the logic, although I'm not sure why it needs to be included in the recital. However, if it is intended as an effort to provide a legal justification for the EU measures under GATT Article XXI, this seems like a dangerous road to go down.

First of all, with regard to WTO law, it would be a challenge to convince a WTO panel to agree with Parliament that these measures are "duly justified under Article XXI." I don't want to get too bogged down in the case law in this short post, but here's a quick assessment of the relevant provisions. Under the legislation, the EU is treating other Members less favorably than the U.S., which would lead to a GATT Article I:1 MFN violation. If the EU were to invoke Article XXI as a defense, it would have to show that the legislation is an "action which it considers necessary for the protection of its essential security interests" under the Article XXI(b) introductory clause; and that it falls under the "taken in time of war or other emergency in international relations" requirement in Article XXI(b)(iii). One consideration here will be whether the EU legislation can be sufficiently connected to the security concern being cited. On this point, at para. 7.138, the Russia - Traffic in Transit panel said: "as concerns the application of Article XXI(b)(iii), this obligation is crystallized in demanding that the measures at issue meet a minimum requirement of plausibility in relation to the proffered essential security interests, i.e. that they are not implausible as measures protective of these interests." Is this EU legislation plausibly protective of the EU's security interests related to Ukraine? Does it actually "maintain and further strengthen its partnership with a key ally"? I watched a bit of the plenary debate in the Parliament, and many of the MEPs did not come across as very confident on these points.

Second, in terms of the systemic impact, it seems to me that taking this approach to Article XXI in these circumstances pushes the boundaries of how this provision is applied. I know the Parliament says "such unilateral measures should not set a precedent," but I'm not sure a disclaimer of this sort will be effective, as the political precedent for a broader approach to invoking Article XXI will have been set. What this means in practice is that future EU actions are more likely to rely on Article XXI, and that other governments may see this as a signal that they, too, have a greater scope to rely on Article XXI to justify violations.

With regard to the next steps, a Parliament press release on the vote says "MEPs are now ready to start negotiations with EU governments on the final shape of the legislation" (referring to the trilogue negotiations involving Parliament, the Member States represented in the Council, and the Commission). It would be a good idea for everyone involved, at both the EU and Member State level, to think about the implications of a formal assertion that the legislation is justified under Article XXI, in terms of both potential litigation against this legislation and the signal it sends to the rest of the WTO membership about how Article XXI can and should be used.

Adopted the 13th February 2024, the Investment Facilitation for Development Agreement (IFDA) was the subject of a draft decision for incorporation into Annex 4 of the WTO Agreement at the 13th Ministerial Conference (MC13) in Abu Dhabi. However, due to India’s blockage of consensus, the agreement could neither be placed on the agenda nor formally integrated into the WTO framework. The short interval between the proposal and MC13 left little room for multilateral discussions, making the absence of outcome largely predictable.

Since then, WTO Members have had the opportunity to discuss the draft decision on eleven occasions during General Council meetings. At each of these meetings, India, Turkey, and South Africa opposed the agreement for a range of reasons.

A first turning point emerged at the General Council meeting in December 2025, when South Africa indicated that instructions from its capital had evolved and that it would no longer oppose the agreement. Turkey also adopted a more moderate position regarding its opposition.

With the opening of MC14 in Yaoundé on 26 March, developments have accelerated further. During the opening session, the Turkish Ambassador officially announced that Turkey would not oppose the agreement. India now appears increasingly isolated. One thing, however, seems clear: the momentum is real.

First, in a press release circulated on 26 March as well, India’s Minister of Commerce noted that “On the IFD agenda, India supports initiatives that facilitate investment flows into developing countries, including LDCs.” This statement remains ambiguous. It is still unclear whether India will support, abstain, or continue to oppose a ministerial decision on the IFDA. So the door seems to be more open than it was at previous meetings. Second, from a political perspective, adopting such a decision at a Ministerial Conference carries greater symbolic weight than doing so at the level of the General Council. Third, the host country, Cameroon, is among the early participants in the IFDA. It therefore has a dual interest in securing the adoption of such a decision: demonstrating that its Ministerial was able to deliver tangible outcomes and advancing an agreement it actively supports.

That said, at a time when plurilateral initiatives and consensus-based decision-making lie at the heart of ongoing WTO reform debates, last-minute adjustments may be necessary to address India’s concerns.

On the legality of the procedure

It now appears widely accepted that Members to a plurilateral agreement may propose its incorporation into Annex 4 on their own initiative, provided that consensus is reached. Investment-related issues were previously the subject of multilateral discussions, as they formed part of the Singapore Issues included in the Doha Development Agenda in 2001. Although these discussions were removed from the multilateral agenda in 2004 following a General Council decision, this does not create a conflict between the multilateral agenda and the current plurilateral initiative.

On the WTO mandate

India and Turkey have argued that investment is not sufficiently linked to trade and therefore falls outside the WTO’s mandate. This argument is difficult to sustain. The WTO already includes investment-related disciplines, notably under the TRIMs Agreement and the GATS. Moreover, investment was previously subject to multilateral negotiations under a broader mandate than investment facilitation alone, and its removal from the agenda in 2004 was not based on a lack of WTO competence. It would therefore be inconsistent to consider investment as falling within the WTO’s mandate until 2004 but no longer thereafter.

More fundamentally, India’s concern may be less about mandate and more about precedent: incorporating the IFDA could open the door to other issues that India would prefer to keep outside the WTO framework, even on a plurilateral basis. One possible solution would be to include a paragraph in the ministerial decision stating that, “Considering the existing investment-related commitments within the WTO and the multilateral discussions initiated at the Singapore Ministerial Conference and pursued under the Doha Development Agenda, investment facilitation falls within the scope of the WTO’s mandate.” Such language could reassure India by clarifying that this incorporation does not automatically legitimize the inclusion of other, unrelated issues.

On the WTO budget

The budgetary implications of plurilateral agreements have long been a central concern for India. In response, Chile, Cambodia, Cameroon, the European Union, and Korea, have emphasized that “4.3. As for the WTO Secretariat's resources, it is important to stress that the WTO is a Member-driven organization. The Secretariat operates under the guidance of Members, and it is routine for it to provide logistical and technical support when a sizeable group of Members (in this case, 128 Members) requests assistance in pursuing discussions of their interest on a trade-related issue. Progress on an investment facilitation agreement does not come at the expense of other negotiating workstreams at the WTO (i.e., not a "zero-sum" choice between workstreams).” However, the main budgetary implications of plurilateral agreements arise not from the negotiation phase, but from their subsequent administration and implementation. The IFDA provides for the establishment of a committee, which will require administrative support from the Secretariat, as well as analytical work relating to implementation. These functions entail financial costs and the allocation of human resources that were not previously accounted for in the WTO budget.

Two options can be envisaged. The first would be to increase Members’ contributions, although non-participating Members may reasonably object to financing mechanisms in which they do not participate. The second would be to reallocate existing resources, which would likely come at the expense of other WTO functions. Neither option appears acceptable to India. A possible compromise would therefore be for participating Members to assume the additional budgetary costs associated with the agreement, a solution that could be reflected in the ministerial decision.

Taken together, these possible adjustments, the political momentum generated by MC14, and the shifts observed over the past three months suggest that a decision to incorporate the IFDA into Annex 4 may now be within reach.

Intervention on the Moratorium on Customs Duties on Electronic Commerce

Approving an open-ended moratorium at MC-14 will deliver stability and predictability for all traders, while demonstrating that the WTO can deliver tangible results for consumers and businesses.

Failure to do so would create uncertainty in digital commerce as Member governments could at any time erect a complex and costly regulatory structure that would stifle growth and innovation.

Such a failure, in addition, would further undermine confidence that the WTO can deliver meaningful results.

We all have an opportunity to deliver a big win in Yaounde for our consumers, for our businesses, and for the WTO. Let us seize that and not let it pass us by.

This might sound like a silly question, but why exactly does the Trump administration care so much about this issue? With the Appellate Body no longer functioning, and the U.S. not a party to the MPIA, enforcement of WTO rules by the U.S. through WTO dispute settlement isn't likely to be very effective. The U.S. could still file a complaint and get a panel ruling, but then the losing party could appeal into the void. So why bother with the moratorium effort when the administration would have such difficulty enforcing the moratorium through WTO complaints?

One possible answer is that it's just about getting the principle established in international rules. If the principle exists there, it can then be cited in various different contexts, both political and legal. For example, when a government such as Indonesia is considering imposing duties on electronic transmissions, U.S. companies and diplomats can push back by citing the WTO moratorium and argue, publicly or privately, that Indonesia shouldn't violate international law. These arguments could have an impact on whether the Indonesian government decides to go through with the duties.

Another answer may be that if rules exist in a trade agreement, Section 301 provides additional remedies beyond the enforcement provisions of that agreement, and thus Section 301 could be invoked instead of filing a WTO complaint. Specifically, the "mandatory" provisions of Section 301 can be used here, as they cover situations where (as set out in the statute) (1) rights in a trade agreement are being denied, (2) benefits of the agreement are being denied, or (3) there are violations of the agreement.

At the same time, it's worth noting that the "discretionary" provisions of Section 301 could apply regardless of whether any trade agreement rules exist. Under these provisions, USTR can investigate whether "an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce," and take action in response. How much value is there in broadening the scope of the Section 301 provisions that might apply here, so that both the "mandatory" and the "discretionary" provisions are options? Maybe enough that the Trump administration thinks this is worth the effort?

Other possible explanations for the thinking behind the U.S. strategy here are: (1) when the functionality of WTO DS is restored some day, the rule will become useful, so this is about laying the foundation for that future; (2) the rule would be effective now as between Members that are parties to the MPIA, so there could be at least some enforcement, even if the U.S. isn't doing the enforcing; or (3) some Members have enacted domestic procedures that allow them to initiate rebalancing on the basis of a panel report alone (regardless of any appeal into the void), which, again, will provide for some enforcement possibilities. I don't think these last three are likely to have been at the core of the U.S. thinking, but I suppose there's a chance someone involved in the strategizing had these things in mind.

At a recent House Ways and Means Committee Trade Subcommittee hearing, the issue of the moratorium came up frequently, and members of Congress and the witnesses all seemed to agree that the moratorium was an important U.S. objective for MC14. If there is a future Congressional hearing on these issues, though, I'd love to see members of Congress probe witnesses or U.S. government officials on what exactly they see as the practical value of the moratorium, given the continuing Appellate Body appointments crisis.

ADDED:

I wanted to add two things to this post.

First, after a conversation I had with someone offline about all this yesterday, I wanted to clarify that I'm not saying that I see no value in an international rule that is not subject to dispute settlement. Rather, I just wanted to ask proponents what value they saw in it.

Second, Maria Pagan pointed out in the comments that the moratorium is not a covered agreement and therefore is not subject to dispute settlement, so the parts above about filing WTO complaints are much less relevant! (Although perhaps some of the proponents do have in mind making the moratorium subject to dispute settlement eventually?)

7 PROTECTING ESSENTIAL SECURITY INTERESTS

57. The December 2025 Report stated that for more than 70 years, the United States has been clear in its view that each country has the sovereign right and responsibility to take action necessary to protect its essential security interests. The United States is not alone in this view; many Members have expressed similar views through previous decades at the GATT and WTO when their own security measures were questioned.

58. The United States firmly believes that litigating matters of essential security at the WTO undermines the foundations of the WTO by dragging the Organization into debating and litigating inherently political matters. Adjudicating questions of national security in the WTO is incompatible with the purpose of the WTO, a trade organization, and damages the viability of the WTO as a forum for discussion and negotiation.

59. The WTO Agreement reflects an understanding among trading partners that judgments on matters of essential security are to be left to governments, not adjudicators. Numerous bilateral and regional trade agreements reflect the same understanding between many Members, even when those Members are close political or security allies.

60. Members need to recognize that litigating matters of essential security is futile. Dispute settlement findings will not alter a Member's views on the fundamental importance of an essential security measure.

61. This approach properly reflects the balance of rights and obligations agreed to by the Members, and reflects the reality that no Member would or should be expected to withdraw a measure that it considers to be necessary to protect its essential security interests.

Way Forward

62. Pursuant to Article IX of the WTO, Members should agree to an authoritative interpretation of Article XXI of the GATT 1994, Article XIV bis of the GATS, and Article 73 of the TRIPS Agreement, to clarify the understanding of the essential security exception. The authoritative interpretation should state that each Member determines for itself whether an action it takes is necessary to protect its essential security interests and whether one of the required circumstances in the sub-paragraphs is present. In any dispute in which a Member invokes the essential security exception, a WTO adjudicator would not review that invocation and would instead limit its report to the Dispute Settlement Body to note the invocation.

The proposal follows up on a brief statement on these issues in a U.S. communication last December.

This statement of the current U.S. position is not surprising, as the U.S. has been saying something along these lines for a long time now, but I have some questions. Towards the end of the Biden administration, back in December 2024, the U.S. put forward a communication entitled “Reflections from the United States on the Handling of Disputes Involving Essential Security Measures." In that communication, in the context of proposing a similar authoritative interpretation for the security exceptions, the U.S. emphasized the role of the non-violation remedy in disputes involving essential security issues:

WTO Members designed a system for the settlement of disputes where rebalancing can take place without interfering with a Member's assessment and sovereign responsibilities for its essential security. If a Member is impacted by an essential security measure, and the Member wishes the assistance of WTO Members in defining an appropriate rebalancing, the appropriate response is to bring a non-violation nullification or impairment claim pursuant to the General Agreement on Tariffs and Trade 1994 (GATT 1994), the General Agreement on Trade in Services (GATS), or the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), or the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

At that time, I had questions about the specifics of the proposed U.S. guidelines relating to non-violation complaints in this context, but putting that aside, here are my questions now: Does the Trump administration share the view of the Biden administration that non-violation claims are the proper remedy in circumstances where essential security has been invoked as the justification for a measure? And are the guidelines proposed during the Biden administration still on the table? I hope these questions come up during the discussions at MC14 so that we get a bit of clarity here.

That's quite a provocative title for an academic paper! Let's look at the abstract to see what the paper is actually about:

We estimate the mortality effects of local labor market exposure to NAFTA and compare them to the mortality effects of other U.S. local labor market contractions. Areas more exposed to NAFTA experienced sustained increases in mortality over the subsequent 15 years. Mortality increases occurred for all broad demographic groups, but were especially pronounced among working-age men. Extending the analysis to other economic contractions, we show that the health consequences depend critically on which sectors bear the losses: declines in manufacturing employment increase local area mortality, while declines in non-manufacturing employment reduce it.

I have a couple thoughts in reaction.

First, the title refers to "NAFTA’s Mortality Impacts And Implications" and the abstract talks about "exposure to NAFTA," but as the paper itself clarifies, the focus here is narrower: "exposure to increased Mexican import competition from NAFTA." It's worth noting, though, that NAFTA did more than just allow increased Mexican imports. For example, just focusing on the U.S. side, it led to increased exports of various U.S. goods and services; it lowered prices for U.S. consumers; it helped make some U.S. industries more competitive with the rest of the world; and it provided stronger protections for intellectual property. What were the economic impacts of each of these, and the consequential impact on the mortality of specific regions? I don't know! But that seems worth considering as part of the bigger picture of "NAFTA's impact" on the economy and on mortality, otherwise the assessment leaves a lot out.

The NYT piece brings this point up too, noting that one of the paper's authors "cautioned that NAFTA might have had other benefits that his paper didn’t capture, including in innovation or in helping North America as a whole remain competitive against other parts of the world." But without these points being made in the paper itself, the paper is likely to be mischaracterized in the public debate.

And while we are on the subject of the broader impact of NAFTA, if there is a concern with increased imports from Mexico, shouldn't we think about the impact on people in Mexico too? If there were manufacturing losses in the U.S., weren't there manufacturing gains in Mexico? What was the economic and mortality impact there? Again, if the paper is presented as being about "NAFTA" rather than just "the impact of Mexican imports into the U.S.," these other considerations seem relevant.

Second, the paper only looks at the impact of Mexican imports on regions of the U.S., but of course there is another NAFTA party whose industries suddenly had to compete with Mexican imports. How did Canada fare in terms of mortality rates in its affected manufacturing regions? If Canada didn't see the same mortality impact, it may be that its social policies did a better job helping manufacturing workers adjust to import competition. That could give us a better sense of the bigger picture of causation here, and could tell us that it wasn't so much the imports to blame as it was the government's social policies to deal with the (widely anticipated) import surge. On this point, the NYT piece notes that one of the paper's authors "pointed to other countries, like Denmark, that had set up systems to help support and retrain workers who had lost their jobs." That idea seems like something that could be tested here by looking at the situation in Canada.

Finally, let's go a little deeper on the way the title frames the issue: "Trading Goods For Lives: NAFTA’s Mortality Impacts And Implications." Imagine a similar study where someone looks at the reduction of U.S. defense spending after the Cold War. They find that the reduction in purchases of weapons has the biggest economic impact on the specific geographic regions where the weapons are manufactured, and that there is a similar mortality effect on these regions as the NAFTA paper's authors found with increased imports from Mexico. (I'm not saying this effect definitely exists, but it's easy to imagine that it could). Then someone takes this study and writes a paper entitled something like: "Trading the Cold War For Lives: Peace's Mortality Impacts and Implications." Yes, statistically speaking, there could be something real here, but it seems like it misses the bigger picture. I would say there is something similar going on with this NAFTA paper. My sense is the NAFTA paper's authors might say the paper does not weigh in on the bigger picture, but the title makes it sound like it does, and regardless of how well done the statistical analysis is, many people are going to be misled by the title.

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First up, these agreements all have a provision along the following lines about digital services taxes: The U.S. trading partner signing the agreement "shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact." So, no discrimination in digital services taxes. That's very clear. But wait, what do they mean by discrimination? Are we talking about a discriminatory effect or a discriminatory intent? Can legitimate regulatory purposes be taken into account in the analysis, and if so how? So actually, it could be a bit more clear.

Next is a provision on facilitation of digital trade, where discrimination is also a key aspect. The Malaysia agreement says the following:

Malaysia shall facilitate digital trade with the United States, including by─

(a)        refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally; [7]

...

[7] For greater certainty, Malaysia has the right to regulate in the public interest.

The Argentina, Cambodia, El Salvador, Guatemala, Indonesia, Taiwan, and Ecuador agreements are basically the same but do not have the "right to regulate" footnote, for whatever that's worth (maybe not much). Bangladesh is the same as well, but for some reason only covers digital products and not digital services (also, it says "digital products" as opposed to "products distributed digitally" like the others).

As with the digital services taxes provision, we have the question of what exactly "discriminate" means in this context as well.

Finally, there are provisions related to these U.S. trading partners signing digital trade agreements with other countries. Interestingly, some agreements (Argentina, El Salvador, and Ecuador) don't address this issue at all. The rest of the agreements can then be put into two broad groups.

The Malaysia and Cambodia agreements require only that the trading partner "shall consult with the United States before entering into a new digital trade agreement with another country that jeopardizes essential U.S. interests"; the Indonesia agreement is similar but requires the possibly lesser "shall communicate."

Another group of agreements mentions the possibility of the following punishment for governments signing digital trade agreements with the wrong countries: The U.S. terminating the trade agreement and reimposing the IEEPA reciprocal tariffs. In this regard, the Guatemala agreement says that in the event "a new digital trade agreement with certain countries" is signed, the U.S. "may terminate this Agreement and reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025" (these tariffs, of course, have now been struck down by the Supreme Court in the Learning Resources case, and therefore would not be legal under domestic law, presumably excluding this as a U.S. response). The Bangladesh agreement is similar, but talks about "a country that jeopardizes essential U.S. interests," and requires consultations before imposing the duties. The Taiwan agreement refers to "a 'covered nation' as defined in 10 U.S.C. § 4872" and says the U.S. may "reimpose the applicable reciprocal tariff rate" but does not specify an EO as the other two agreements do.

What are the implications of all this trade deal language, with its variations? There has been a proliferation of domestic digital regulations and taxes in recent years, and there are some complex issues surrounding (1) whether these measures would violate non-discrimination or similar obligations in international agreements and (2) whether any relevant exceptions are satisfied. These issues are hypothetical at this point because we haven't seen litigation in this area, so it's not clear what real world impact the international rules would have on domestic policy. In the meantime, though, the Trump administration seems to be trying to prevent any international rules that it considers undesirable, mainly due to connections to China. To this end, it is using one set of international agreements to try to constrain another set of international agreements. How these international agreements interact with each other and with domestic regulations and taxes is going to be interesting to watch in the coming years.

The relevant provisions of the legal texts are below.

Malaysia

Article 3.1: Digital Services Tax

Malaysia shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

Malaysia shall facilitate digital trade with the United States, including by─

(a)        refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally;[7]

...

[7] For greater certainty, Malaysia has the right to regulate in the public interest.

Article 3.3: Digital Trade Agreements

Malaysia shall consult with the United States before entering into a new digital trade agreement with another country that jeopardizes essential U.S. interests.

Cambodia

Article 3.1:  Digital Services Taxes

Cambodia shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies, in law or in fact.

Article 3.2:  Facilitation of Digital Trade  

Cambodia shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally, ...

Article 3.3:  Digital Trade Agreements

Cambodia shall consult with the United States before entering into a new digital trade agreement with another country that jeopardizes essential U.S. interests.

El Salvador

Article 3.1: Digital Services Taxes

El Salvador shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

El Salvador shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally, ...

Guatemala

Article 3.1: Digital Services Taxes

Guatemala shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

Guatemala shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally, ...

Article 3.3: Digital Trade Agreements

If Guatemala enters into a new digital trade agreement with certain countries, the United States may terminate this Agreement and reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025.

Argentina

Article 3.1: Digital Services Tax

Argentina shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

1. Argentina shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or products distributed digitally. ...

Bangladesh

Article 3.1: Digital Services Tax

Bangladesh shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

1. Bangladesh shall facilitate digital trade with the United States, including by: (a) refraining from measures that discriminate against U.S. digital products; ...

2. If Bangladesh enters into a new digital trade agreement with a country that jeopardizes essential U.S. interests, the United States may, if consultations with Bangladesh fail to resolve its concerns, terminate this Agreement and reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025

Taiwan

Article 4.1: Digital Services Taxes

TECRO, through its Designated Representative, shall not impose digital services taxes, or similar taxes that discriminate against enterprises of the territory represented by AIT in law or in fact.

Article 4.2: Facilitation of Digital Trade

TECRO, through its Designated Representative, shall facilitate digital trade with AIT, through its Designated Representative, between the territories represented by the Parties, including by refraining from measures that discriminate against digital services or products distributed digitally of the territory represented by AIT, ...

Article 4.3: Digital Trade Agreements

If the authorities of the territory represented by TECRO enter into a digital trade agreement with a “covered nation” as defined in 10 U.S.C. § 4872, AIT, in consultation with its Designated Representative, may terminate this Agreement and reimpose the applicable reciprocal tariff rate.

Indonesia

Article 3.1: Digital Services Taxes

Indonesia shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

Indonesia shall facilitate digital trade with the United States, including by:

(a) refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally;

...

Article 3.3: Digital Trade Agreements

Indonesia shall communicate with the United States before entering into a new digital trade agreement with another country that jeopardizes essential U.S. interests.

Ecuador

Article 3.1: Digital Services Taxes

Ecuador shall not impose digital services taxes, or similar taxes, that discriminate against U.S. companies in law or in fact.

Article 3.2: Facilitation of Digital Trade

Ecuador shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally, ...