On the one hand, you have those who view state-to-state mechanism more like an international court. Panel reports must be “binding” and the mechanism needs to be clear that the losing responding party “must” comply with the findings of a panel. This approach, it is argued, provides the predictability and certainty that makes these mechanisms worthwhile.

However, the United States approaches dispute settlement very differently. The longstanding view of the United States is that, as a sovereign, you retain the right to decide what to do in the case of a loss. From the U.S. perspective, rather than focusing on whether the system is “predictable,” it is more important that the system be structured in such a way as to deliver an outcome that is credible and trustworthy. This is important because, when faced with the possibility of having to remove or modify a law, regulation, or policy to comply with a panel finding, a government must go through complex domestic legal and political dynamics. Reality dictates that parties will comply where compliance is politically achievable, not because the agreement says results are binding. The results of a credible dispute settlement process are a more powerful incentive to eventual compliance than just because a dispute settlement chapter text says that you must comply. In addition, from the U.S. perspective, a DSM should assist the parties in resolving the issue but not dictate a particular outcome.

(footnote omitted)

When people describe international law or international judicial rulings as "binding," as the international law folks I know generally do, I'm not always sure what they have in mind. There may be a variety of views here, which can make this kind of discussion difficult to sort out. Regardless, I think this may be an area where semantics is making any divide that exists seem bigger than it is. In practice, we all know that even if an international agreement or ruling is characterized as "binding," governments do not always comply. I don't see much of a divide between the U.S. government and other governments on this point.

To me, the practical issue that should be the focus of this debate is the degree of enforceability of the international agreement and the ruling. How strong are the sanctions for non-compliance? What are the expectations for what responses to rulings should look like? Reaching agreement on these issues can be a challenge, although in the Uruguay Round governments were able to do so. On whether a respondent government must comply with the findings of a panel or Appellate Body report when it loses, DSU Article 3.7 provides:

... The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements. The provision of compensation should be resorted to only if the immediate withdrawal of the measure is impracticable and as a temporary measure pending the withdrawal of the measure which is inconsistent with a covered agreement. The last resort which this Understanding provides to the Member invoking the dispute settlement procedures is the possibility of suspending the application of concessions or other obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorization by the DSB of such measures.

Does the DSU consider panel or Appellate Body reports to be "binding," such that "the losing responding party 'must' comply with the findings of a panel"? It doesn't use the term "binding," and based on the language in Article 3.7 and the experience with disputes under the DSU, there seems to be a good amount of flexibility involved here in terms of compliance.

Getting back to Pagan, she says "[t]he longstanding view of the United States is that, as a sovereign, you retain the right to decide what to do in the case of a loss"; that "[r]eality dictates that parties will comply where compliance is politically achievable, not because the agreement says results are binding"; and "a DSM should assist the parties in resolving the issue but not dictate a particular outcome." I think DSU Article 3.7 reflects all of this. And I would say that by their behavior, all governments agree with this, broadly speaking.

Having said all that, there clearly is a divide between the U.S. and others at the moment (there may be divides within the U.S. government too, although I have no direct knowledge of this). For example, if I understand things correctly, the U.S. objects to any appellate review in dispute settlement; it would like to see panels rely less on past case law; and it wants panels to do less "gap-filling" where legal texts are ambiguous. To me, these are areas in which compromise will be a challenge but is nonetheless possible, regardless of whether panel reports are characterized as "binding."

As I see it, however, this narrative rewrites history and mischaracterizes the actual trade policy that existed during this period. In reality, post-Cold War U.S. trade policy was, on the whole, just about as balanced and flexible as what came before. In fact, it is the period from 2017 to today, under both Presidents Trump and Biden, that has shifted the United States away from the successful post-World War II trading system it helped create.

The "Aberration" Narrative

In two recent publications, trade policy officials from the Trump and Biden administrations have pushed a narrative that in the early 1990s, there was a break from post-World War II U.S. trade policy. In their view, the U.S. government helped create agreements/institutions such as the WTO and NAFTA that were "rigid" and that imposed excessive limits on the ability of the United States to use tariffs to protect domestic industries from foreign competition.

On the Republican side, U.S. Trade Representative Jamieson Greer gave a speech in Davos in which he argued that at the end of the Cold War, "American policymakers largely jettisoned our historic and pragmatic approach to trade," "pursued hyperglobalization regardless of the consequences," and "bound our hands with NAFTA and the World Trade Organization in ways that made it impossible for the United States to effectively respond to foreign practices and defend our industrial production." He subsequently referred to this period as a "30 year aberration" based on "a system ... agreed to in 1992 or 1994." To correct this mistake, he argued, the Trump administration's trade policies were taking the U.S. "back into normal history, which is, we have to use tariffs, we have to use trade measures, we use them for protection, we use them for geopolitical ends."

And on the Democratic side, Peter Harrell – who was the Senior Director for International Economics at the National Security Council and the National Economic Council during the Biden administration – wrote a piece for Foreign Affairs called "The Case for Upending World Trade" in which he argued that "[b]etween the end of World War II and the early 1990s," U.S. presidents "generally supported free trade and encouraged other countries to lower trade barriers with initiatives such as the 1947 General Agreement on Tariffs and Trade (GATT)," but they "balanced this preference with pragmatism, taking a flexible approach to policy that considered distinct challenges discretely." Harrell then contrasted this approach with what he referred to as "an overly rigid attitude toward trade" that emerged in the post-Cold War era and "dogmatism around the free trade rules that Washington established in the 1990s," and called for going back to "the more pragmatic, less rules-focused trade policymaking that reigned during most of the United States’ history."

Central to both arguments is the idea that the shift from the GATT to the WTO led to a world trading system that (1) bound the hands of the U.S. government through a dispute settlement system that was too strict and (2) imposed excessive limits on the use of tariffs. On both of these points, however, the reality looks very different from what has been claimed.

GATT vs. WTO Dispute Settlement

Both Greer and Harrell draw a contrast between dispute settlement under the GATT and dispute settlement under the WTO. Greer argues that whereas "[t]he GATT rules were intended to be flexible," allowing countries "to use the methods they need to support their economy while resolving the conflicts that inevitably emerged," the WTO involved "a rigid dispute settlement system, filled by unaccountable bureaucrats in Geneva, that interpreted the rules so narrowly that they lost much of their intended flexibility." As for Harrell, he says: "The dispute resolution mechanism in the GATT was also effectively nonbinding, encouraging countries to work out trade disputes diplomatically rather than litigating over rules."

While there are real differences between the two systems, there is, in fact, a good deal of continuity as well. The transformation of the GATT into the WTO did make dispute settlement more effective and enforceable, but the changes were not as fundamental and extensive as portrayed by Greer and Harrell. The biggest changes were as follows: losing parties could no longer block a panel ruling from having legal effect; and an appeals mechanism was created to improve the quality of the rulings.

Despite these important changes, the two eras of trade dispute settlement should be seen as more of a refinement than as a radical disruption. GATT disputes were not a purely diplomatic exercise, as they involved a significant amount of litigation and panel rulings as well, especially during the 1980s and early 1990s. While the blocking of panel reports did become a problem toward the end of the GATT era, panel reports were still regularly adopted and implemented by the losing party. When the legal scholar Robert Hudec undertook his well-known study of GATT dispute settlement covering the period 1948-1989, he found that of the 207 cases, 43% resulted in rulings and 31% were settled (the rest of the cases were withdrawn or abandoned). Hudec offered the following conclusion on the percentage of GATT complaints that were fully or partially successful – in the sense of achieving full or partial compliance with GATT obligations – for the complainant: "The GATT dispute settlement procedure has been a quite successful international legal institution. The overall success rate of 88 percent, or even the 1980s' success rate of 81 percent, means that at least four out of five valid complaints are being dealt with successfully."[1]

In the WTO era, diplomacy has continued to play an important role. Many disputes have been settled by the parties even before a ruling was issued. And when rulings were issued, disputes have sometimes been settled through resolutions that do not involve the respondent government coming into full compliance with the ruling (and in other disputes, the respondent government has simply not taken action that brings it into compliance with the ruling). It is important to note in this context that, just like under the GATT, WTO rules allow governments to rebalance trade concessions rather than change their laws and regulations to comply with a ruling. Greer himself acknowledged this flexibility in a subsequent speech, noting the following example:  "The United States won the EU Beef Hormone case in 1998, but the European Union never lifted its ban on hormone-treated beef imported from the United States.  Instead, the United States accepted a negotiated quota arrangement—market access for a limited quantity of hormone-free beef—far short of what the ruling required."

Thus, both the GATT and WTO versions of dispute settlement involve a mix of diplomacy and law. WTO dispute settlement is not as "rigid" as suggested, and even with the changes made as part of the transition from the GATT to the WTO, the dispute settlement system continues to have flexibility. While it is certainly worth considering the proper balance between the two elements, and additional tweaks are possible, the GATT and WTO eras are not as different as they are sometimes portrayed.

The Technocratic Turn in Tariffs

Both Greer and Harrell suggest that tariffs fell into disuse in the post-Cold War period. Greer talks about the "30 year aberration where we pretended that ... we didn't need to protect our supply chains and we didn't need to protect American workers," and "now we're actually back into normal history, which is, we have to use tariffs, we have to use trade measures, we use them for protection, we use them for geopolitical ends." And Harrell says, "[b]etween the end of World War II and the early 1990s, ... [w]hen necessary, U.S. presidents were willing to use tools such as tariffs, ... ."

But the reality of tariffs during this period is that, despite all the talk of free trade and free trade agreements, the U.S. used tariffs frequently, with much of the tariff imposition being turned over to lawyers and economists in the form of trade remedies, in particular anti-dumping and countervailing duties (AD/CVDs). Indeed, the post-Cold War period in question saw the continuation of one of the most significant developments in U.S. trade policy: AD/CVDs became a much more important tool of protectionism after 1980 (and the WTO and NAFTA did not slow their rise).

The World Bank maintains a historical database of these duties, including the "orders" – directions to U.S. Customs and Border Protection to collect a designated tariff on imports of a particular product from a specified country – imposed each year. Focusing on anti-dumping, which is the more commonly used remedy, after a legislative change in 1979 that shifted responsibility for dumping (and subsidy) calculations from the Treasury Department to the Commerce Department, in order to generate more aggressive usage of these measures,[2] there was an increase in the number of anti-dumping orders imposed, which has continued to this day:

U.S. Anti-Dumping Duty Orders

Data derived from World Bank, Temporary Trade Barriers Database

Reliable pre-1980 data is difficult to find, but for comparison, Alfred Eckes found that there were 4 anti-dumping duty orders from 1960-1970; 18 from 1971-1975; and 21 from 1976-1980.[3]

Greer complains that "we bound our hands with NAFTA and the World Trade Organization in ways that made it impossible for the United States to effectively respond to foreign practices and defend our industrial production," suggesting that the use of AD/CVDs was being overly restricted through these international rules. But while WTO rules provide some modest constraints here, and there were objections to specific WTO dispute settlement rulings on these issues, the data show that the existence of the WTO has not done much to rein in the imposition of AD/CVDs by the United States. There have been fluctuations, with the state of the U.S. economy being an important factor, but the data clearly indicate significant and consistent usage over time after the 1979 legislative change.

It's also worth noting that most of the orders are still in place today: According to the U.S. Commerce Department, as of this writing 819 AD/CVD orders are in effect. Thus, in addition to the rate of imposition being consistent, the cumulative effect has increased as new orders are added and most old ones remain.

Historical Narratives as Policy Debates about the Future

In crafting their narratives, Greer and Harrell promote their policy views as the "pragmatic" ones, in contrast to the more extreme policies they attribute to their opponents, who pursued "hyperglobalization." But the reality of the policies in place during the period in question is very different. Throughout the post-Cold War era, the WTO dispute settlement system maintained a good deal of flexibility and tariffs were widely used.

Importantly, these narratives are not just about establishing an authoritative historical record. They also play a role in crafting U.S. trade policy going forward. If the post-Cold War period really was too extreme, then the arguments for "upending" this trade policy are more compelling. However, if the policies of this era actually remained pragmatic and balanced, then arguably it is the period of more unilateralism and protectionism starting in 2017 that is outside the norm established after World War II with the creation of the GATT (and building on the reciprocal trade agreements negotiated by Franklin Roosevelt starting in 1934).

What the future holds for U.S. trade policy is still up in the air, to be decided in the coming years on the basis of electoral outcomes. Are we going to continue the post-World War II system of international rules, under both the GATT and the WTO, that provide modest constraints on protectionism, along with carveouts that explicitly allow the use of tariffs for the protection of specific domestic industries? Or are we going to move in the direction of a trade policy based on unilateralism and protectionism with few constraints? As the search for a stable and enduring U.S. trade policy continues, it is important to have a clear and accurate understanding of the history.

[1] Robert E. Hudec, Enforcing International Trade Law: The Evolution of the Modern GATT Legal System (Butterworths, 1993), at 277, 353.

[2] As economic historian Douglas Irwin notes, “this shift took place in part because of the perceived indifference of Treasury to the plight of [the domestic industry].” Douglas A. Irwin, The Rise of U.S. Antidumping Activity in Historical Perspective, IMF Working Paper, February 2005, at 7, https://www.imf.org/en/publications/wp/issues/2016/12/31/the-rise-of-u-s-17551

[3] Alfred E. Eckes Jr., "Opening America's Market: U.S. Foreign Trade Policy Since 1776" (University of North Carolina Press, 1995), at 275.

The non-violation remedy in the GATT (Article 23:1(b)) makes this point clear.  It allows member countries to seek a remedy even when the challenged policy does not violate any specific written obligation, so long as it nullifies or impairs benefits the complaining member reasonably expects from prior negotiations.  Scholars have described this as “Exhibit A” for the proposition that trade agreements are incomplete contracts.  The drafters of the GATT did not attempt to enumerate every domestic policy move that could erode the value of negotiated concessions.  The agreement explicitly creates a specific gap-filling mechanism for situations the written rules do not reach.

Non-violation nullification or impairment was the main claim in the first WTO dispute I worked on, and I wrote something about it at that time. I think Jamieson's characterization of the origins of this remedy leaves out some important details, and I'll use this post to highlight them, on the basis of a draft book chapter I started but had to put aside.

Some time in the mid-2010s, I was going to do a book about regulatory trade barriers, but then events in the trade policy world during the first Trump administration got the better of me. As part of that project, I had a chapter on the "The Early History of Regulatory Issues in Trade." It never made it out of draft form, but having glanced through it quickly just now, I think/hope it's good enough to post it here.

As an initial point, let me note that the early conversations about the completeness of trade agreement contracts happened at the League of Nations economic conferences in the late 1920s and early 1930s, well before the GATT. The conclusions reached in the League discussions then made their way into the 1930s reciprocal trade agreements and later into the GATT.

Turning to the origins of the non-violation remedy, the key point for the purposes of this post is the following. When crafting agreements to limit the use of tariffs, the government and League Secretariat officials doing the negotiating and drafting were aware that, in addition to tariffs, various domestic measures could serve as protectionism as well. The concern was that these domestic measures could undermine the goals of any tariff reduction agreement, that is, they could "erode the value of negotiated concessions."

The officials were able to identify a wide range of such measures, but there was uncertainty about whether they could catch them all. So, faced with a choice of "enumerating" in a trade agreement all the domestic measures that might be considered "indirect protectionism" (i.e., the measures "that could erode the value of negotiated concessions"), on the one hand, and creating an "equitable treatment" formula as a "gap-filling mechanism," on the other hand, the drafters decided to do both.

The way this played out at the League's 1933 London conference was that the Secretariat was instructed to draw up a list of the various forms of indirect protectionism. The Secretariat put together that list, and all of the items on it ended up being covered by modern trade agreements. For example, the first item on their list is "Application of veterinary and phyto-pathological regulations for purposes of protection," which corresponds to today's WTO SPS Agreement (and SPS chapters of FTAs); and the ninth item is "Internal charges imposing upon imported goods higher or more onerous duties than those to which national products of the same nature are liable, in particular, taxes on circulation, turn-over tax, discriminatory excise duties, etc.," which corresponds to GATT Article III:2, second sentence. There's a table at the end of my draft chapter that documents all this.

But the Secretariat also worried that it would be impossible to come up with a complete list, and so it developed an "equitable treatment" clause as well in order to fill the gaps. Right at the end of the conference, this clause was re-drafted with the famous "nullification or impairment" language that made its way into the trade agreements that followed.

Summing up, governments did, in fact, "attempt to enumerate every domestic policy move that could erode the value of negotiated concessions," but then they also drafted a "gap-filling mechanism" to accomplish a similar goal. So why put the nullification or impairment provision in there when they already had enumerated all the domestic policies? Did they worry they had missed some? Or was it just that they had drafted such a nice nullification or impairment provision that they didn't want the work to be wasted? Or maybe they figured why not use both to be safe? That's hard to say. In practice, though, their enumeration of domestic policy moves has provided much of the basis for GATT/WTO law under a contract that seems fairly complete, while the non-violation remedy has proven difficult to use successfully.

President Trump has issued new 10% tariffs, shortly after raised to 15%, based on Section 122 of the Trade Act of 1974. Section 122 allows the President to impose tariffs of up to 15% for up to 150 days to address a “fundamental international payments problem.” Continuation after 150 days requires congressional approval.

Just like his attempt to impose tariffs under the International Emergency Economic Powers Act, his new Section 122 tariffs are not legal. That’s because the purpose of Section 122 tariffs is to address international payments problems that arise under a fixed exchange rate system. The United States has not relied on fixed exchange rates since Nixon was president.

This is not a novel interpretation of the law. In its reply brief to the U.S. Court of Appeals for the Federal Circuit, the Department of Justice wrote: “Nor does [Section 122] have any obvious application here, where the concerns the President identified in declaring an emergency arise  from trade deficits, which are conceptually distinct from balance-of-payments deficits.” Even the dissenting judges on the Court of Appeals who upheld the tariffs found Section 122 doesn’t apply to current international circumstances: “section 122 does not apply to the problems underlying the reciprocal tariffs, which are not the payments problems that are the precondition to section 122’s application.” 

Section 122’s Historical Background

The Nixon Administration began drafting a Trade Reform Act in 1972, which included what became Section 122. The United States had a system of fixed exchange rates at the time. Section 122 was subsequently included in the Trade Act of 1974.

Section 122, sub-paragraph (a) requires the existence of a “fundamental international payments problem” as a prerequisite for tariffs. However, it does not define the meaning of the phrase.

That is because there was no need to. At the time, everyone would have understood the phrase to refer to international payments problems resulting from the government attempting to maintain the value of the dollar under our fixed exchange rate system.

Importantly, the statute does not mean “whenever the president asserts there is an international payments problem.” If that is what the drafters of Section 122 had meant, they would have written something like “Whenever the President determines there is a fundamental international payments problem.” In fact, this exact language was used in sub-section (c) of Section 122, relating to liberalizing imports, which shows that the drafters knew how to use language that defers to the president. By not taking this approach in sub-section (a), the drafters created a provision that requires an objective determination of whether such a fundamental international payments problem exists.

Comparisons to other trade laws are informative here as well. Section 122 differs significantly from other laws that delegate tariff authority to the executive branch, including Section 201 of the Trade Act of 1974, Section 301 of the Trade Act of 1974, and Section 232 of the Trade Expansion Act of 1962. Each of these requires the federal government to conduct investigations before tariffs can be imposed. There was no need for such an investigation under Section 122, because international payments problems would have been self-evident under the fixed exchange rate system of the day.

This is further evident from Section 122’s text explaining that, if (and only if) the United States is facing international payments problems, the President may impose tariffs to deal with balance of payments deficits or to correct an international balance of payments disequilibrium.

Those problems only arise under a fixed exchange rates system.

Section 122 can be invoked to deal with “a fundamental international payments problem” and “large and serious United States balance-of-payments deficits.” These terms do not refer to trade deficits or investment flows, but to the outflow of currency reserves that occurred under the Bretton Woods fixed-exchange system between 1945 and 1971. Most years during that period, dollars and gold flowed out of the United States as we financed European and Japanese recovery and a world trade system denominated in dollars. Our gold and dollar reserves were steadily drained toward zero, while those in other countries grew. When foreign central banks began exchanging these dollars for U.S. gold reserves, they created a payments problem for the United States, which didn’t have enough gold in reserve to cover all the outstanding dollars. President Nixon responded by imposing a 10% import surcharge and suspending the ability to convert dollars to gold. Section 122 was a response to these developments.

Under our modern system, all U.S. international accounts are balanced. As the U.S. Court of International Trade wrote last year, “The balance-of-payments is the [r]ecord of transactions between U.S. residents and foreign residents during a given time period . . . includ[ing] transactions in goods, services, income, assets, and liabilities,’ and always balances to zero.” (Those interested in a more detailed understanding may want to review explanations from the Federal Reserve Bank of Saint Louis in Why Does the Balance of Payments Equal Zero? and by the Congressional Research Service in The Balance of Payments: Meaning and Significance.)

Similarly, Section 122’s reference to “disequilibrium” is meaningless today. Under our modern floating-rate system, international accounts automatically adjust to equilibrium based on the supply and demand for dollars, with no need for federal payments to defend the dollar’s value.

Trump’s Section 122 tariff proclamation fails to demonstrate the existence of a fundamental international payments problem.

A legitimate international payments problem and balance of payments disequilibrium under Section 122 would require a fixed-exchange rate system. Because the United States ditched that system over five decades ago, Section 122 cannot be legally used to impose new tariffs. Certainly, the Trump Administration’s tariff proclamation fails to provide a satisfactory justification.

The Trump Administration could have made a more plausible argument to get around the “international payments problem” roadblock by suggesting that tariffs are needed to support payments on U.S. Treasury securities. However, that’s clearly not the case. Foreign investors continue to purchase federal debt, including $609 billion of U.S. Treasury securities in 2024 and another $500 billion in the first three quarters of 2025. They would not continue to purchase federal debt if they doubted the ability of the United States to make payments on their bonds. Recent history shows that tariffs actually may impede Treasury sales. Global investors initially responded to the imposition of Liberation Day tariffs last year by dumping U.S. Treasury bonds.

Since there is no overall balance of payments deficit, Trump’s proclamation suggested tariffs are necessary to address the trade deficit. That is incorrect. Tariffs may reduce imports by increasing their cost, but they also reduce exports by depriving our trading partners of the ability to earn dollars to spend on U.S.-made products, with no clear impact on the trade deficit. In 2025, for example, the real U.S. trade deficit in goods increased by 5.7% despite an increase in tariffs to the highest level since the 1940s. Tariffs result in less trade; they do not necessarily reduce trade deficits.

The Trump Administration further suggests our “negative net international investment position” shows we have an international payments problem. A negative international investment position results when foreign investment in the United States exceeds U.S. investment in other countries. Despite the confusing name, a negative international investment position simply means the United States excels in attracting foreign investment. The desire of our trading partners to invest in the United States is a sign of economic strength, not an indication of an international payments problem. President Trump has even suggested that tariffs would bring in $18 trillion in additional investment, an amount that would increase our negative international position by nearly 70%.

There are many other dubious allegations in President Trump’s proclamation, none of which demonstrate a fundamental problem with U.S. international payments as required by Section 122. Soon after publishing his official tariff declaration, President Trump indicated the tariffs have nothing to do with an international payments problem and are instead related to a desire for retribution.

The consensus that tariffs imposed by President Trump on February 20 are illegal is beginning to build: 

●       Harvard economist and former International Monetary Fund Chief Economist Gita Gopinath: “the US does not have a fundamental international payments problem.”

●       Economic historian Phil Magness: “There is no ‘fundamental international payments problem’ that could possibly be addressed by Section 122 tariffs right now, because that international payments system no longer exists.”

●       Economist Alan Reynolds: “There is no ‘balance of payments’ justification for President Trump’s newest effort to tax American firms and families for buying imports.”

●       National Review contributing editor and former Assistant United States Attorney for the Southern District of New York Andrew McCarthy: “These new tariffs are even more clearly illegal than Trump's IEEPA tariffs.”

●       Constitutional lawyer Ilya Somin, one of the attorneys who challenged the IEEPA tariffs and won: “I think there are additional reasons why the new Section 122 tariffs are illegal.”

●       Former Federal Reserve Bank and White House economist Claudia Sahm: “the new section 122 tariffs are likely illegal.”

●       Economist Peter Berezin: “Section 122 of the 1974 Trade Act, on which Trump’s 10% tariff is based, does not apply in the current macro environment. A balance of payments deficit is not the same thing as a trade deficit. You cannot have a balance of payments [deficit] if you have a flexible exchange rate, as the US currently does.”

●       U.S. Court of Appeals, 8/29/2025: “section 122 does not apply to the problems underlying the reciprocal tariffs, which are not the payments problems that are the precondition to section 122’s application.”

While Section 122 served a legitimate purpose within the fixed exchange rate framework that governed international trade over fifty years ago, it has no meaningful application in a modern floating exchange rate system. The Trump Administration would be wise to prepare for potential legal challenges to its latest batch of tariffs.

What are the statutory bases available to the executive to declare emergencies and negotiate these trade/security deals? We can begin by examining the relevant EOs and the terms of each concluded deal to determine the statutory basis. Kathleen Claussen and Tim Meyer have sought to unpack the different potential authorities, including IEEPA (Kathleen raised this point on IEEPA authority for the deals last summer). Claussen and Meyer note that the last three administrations have “entered into international agreements that lacked explicit congressional consent and rested on at best shaky claims of ex ante delegations of authority.”

Inu Manak’s CFR team tracks all the trade/security deals. The first few deals are rooted in Executive Order 14257 (Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits). This seems to be the case for Indonesia and Japan, even though the US issued EO 14345 on September 4, 2025, to implement an agreement with Japan. The US modified Japan’s reciprocal tariff rate to 15 per cent per EO 14326, drawing on the authority granted to the President by the Constitution, IEEPA, (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), and section 301 of title 3, United States Code. These executive actions connect back to the determination of a national emergency declared in EO 14257.

There seems to be a similar situation for Taiwan. The US modified Taiwan’s reciprocal tariff rate to 20 per cent, again drawing from the authority of the US Constitution, IEEPA, the National Emergencies Act, section 604, and section 301 (links above). On February 12, 2026, the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the US signed the Agreement on Reciprocal Trade. This Agreement rests upon Taiwan applying the reciprocal tariff within the meaning of EO 14257 (this no longer exists).

However, after the EU negotiated with the US, the EO 14346, Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements reflected the EU deal and all other subsequent ones. For Taiwan, actions committed by the US, including exemptions for select products from the reciprocity tariffs, are pursuant to EO 14346, not a specific EO concerning Taiwan’s deal.

EO 14346 rests on the emergency declaration issued by EO 14257, which led to the executive decision to impose IEEPA reciprocity tariffs. Other deals that see the US modify the trading partner’s reciprocal tariff rate connect to EO 14346. For example, for Vietnam:

The United States will maintain the 20 percent reciprocal tariff rate for imports from Vietnam and will identify products from the list set out in Annex III to Executive Order 14346 of September 5, 2025, Potential Tariff Adjustments for Aligned Partners, to receive a zero percent reciprocal tariff rate.

Another example:

Consistent with Executive Order 14346, the Secretary and the Trade Representative have determined that the additional ad valorem rate of duty applicable to any article the product of Switzerland or Liechtenstein shall be determined by the article’s current ad valorem (or ad valorem equivalent) rate of duty under column 1 (General) of the HTSUS (“Column 1 Duty Rate”). For an article the product of Switzerland or Liechtenstein with a Column 1 Duty Rate that is less than 15 percent, the sum of its Column 1 Duty Rate and the additional ad valorem rate of duty pursuant to this notice shall be 15 percent ad valorem. For an article the product of Switzerland or Liechtenstein with a Column 1 Duty Rate that is at least 15 percent, the additional ad valorem rate of duty pursuant to this notice shall be zero.

There is no mention of EO 14346 in the February 20, 2026 EO Ending Certain Tariff Actions. However, the emergency declaration that linked these agreements to EOs imposing reciprocity tariffs remains in effect. Is this the statutory basis for these agreements? No. Yet if we did not probe this closely enough, we might simply assume the continuation of these powers, for the emergency preserves them and vests the executive with authority to enter into these trade/security deals. The perpetuation of the emergency and threats to US economic security could grant the executive the power to establish these deals under IEEPA and section 232 (as well as other authorities identified). Does the Supreme Court ruling that IEEPA does not authorise the President to impose any tariffs included in these trade/security deals? The executive branch has maintained the EOs that implement these deals, with some deliberate efforts to treat them separately from the IEEPA tariffs. But is this just a matter of degree?

In EO 14346, the President noted that the EU and the US have agreed to a tariff bargain arising from the initial imposition of reciprocity tariffs (EO 14257), making it “necessary and appropriate to implement the tariff modifications described in the Framework Agreement.” The agreement becomes the means to “deal with the national emergency.” Likewise, all agreements with other trading partners rest on the same logic. The subsequent implementation of these agreements was to address the national emergency that gave rise to the IEEPA tariffs and threats to national security pursuant to Section 232 of the 1962 Expansion Act. The mixed objectives make it difficult to disentangle the now non-existent reciprocity tariffs from the other necessary actions taken to continue addressing the purported emergency and US security interests.

In sum, the EOs on the establishment and implementation of the trade/security deals do not resolve the fate of the negotiating trade/security deals that impose tariffs and implement a variety of economic security commitments. It does seem, however, that the executive has tried to quarantine its trade/security deals from the IEEPA reciprocity tariffs, for the executive can argue that the deals remain in effect as long as the emergency that gave rise to them persists.

One year ago, former USTR Robert Lighthizer outlined a tiered system with variable tariff levels, negotiated with other governments. The durability of these trade/security deals raises questions about how close we are to this proposal. Will US trading partners see these agreements as powerful diplomatic tools, regardless of US legality? Or will the EU and other partners walk away (perhaps even collectively)? There are political questions about whether governments can make the most of their current circumstances, even while remaining subject to a woolly emergency, and hoping any promises made do not break the multilateral trading system.

STANFORD LAW SCHOOL seeks to hire a teaching fellow for the LLM Program in International Economic Law, Business & Policy. The appointment is for a two-year position with the possibility of a third year by mutual agreement, beginning in August 2026.

The fellow will assume significant academic, advising, and administrative responsibilities.  The principal functions of the teaching fellow are to prepare and lead a colloquium on international business issues for the 15-20 students who enroll in the program annually, to advise students on their curricular choices, and to assist in the admissions and orientation process for the incoming class. 

The fellow will also organize and facilitate informal workshops, outside speakers, and academic and social events, be responsible for day-to-day administrative management of the LLM program, advise and counsel LLM candidates on academic and personal issues, respond to inquiries from prospective LLM applicants, and interact with our faculty in support of the LLM program goals and needs.

The ideal candidate will be an aspiring academic with a strong interest in one or more of the core subject areas spanned by the program (including international trade, international investment law, international dispute resolution and arbitration, international business transactions and international antitrust). It is expected that the responsibilities of the teaching fellow will occupy approximately half of his or her time, with the remaining time available to pursue the fellow’s own research agenda. The fellow will have full access to the research resources of Stanford University and access to faculty workshops.

Candidates for this position are expected to have strong academic records and references. Professional experience in the area is also valuable. This position is ideally intended for an individual who expects to pursue an academic career in the field, although a firm commitment to academia is not mandatory.

Application Deadline: Sunday, April 3, 2026

See full details and instructions to apply here.

Earlier posts by Mona and Bryan on this statute looked at specific issues under Section 122. Mona talked about the standard of non-discrimination, among other things; Bryan focused on whether there is, in fact, a "fundamental international payments problem" right now. At the time they wrote their posts, the issues were theoretical, as Section 122 had not been invoked. But now it has been, with President Trump announcing a 10% "temporary import surcharge" to be imposed starting February 24 and lasting for 150 days. A White House fact sheet is here, and the presidential proclamation is here.

Bryan's point was that after the United States adopted a system of floating exchange rates in 1973, which allowed currency values to adjust according to market forces, there was no need for the government to maintain reserves to defend a fixed dollar value and therefore there could be no balance-of-payments problem. Is he on to something here? In the fact sheet, the White House explains how it sees the "fundamental international payment problems," noting among other things that:

At the end of 2024, the U.S. net international investment position was $26 trillion, which was 89% of U.S. GDP. This means that if all of the obligations to foreigners that the United States has incurred were to come due today, and even if all of the foreign assets that the U.S. owns could be instantly deployed as payment, the United States would still end up needing to make payments equal to 89% of its annual economic output in order to meet its obligations. ...

As a practical matter, "if all of the obligations to foreigners that the United States has incurred were to come due today" seems unlikely to occur. How unlikely is it? One in a thousand? One in a million? One in a billion? At a certain point, I think it's possible a court might say this is too speculative a "problem" to justify action. But of course, Section 122 has never been used before, so any thinking about what a court might do is also speculative.

In the proclamation, President Trump states: "the United States faces fundamental international payments problems, such as large and serious balance-of-payments deficits, an imminent and significant depreciation of its currency in foreign exchange markets, or an international balance-of-payments disequilibrium." He also has some detailed references to the assessments provided to him by his advisors, including the following:

Among other things, I have been informed by my advisors that the United States balance-of-payments position, under any reasonable understanding of the term in the context of section 122, is currently a large and serious deficit. My advisors have studied different methods of evaluating balance-of-payments deficits, including calculations based on current-account statistics. In my advisors’ opinions, under any of these methods, the United States balance-of-payments position is a large and serious deficit.

There is a lot more to it, but I didn't want to clutter this post up with too long a quote. It will be interesting to see economists discuss and debate these points.

Shifting to the discrimination issue that Mona talked about, as set out in the fact sheet the following goods, among others, will not be subject to the duty:

USMCA compliant goods of Canada and Mexico; and

textiles and apparel articles that enter duty-free as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the Dominican Republic-Central America Free Trade Agreement.

The proclamation then states: "I find that each exception described in paragraph 14 of this proclamation — in whole or in part, separately or in any combination — is consistent with the limitations of section 122." So what about the issue of discrimination? The relevant provision of the statute says:

(d) Nondiscriminatory treatment of import restricting actions

(1) Import restricting actions proclaimed pursuant to subsection (a) shall be applied consistently with the principle of nondiscriminatory treatment. ...

(2) Notwithstanding paragraph (1), if the President determines that the purposes of this section will best be served by action against one or more countries having large or persistent balance-of-payments surpluses, he may exempt all other countries from such action.

...

However, the statute also says this:

(e) Broad and uniform application of import restricting actions

Import restricting actions proclaimed pursuant to subsection (a) shall be of broad and uniform application with respect to product coverage except where the President determines, consistently with the purposes of this section, that certain articles should not be subject to import restricting actions because of the needs of the United States economy. Such exceptions shall be limited to the unavailability of domestic supply at reasonable prices, the necessary importation of raw materials, avoiding serious dislocations in the supply of imported goods, and other similar factors. In addition, uniform exceptions may be made where import restricting actions will be unnecessary or ineffective in carrying out the purposes of this section, such as with respect to articles already subject to import restrictions, goods in transit, or goods under binding contract. Neither the authorization of import restricting actions nor the determination of exceptions with respect to product coverage shall be made for the purpose of protecting individual domestic industries from import competition.

Do these provisions offer enough discretion to justify the USMCA/DR-CAFTA exemptions?

Let's also think about the possible end point of these tariffs. The statute says "the President shall proclaim, for a period not exceeding 150 days (unless such period is extended by Act of Congress)" a "temporary import surcharge" (or a quota, but that's not being used here). The Section 122 surcharge goes into effect on February 24, so 150 days takes us to July 24.

What happens on that date? Does Congress extend the surcharge? That's a little hard to imagine at the moment, but I suppose you never know.

If Congress does not extend it, the Trump administration might – as too many people for me to cite have suggested – decide to just ... proclaim a new temporary surcharge for another 150 days.

Can they do that? I don't know! A big question here will be, can U.S. businesses that are affected file lawsuits and effectively challenge the initial action and any subsequent ones?

Before anyone gets too obsessed with Section 122 though, keep in mind this statement from a USTR press release about the Supreme Court ruling:

The Trump Administration will ... [i]nitiate several investigations under Section 301 of the Trade Act of 1974 (“Section 301”) to deal with unjustifiable, unreasonable, discriminatory, and burdensome acts, policies, and practices by many trading partners. We expect these investigations to cover most major trading partners and to address areas of concern such as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products. We intend to conduct these investigations on an accelerated timeframe, in keeping with the Section 301 statute’s substantive and procedural requirements. If these investigations conclude that there are unfair trading practices and that responsive action is warranted, tariffs are one tool that may be imposed.

If Section 122 is too economics-focused for you, Section 301 will have plenty of action to keep you occupied.

Malaysia

Article 2.9: Labor

1.         Malaysia shall adopt and implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor. Malaysia may acknowledge U.S. government determinations on entities under Section 307 of the Tariff Act of 1930 and shall take appropriate action to prohibit importation of goods from those companies. The Parties shall cooperate by sharing best practices on the development and enforcement of forced labor import prohibitions, as appropriate. Malaysia shall implement the obligations in this paragraph within two years of the date of entry into force of this Agreement.

(underlining in original)

Cambodia

Article 2.8:  Labor

1.         Cambodia shall adopt and effectively implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor, as defined by the relevant International Labor Organization (ILO) instruments to which Cambodia is a party. Cambodia may acknowledge U.S. government determinations on entities under Section 307 of the Tariff Act of 1930 and shall take appropriate action to prohibit importation of goods from those entities.

El Salvador

Article 2.7: Labor

1. El Salvador shall prohibit the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor.

Guatemala

Article 2.7: Labor

1. Guatemala shall adopt and effectively implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor. Guatemala shall recognize U.S. government determinations on entities under Section 307 of the Tariff Act of 1930 and shall presumptively prohibit importation of goods from those entities.

Argentina

Article 2.9: Labor

1. Argentina shall adopt and effectively implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor as defined by the relevant International Labor Organization (ILO) instruments to which it is a party. Argentina shall consider U.S. government determinations on entities under Section 307 of the Tariff Act of 1930 and the prohibition of importation of goods from those companies.

Bangladesh

Article 2.9: Labor

1. Bangladesh shall adopt and implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by convict labor or forced or compulsory labor, including indentured labor and indentured child labor. FN.4

FN.4 In this regard, Bangladesh may recognize U.S. government determinations on entities under Section 307 of the Tariff Act.

Taiwan

Article 3.9: Labor

1. TECRO, through its Designated Representative shall adopt and effectively implement a prohibition on importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor. TECRO, through its Designated Representative, shall recognize determinations of the authorities of the territory represented by AIT on entities under 19 U.S.C. § 1307 through its domestic procedures and shall presumptively prohibit importation of goods from those enterprises.

Indonesia

Article 2.9: Labor

1. Indonesia shall adopt and implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor. Indonesia may recognize U.S. government determinations on entities under Section 307 of the Tariff Act and, in the event that Indonesia recognizes such determinations, shall take actions appropriate to prohibit importation of goods from those entities into Indonesian territory. Indonesia shall implement the obligations in this paragraph within two years of the date of entry into force of this Agreement.

A few things stand out in these provisions.

Starting with the references to Section 307 of the Tariff Act (codified at 19 U.S.C. § 1307 – see this CRS report for more details on this law):

• The El Salvador agreement is the only one that doesn't mention Section 307. In terms of the role of Section 307 where it is included in an agreement, the obligation on trading partners to take into account Section 307 determinations varies from "shall recognize" to "shall consider" to "may recognize" to "may acknowledge." These variations clearly seem to establish different degrees of discretion for the implementing government.
• Guatemala and Taiwan are the only ones that have the additional burden of "shall presumptively prohibit importation of goods from those [entities]/[enterprises]" for which Section 307/19 U.S.C. § 1307 determinations have been made. For Malaysia, Cambodia, and Indonesia, there is something that looks slightly less burdensome, as it says "shall take appropriate action to prohibit importation of goods from those [companies/entities]." Argentina "shall consider ... the prohibition of importation of goods from those companies."
• I don't think there is any interpretive importance here, but I am curious how the Bangladesh Section 307 reference ended up in a footnote.

Turning to other differences in the provisions:

• Malaysia and Indonesia get two years to implement, whereas the others do not.
• The Argentina and Cambodia agreements define forced or compulsory labor by reference to the ILO, whereas the others do not.
• The Bangladesh agreement is the only one to mention "convict" and "indentured" labor.
• And then getting really nit-picky in terms of wording differences, the El Salvador agreement just says "El Salvador shall prohibit," as opposed to the other agreements that say "shall adopt and effectively implement a prohibition" (two agreements do not have "effectively" in there).

I have some questions about all this.

First, how hard will the Trump administration press on enforcement of these obligations? Will this be a priority for them? What form would this pressure take?

Second, how will the other governments react to any U.S. pressure? Will U.S. pressure be enough to induce the governments to try to implement?

Finally, and related to the previous question, if the other governments decide they want to try to implement, will they have the resources to do so?

I bring all this up because AOC was on a couple panels last week at the Munich Security Conference, and also spoke at the Technische Universität Berlin, and this European trip was widely seen as a move to establish some foreign policy credentials for a presidential run (reports indicate that she is being advised on foreign policy by former Bernie Sanders adviser Matt Duss). With that in mind, while this may be getting a little ahead of possible future events, let's take a look at some things she said on foreign policy and trade policy. (At the bottom of this post, there is a transcript of the comments I thought people would be most interested in.)

On trade, at one point she criticized NAFTA as "a failed policy for many rural and working class communities." Of course, NAFTA has been replaced by USMCA, so this is a pretty safe criticism to make of past U.S. trade policy. It would be great if someone would ask her what she thinks about how USMCA has been working, whether it should be extended as part of the upcoming review, and if it needs revisions as part of that.

On tariffs, she was critical of the impact of Trump's tariffs: "Tariffs, of course, have hurt Americans, and it has hurt and had a negative impact on the United States globally as well." I take that as opposition to Trump's tariffs specifically, with a focus on the IEEPA tariffs, rather than to all tariffs as a general matter. However, it would be good to get more clarity on exactly what scope she sees for using tariffs. When asked directly about trade policy at one point, she mentioned tariffs briefly but then moved quickly to a detailed criticism of non-tariff policies in trade agreements (more on that in the next paragraph).

And then more broadly on trade, she said: "we have an opportunity to explore what a world would look like if we upheld democracy, human rights, trade that actually centers working class people, instead of accruing overwhelmingly the benefits of trade to the wealthiest." Relatedly, perhaps, in response to the question "[what] does a worker centered trade policy look like to you," she focused on the "hundreds of pages of non-tariff related policies that are included in these trade agreements that amount to corporate protectionism." In this context, she pointed to the 20 year patent term requirement in the WTO's TRIPS Agreement as a particular concern, as well as trade rules that affect the ability of governments to regulate. She concluded here by saying:

And so all too often, global trade is used as a back door for major corporations and industries to get away with policy changes that they would not be able to otherwise. And these need to become much more central pieces of our focus, especially now as tech companies seek to erode all protections on privacy and user data so that they can commodify our personal information, and I would not be surprised if they use trade agreements in order to advance that as well.

All of this leaves her plenty of room to maneuver on trade policy going forward. I have no expectation of big new trade liberalization initiatives from her, but there are ways she could support the core of existing trade rules as well as positive trade relations with other countries while still suggesting tweaks (scaling back the IP rules or revisiting what we mean by "discrimination" in trade agreements, to pick up on the examples she gave).

Speaking of rules, she emphasized her support for the "rules-based order" in international relations. While there is uncertainty about what that order is exactly, using the term seems like a way to signal some degree of support for the system as it has existed (pre-Trump, anyway). Her big objection to the existing system was interesting, because it focused on how the U.S. and other wealthy countries have carved out exceptions from the rules. It sounds like she would want the U.S. to be more bound, or at least more heavily influenced by, international rules rather than less bound.

On China, she was careful and nuanced. She noted that it is an "an ascendant global power ... , acting in its own self interest." One concern she has is that Washington rhetoric on China "can get a little conflict driven." In terms of competing with China, her focus seemed to be on making domestic improvements, such as "investments in science and technology." She noted that China has "invested dramatically in wind and solar and in energy innovation," which she sees as "a question of competition and ... trade," and said "we have to make sure that we are having, I think, a reflection and a reflective conversation about, how are we positioning ourselves to offer, to continue to offer the world the best of what America has to offer." I took that to mean that, as a way to compete with China, she would focus on using policy tools that promote U.S. industry, but I'm not totally sure about the scope of this. What mix of subsidies, tariffs, or other measures would she use here?

A couple other tidbits:

• She is a big supporter of international aid
• She is strongly against imperialism, and that applies regardless of who is doing it
• Whereas the Biden administration had a foreign policy for the "middle class," AOC wants a foreign policy for the "working class" (I'm not convinced that this sort of political messaging means much, but it has become pretty standard)
• I don't think trade rules had the impact on Glass Steagall that she suggests (see the transcript below)

Anyway, her statements here lay the foundation for a discussion that is sure to pick up next year, and I'll come back to the AOC trade policy tea leaf reading then.

Quotes from AOC at the Munich Security Conference, February 13, 2026

On NAFTA "as a failed policy" and on a "working class centered politics"

What we are seeing over the last eight years, I think, has been a growing recognition that of those past errors, that go back, that include military interventionism in the Iraq war, that include a recognition of NAFTA as a failed policy for many rural and working class communities. And now I think we are moving in this direction of increased recognition that we have to have a working class centered politics if we are going to succeed, and also if we are going to stave off the scourges of authoritarianism, which also provides ... political siren calls to allure people into finding scapegoats to blame for rising economic inequality, both domestically and globally.

On Democrats and the transatlantic partnership / the "rules-based order"

I think this is a moment where we are seeing our presidential administration tear apart the transatlantic partnership, rip up every democratic norm, and really calling into question, as was mentioned by ... [Prime Minister] Carney at the World Economic Forum, the rules based order that we have, or question mark, do we have? And so I think one of the reasons why, not just myself, but many of our colleagues here, in fact, Democrats, many Democrats that are here as well, is because we want to tell a larger story, that what is happening is indeed very grave, and we are in a new era, domestically and globally.

There have been many leaders who said, we will go back. And I think we have to recognize that we are in a new day and in a new time. But that does not mean that the majority of Americans are ready to walk away from a rules based order, and that we're ready to walk away from our commitment to democracy. I think what we identify is that in a rules based order, hypocrisy is vulnerability, and so I think what we are seeking is a return to a rules based order that eliminates the hypocrisies around when, too often in the West, we look the other way for inconvenient populations to act out these paradoxes, whether it is kidnapping a foreign head of state, whether it is threatening our allies to colonize Greenland, whether it is looking the other way in a genocide. Hypocrisies are vulnerabilities, and they threaten democracies globally. And so I think many of us are here to say, we are here and we are ready for the next chapter, not to have the world turn to isolation, but to deepen our partnership on greater and increased commitment to integrity to our values.

In response to the question, "Are there any particular institutions that a Democratic administration would want to save ... is it NATO? Is it the climate accord? Is it the Iran nuclear ... ?"

First and foremost, I think we need to revisit our commitments to international aid. Not just USAID, but the dozens of global compacts that this current Secretary of State and President Trump have withdrawn from. They are looking to withdraw the United States from the entire world so that we can turn into an age of authoritarianism, of authoritarians, that can carve out the world, where Donald Trump can command the Western Hemisphere and Latin America as his personal sandbox, where Putin can saber rattle around Europe and try to bully around our own allies there, and for essentially authoritarians to have their own geographic domains. And it actually is the trans pacific partnership*, it is our global alliances that can be a hard stop against authoritarian consolidation of power, particularly in the installation of regional puppet governments.

[*She later explained that she meant to say "transatlantic partnership"]

On whether the United States is stronger or weaker on the world stage than it was five years ago, and tariffs

I think that the United States is very much in a compromised position compared to where we were five years ago. Our relationships with our allies are strained, our commitment and demonstrated consistency on democratic values, human rights also incredibly strained. And our domestic situation, I think, is reflecting globally as well, particularly economically. Skyrocketing inflation. Tariffs, of course, have hurt Americans, and it has hurt and had a negative impact on the United States globally as well.

On whether we are in a new world order

I think that Prime Minister Carney's remarks at the World Economic Forum were words that rung around the world in raising this question. But I think that also in his remarks, as well as part of this larger conversation, there was this undertone, this undercurrent, this suggestion that it was a rules based order sometimes. And I think that that is the issue that lies before us, is that in a so called rules based order, the rules for whom. Because for all too long, the rules only apply to the United States, Europe, its allies, and we would carve out exceptions for the Global South. And I think that when you have a rules based order where you carve out exceptions to our values, exceptions to our rules, eventually the exceptions become the rules. And I think that to your original point, over the last five years, we've seen such a breaking and such a fraying of these alleged western values that people wonder if it ever existed in the first place. So I don't know if it's necessarily that we are in a post-rules based order, I think it's possible that we were in a pre-rules based order, and we have an opportunity to explore what a world would look like if we upheld democracy, human rights, trade that actually centers working class people, instead of accruing overwhelmingly the benefits of trade to the wealthiest. But if we reoriented a new era that could actually help people and show how foreign policy and healthy foreign policy can show up and help them in their lives.

On relations with European allies

I know that the Democratic Party is here for our allies. We are shocked at the President's destruction of our relationship with our European allies. His threatening over Greenland is not a joke. It is not funny. It threatens the very trust and relationships that allow peace to persist. And so I believe what I can say is that unequivocally, the majority, the vast majority of the American people do not want to see these relationships frayed, and they are committed to our partnerships and our relationships and our allies.

On consistency in U.S. foreign policy

I think what we are seeing now is this idea that US foreign policy is, and some of our more basic and foundational values based commitments seem to be, enacted based on the partisanship of whoever is elected, that we play hokey pokey with USAID, with the Paris Climate Agreement, with many of our commitments. And I don't think that that is good for the country. I think that what is best is for when we sign an agreement and when we're a part of it, we stay in it, so that they know that our commitments are reflective of our nation's values in a way that transcends partisanship. And so I think that instability is one, but then the other, I think it is hand in hand with the volatility, on one hand, it goes far beyond just agreements, and it goes into real aberrations, I think, in interventionism, in, I think, a turning back on our commitment on human rights, as well as super charging an economic regime that fuels the 1%. And I think that that piece is the most concerning for everyday people.

On China

I think China is, of course, an ascendant global power, growing very quickly, acting in its own self interest. And oftentimes in Washington, there's this frame between conflict and competition. I think sometimes, depending on what's happening, that rhetoric can get a little conflict driven. And I think that it's really a question of competition, and to the governor's point, fair competition. But when I think about that, I think about how the United States, if you want to assert oneself as a global competitor, the kinds of things that one would do in order to really assert that position is investments in science and technology, which we are gutting our NIH, we are gutting our health science research. We are cutting the very things that make us a global power in that respect, in terms of government and public funded research, which is what allows innovation in a more broad sense, as opposed to privatized research. An ascendant global power would invest heavily in innovative energy solutions so that it could be sovereign in that respect. And the United States at this point, instead of expanding our energy mix, we are actively narrowing our energy mix, to become increasingly more reliant on fossil fuels ... in contrast to what you see is happening in China. Yes, they burn a very large amount of fossil fuels, but they have also invested dramatically in wind and solar and in energy innovation. And so to me, I see this as a question of competition and of course, of trade, to the governor's point, but we have to make sure that we are having, I think, a reflection and a reflective conversation about, how are we positioning ourselves to continue to offer the world the best of what America has to offer.

On Ukraine

There's no conversation about Ukraine that can happen without Ukraine. And so they, of course, lead in terms of setting their terms on this. But I think that, overall, as a principle, we shouldn't reward imperialism. And I don't think that we should allow Russia to continue, or any nation to continue, violating a nation's sovereignty and to continue to be rewarded, and whose main lesson and takeaway is that they will gain. And so what that looks like in the specifics, I think is a deeper conversation, but on principle, I think that is what we should be pursuing.

Quotes from AOC at Technische Universität Berlin, February 15, 2026

Question:

Let me move on to the transatlantic relations, and one of the key issues at the core of the fray we have experienced in the past year is the trade policy that the United States has leveled as political leverage against Europe, but also other parts of the world as well. You have called for a trade policy that serves workers, not just the economic elites. The German wealth model is very much based on trade so obviously we're very curious to know, how does a worker centered trade policy look like to you?

AOC:

When we think of trade policy, we think about trying to lower some of the barriers to trade, tariffs, famously, is a central part of that conversation. But oftentimes in our trade agreements, what doesn't get discussed are some of the most important pieces that are hurting working people the world over. There are hundreds of pages of non-tariff related policies that are included in these trade agreements that amount to corporate protectionism. And when I think about this, I think about, for example, in the WTO, there are agreements that every nation, every signatory, must increase their patent year holdings for pharmaceutical companies, for example. And so the United States had 17 year patents – where, of course, we develop many pharmaceutical drugs in the United States, cancer treatments, all sorts of different kinds of treatments – the United States originally had a 17 year patent length for pharmaceutical drugs. We then had to increase that patent length in order to be in accordance with the WTO. And that meant that pharmaceutical companies held onto their patents longer. Drugs could not go generic. That meant that it drove up costs on healthcare systems in the entire world in order to more benefit the bottom line of pharmaceutical companies.

Or in other types of tariff agreements, that you can't discriminate, and you can't have laws against financial institutions that have multiple services, which led to the downfall of the Glass Steagall Act in the United States, which separated banks and kept them small in order to prevent what happened in, ultimately, in 2008 where banks got too big to fail. And that precipitated, not just in America the US housing crisis, but of course, famously, it became a global financial crisis.

And so our trade policies, they call them trade policies, but there's so much that's tucked inside them, precisely because our democracies would never allow these things to happen in your parliament, nor in my Congress, it would be too difficult to pass it on its own. And so all too often, global trade is used as a back door for major corporations and industries to get away with policy changes that they would not be able to otherwise. And these need to become much more central pieces of our focus, especially now as tech companies seek to erode all protections on privacy and user data so that they can commodify our personal information, and I would not be surprised if they use trade agreements in order to advance that as well.

Then in late January, in light of some comments from Trump, Bessent was asked about this issue again in a CNBC interview:

Question: One question people have right now is the appeal of US assets, especially when they look at the US dollar, which is trading at multi-year lows. I know the President sort of endorsed this as a good thing yesterday, but is it really a good thing if people are wondering if the dollar is the right place to be?

Bessent: Well, again, the US always has a strong dollar policy, but a strong dollar policy means setting the right fundamentals. And I think that with President Trump, with the one big beautiful bill, with our regulatory policies, we are making this the best place to come build your business, have tax certainty, regulatory certainty, energy certainty, and over time the prices on the screen can fluctuate over six months, a year ...

Question: You're not worried about dramatic weakness in the dollar?

Bessent: Again, if we have sound policies, the money will flow in. And we are bringing down our trade deficits, so automatically that should lead to more dollar strength over time.

Question: Are we intervening in the currency market right now? Strengthening the yen? Is that happening?

Bessent: Absolutely not.

Question: Is that something you're planning to do? There was word that the New York Fed was looking for prices.

Bessent: Again, we don't comment, other than to say we have a strong dollar policy. ...

Along the same lines, at a recent House hearing, Bessent was asked by Rep. Bill Foster (D-IL) – the same member of Congress who raised the issue last May – about the issue again (starts at 1:47:53 of the video):

Foster: Last time we spoke, I asked you a simple question that I didn't get an answer to, which is, does this administration support a strong dollar policy or a weak dollar policy? And frankly, as far as I've been able to tell, you're just all over the map on this. So could you answer the question, just simply, do you support a strong dollar policy or a weak dollar policy? And how would you score, whichever way you're trying to go, how you are doing?

Bessent: We always support a strong dollar policy.

Foster: Okay, that's interesting, because, you know,
last time we spoke, I presented a couple of graphs which presented the historic fact, the interesting fact, that every time you put a Republican in charge in the presidency, two things have happened, that the dollar has gotten weaker, and that manufacturing employment has dropped. And this has happened just during every Republican president in our lifetime. And the reverse has happened, every Democratic president, the dollar has strengthened, actually achieved your objective, instead of just talking about it. And since the time of that, actually, I think this plot here was the one we had then, when the dollar was only 8%, I think it's down about 10 and a half percent now. ...

What should we make of all this? Does the Trump administration want a strong dollar? Bessent keeps saying they do, and yet the dollar keeps going down. Are they, in fact, looking for a managed decline in the dollar like in the 1980s? I'm still not sure what's going on here.

Introduction

On January 30, 2026, a panel at the World Trade Organization (WTO) handed down another blow to the United States, finding the U.S. Inflation Reduction Act (“IRA”) inconsistent with the U.S.’s WTO commitments.[i]  The panel found that the challenged measures were inconsistent with the national treatment provision of the General Agreement on Tariffs and Trade 1994 (GATT 1994), the Agreement on Trade-Related Investment Measures (TRIMs Agreement), and the Agreement on Subsidies and Countervailing Measures (SCM Agreement).  The panel further concluded that these measures were not justified by the public morals exception under GATT Art. XX(a).  It is the second loss the U.S. suffered in WTO disputes initiated by China since trade tensions heightened in 2018.  In September 2020, another WTO panel ruled that tariffs imposed by the U.S. against Chinese goods under Section 301 were inconsistent with the U.S.’s WTO obligations under the Most-Favoured-Nation obligation and the tariff bindings under relevant GATT provisions, and that the public morals exception under GATT Art. XX(a) could not save the measures.[ii]  The consequences of the ruling may be far-reaching, not just because the case attracted ten third-party submissions from members of various developmental statuses and the Addendum is longer than the Panel Report.[iii]  The ruling—highly likely to be appealed to the void by the U.S.—will also likely prompt other WTO members to reconsider their own domestic measures seeking to achieve the same re-industrialization efforts.

The Challenged Measures

The challenged U.S. measures are tax credits and subsidies contingent upon the use of domestic goods, or that discriminate against goods of Chinese origin, under the IRA passed by the Biden Administration.[iv]  Specifically, China has challenged two sets of subsidies, the Clean Vehicle Credit and the Renewable Energy Tax Credits, both of which were intended to “advance U.S. leadership in the development of cutting-edge clean energy technology”[v].  The challenge to the Clean Vehicle Credit was dropped after the One Big Beautiful Bill Act effectively terminated it.[vi]  The remaining Renewable Energy Tax Credits challenge entails four sub-categories of credits, namely, the Investment Tax Credit for Energy Property, the Clean Electricity Investment Tax Credit (collectively, ITCs), the Production Tax Credit for Electricity from Renewables, and the Clean Electricity Production Tax Credit (collectively, PTCs).  Both ITCs and PTCs carried over existing tax credits to reduce upfront investment and production costs for qualified facilities in the U.S. and introduced new incentives, including the challenged Domestic Bonus Credits (DBCs).  ITCs and PTCs can be used in three ways: As a tax credit (Investor/Producer Credit), as payments of taxes due (the Elective Payment), or as a direct transfer for monetary compensation (the Assignment Credit).  DBCs are given contingent upon the satisfaction of two domestic content requirements: (1) the Steel and Iron Requirement that requires the project to use 100% of domestic steel and iron and (2) the Manufactured Products Requirement that requires the threshold of an electricity generation facility must be domestically mined, produced, or manufactured, and such threshold will gradually increase over the years.

China claims that both ITCs and PTCs violate Art. III:4 of the GATT 1994, Art.  2.1 of the TRIMs Agreement, Art. 2.2(a) of the TRIMs Agreement (collectively, National Treatment Violations), and Arts. 3.1(b) and 3.2 of the SCM Agreement.  The U.S. admitted inconsistencies between the challenged measures and relevant WTO rules.  However, the U.S. defended the legality of these measures under Art. XX(a), the public morals exception clause of GATT 1994—an approach similar to its defense strategy in the Section 301 case.[vii]

National Treatment Violations

I. Art. III:4 of the GATT 1994 Violation

Since the U.S. chose not to contest China’s claims, the Panel found that China has satisfied the burden of proof in demonstrating that the challenged measures met the three-element framework for Art. III:4 violations.  Because both ITCs and PTCs conditioned the qualification for DBCs on the use of domestic contents based on the plain text of the measures, the Panel concluded that the “like products” prong was satisfied as the grant of both ITCs and PTCs was exclusively on the basis of origin.  The Panel also found that the “laws, regulations, or requirements” prong and the “less favourable treatment” prong were met because the challenged measures created incentives for the use of domestic products over foreign products (paras. 7.16-7.20).

II. Art. 2.1 and Art. 2.2 of the TRIMs Agreement Violation

The Panel began its analysis of the TRIMs Agreement claims by holding that domestic content requirements fall within the scope of the TRIMS Agreement (para. 7.34).  The Panel stated that “any trade-related investment measure that is inconsistent with Article III:4 of the GATT 1994 (or any other subparagraph of Article III) is ipso facto inconsistent with Article 2.1 of the TRIMs Agreement” (paras. 7.26-7.28).  The Panel held that “[w]here a measure is a TRIM that falls within the scope of the illustrative list, it follows that the measure is a TRIM that is inconsistent with Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement” (para. 7.31).  Since the Panel has already found that ITCs and PTCs violated Art. III:4 of GATT 1994, and that compliance with the DBCs “is necessary to obtain an advantage” in terms of the increased benefits under ITCs and PTCs, the Panel concluded that the U.S. violated Art. 2.1 of the TRIMs Agreement (para. 7.39).

SCM Agreement Violation

The Panel first set forth the three-step analytical framework for assessing the existence of subsidies under SCM Agreement violation claims: There exists a financial contribution by a government, that financial contribution confers a benefit, and the financial contribution is specific.  The Panel proceeded to analyze the three different use-cases of the DBCs and found subsidies exist under all three scenarios.  With respect to the Investor/Producer Credit, the Panel agreed with China that the comparators are taxpayers that invest in or produce electricity but do not qualify for the ITCs and PTCs, or the Domestic Content Bonus Credits.  The Panel then concluded that ITCs and PTCs reduce the tax liability under otherwise applicable tax rules for a specified subset of projects (para. 7.57).  The Panel concluded that DBCs met the financial contribution requirement and DBCs conferred benefits that left the taxpayers better off than in the absence of such credits  (para. 7.58).  Regarding the Elective Payment scenario, the Panel again agreed with China’s claims that DBCs constitute either a direct transfer of funds or revenue foregone otherwise due (pars. 7.61-7.62).  On the Assignment Credit, although the presence of the assignee as the intermediary attenuates the directness of the transfer of funds, the Panel nevertheless found that the flow of value, as mandated by the statutory provision, inevitably results in a transfer from the government to the assignor.  The Panel further affirmatively found that the ITCs and PTCs, as well as the DBCs, are contingent on the use of domestic products under Art. 3.1(b) of the SCM Agreement.

Art. XX(a) Public Morals Exception under GATT 1994

Parties’ Arguments

The U.S. relies entirely on the Art. XX(a) Public Morals exception as its defense.  GATT Art. XX(a) allows a member to impose measures “necessary to protect public morals” so long as the measures are applied in a non-discriminatory manner and are not a disguised trade restriction.  The protected “public morals,” according to the U.S., are conduct or outcomes deemed morally objectionable—in this case, China’s non-market and trade-distorting behavior—within a Member’s territory.  The U.S. contended that measures at issue were, therefore, to protect its public morals from China’s attainment of global dominance in the renewable energy sector.  The dominance was allegedly gained through behaviors against U.S. norms against unfair competition, crimes under U.S. laws (including cyber-theft, economic espionage, and misappropriation of trade secrets), and violations of U.S. laws against forced labor.  Ultimately, the U.S. believed that the challenged measures would protect public morals by reducing reliance on China and reclaiming market share from China’s dominance in certain industries in the U.S. market.  Additionally, the U.S. argued that the measures were necessary because all previous efforts had failed.  The U.S.’s arguments in this dispute were similar to those proffered in US – Tariff Measures (China).

China countered such arguments by pointing out that what the U.S. alleged to be public morals were not genuine public morals, that the measures were not designed to address any of the public morals concerns, and that the measures resulted in arbitrary or unjustifiable discrimination and constituted a disguised restriction on international trade.  Specifically, China argued that economic concerns that are addressed by one or more of the WTO Agreements, or that are purely economic in nature (i.e. that are not ancillary to, or a consequence of, a genuine public moral), are not encompassed by the concept of “public morals” under Article XX(a), a proposition that is agreed by the European Union as a third party in the dispute.

Panel’s Finding

The Panel employed a three-step analytical framework to assessing the Art. XX(a) claim.  Under the framework, the Member invoking Art. XX(a) must first establish that the measure was designed or taken “to protect public morals.”  Then the Member must demonstrate that the measure is “necessary” to protect such public morals.  Lastly, the Member must show that the measures are not applied in a manner that would constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.

At the outset, the Panel reiterated that the assessment of whether the challenged measures were “designed to” and whether such measures were “necessary” to protect public morals is legally and conceptually distinct; the same or similar evidence or considerations may be relevant to both inquiries.  The Panel defended the “holistic approach” employed in US – Tariff Measures (China), which combined the assessment of “designed to” with “necessity” as warranted by the arguments and evidence submitted by the parties, and not a deviation from the separate analysis framework (para. 7.84).

The Panel reiterated the considerable deference Members enjoy in articulating public morals (para. 7.105), and reaffirmed the US – Tariff Measures (China) panel’s conclusion that norms having economic aspects could be covered by “public morals” (para. 7.106).  The Panel, however, emphasized that “public morals” refer to right or wrong according to moral principles or norms, as opposed to principles or norms tied solely to economic values.  The Panel refrained from setting an interpretative framework for the scope of public morals in this case or specifying the types of values that may qualify as public morals.  Instead, the Panel focused its analysis on the four sets of public morals the U.S. articulated, namely, public morals against unfair competition, forced labor, theft, and coercion.  The Panel found that the U.S. proved—and China accepted—that forced labor and theft are protected public morals.

With respect to whether public morals against unfair competition and coercion existed, the Panel again looked to domestic legislation, executive orders, presidential memoranda, and statements made in international fora.  The Panel reaffirmed that domestic laws criminalizing or prohibiting certain acts may constitute prima facie evidence of the impermissibility of such regulated acts.  The Panel, however, like the US – Tariff Measures (China) panel, held that the U.S. failed to explain why the aggrieved Chinese behavior, which was broader in scope than that criminalized or prohibited under U.S. domestic laws, fell within the alleged public morals.  The Panel declined to expand the scope of public morals beyond what was regulated by the Sherman Act and the Federal Trade Commission Act.  The Panel, however, appeared to leave such a possibility open, were the U.S. to demonstrate the existence of a common set of underlying values reflecting a broader, unified public morality across different pieces of domestic legislation.  Moreover, the Panel held that the categorization of concerns matters, concluding that concerns labeled as economic or security were not moral concerns.

The Panel further found evidence submitted by China based on, inter alia, U.S. executive orders granting subsidies and allowing government intervention to reestablish the U.S. dominance in certain sectors undermined the U.S. contention that public morals against unfair competition existed.

Regarding whether public morals against coercion existed, the Panel concluded that the U.S. failed to articulate the scope and content of those morals.  The Panel thus concluded that the U.S. failed to prove public morals encompass the alleged Chinese conduct.

Next, the Panel examined whether the challenged U.S. measures were designed to protect public morals and concluded that they were not.  The Panel stressed that the explicit reference of public morals in the challenged measures was pertinent but not essential.  The Panel found the lack thereof, together with the explicit reference tying the challenged U.S. measures to address economic and security concerns, rather suggested the challenged measures were not adopted with protecting public morals in mind.

The Panel then examined the design, structure, and expected operation of the challenged measures and again refuted the U.S. allegation that they were intended to protect public morals.  Regarding the Steel and Iron Requirement, the Panel found that its operation as bonus credits did not disincentivize the use of Chinese steel and iron, nor did it send any signal of disapproval of Chinese alleged non-market behavior.  To the Panel, the “choice by consumers (i.e. electricity production facilities) to use 100% domestic steel could therefore be motivated only by economic considerations disconnected from the perception or actualization of [‘]standards of right and wrong conduct[’] prevailing in the United States” (footnote 287).  The Panel similarly dismissed the U.S. justification for the Manufactured Products Requirement.  Thus, the Panel’s “global assessment” returned the verdict that the U.S. failed to show the challenged measures were necessary to protect public morals.

For judicial economy, the Panel declined to address the “necessity” element and the compliance with the chapeau, and recommended that the U.S. withdraw the challenged measures by Oct. 1, 2026.

What Are the Implications?

While China has quickly welcomed and praised the Panel report,[viii] the Panel Report only deepens the U.S. criticism over the WTO dispute settlement mechanism, and the U.S. is unlikely to withdraw the challenged IRA measures as recommended.[ix]  As a result, the immediate effects between the two parties may be minimal.  However, this outcome could potentially influence the parties’ positions in the ongoing negotiation, especially ahead of the much-anticipated meeting between President Xi and President Trump.[x]

Beyond the two disputing members, the Panel Report has wider ramifications for WTO members who plan to use industrial policies favoring certain products or producers to secure economic independence.[xi]  Already, the consistency between industrial policies in critical minerals[xii] and electric vehicles[xiii], on the one hand, and the WTO rules against discrimination and trade distortion, on the other, has been questioned.  Besides China, the EU has also accused the U.S. IRA of violating WTO rules at its expense, though it stopped short of filing a formal WTO complaint.[xiv]  The EU further developed its own Green Deal Industrial Plan as its response to the IRA, which loosens the state aid rules to hand out subsidies but does not outright require local manufacturing or local content. [xv]  Instead, through public procurement, the EU attempts to secure “resilient supply chains” and reach a set European capacity target. The EU’s Green Deal Industrial Plan has been similarly criticized for its protectionist and trade-distorting effects.[xvi]  Therefore, one key takeaway from the Panel Report appears to be that to successfully invoke the public morals exception, the invoking member must talk the talk and walk the walk.  In other words, the invoking member cannot adopt internal measures similar to those it claims violate public morals simultaneously.

This case further touches on the important question of the core function of the WTO and the purpose of the dispute settlement mechanism.  A recent piece by Joost Pauwelyn suggests a “less law and more politics” approach would be better suited for the WTO going forward.[xvii]  Pauwelyn emphasizes the function of “settling disputes and maintaining a balance of concessions, not abstract rule compliance and the further development of [‘]trade law[’]” and encourages deal-making between the disputing parties, while calling for resistance to more legislation.  Other scholars have also opined on how to adjust the WTO and the dispute settlement mechanism to better handle the new trade reality.  For instance, Gregory Shaffer called for more flexibility in rules interpretation, especially concerning the safeguard.[xviii]  Simon Lester pointed to the built-in flexibility in anti-dumping and countervailing duties investigations and similarly argued for loosening restrictions on safeguard measures.[xix]  Sergio Puig and his co-authors, on the other hand, called for patience with the incremental rule changes through adjudication.[xx]  Though from different angles, they all stem from the harsh reality of the changing environment in which governmental actions and counteractions are prompted by the quest for independence rather than dependence.  As indicated by members’ proposals on WTO reform,[xxi] fundamental principles and practices—such as the most-favoured-nation principle—that underpin the creation of the WTO institution are called into question, and bilateral dealings appear to be regaining popularity.[xxii]  Issued at this critical juncture, the case allows all members to reflect on how best to (re)balance domestic economy and foreign competition, trade and economic security, as well as international cooperation and development.

[i] Panel Report, United States – Certain Tax Credits under the Inflation Reduction Act, WTO Doc. WT/DS623/R (circulated Jan. 30, 2026), https://www.wto.org/english/news_e/news_docs/623_e.pdf (hereinafter “Panel Report”)

[ii] Panel Report, United States—Tariff Measures on Certain Goods from China, WTO Doc. WT/DS543/R (adopted Sept. 15, 2020), https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/543R.pdf&Open=True (hereinafter “US – Tariff Measures (China)”)

[iii] Addendum, United States – Certain Tax Credits under the Inflation Reduction Act, WTO Doc. WT/DS623/R/Add.1, https://www.wto.org/english/news_e/news_docs/623a_E.pdf.

[iv] Public Law 117-169, An Act To Provide for Reconciliation Pursuant to Title II of the S. Con. Res. 14 (16 August 2022)

[v] Statement by Ambassador Katherine Tai Following Congressional Passage of the Inflation Reduction Act of 2022, Office of the United States Trade Representative, Aug. 12, 2022.

[vi] China’s comments on the United States’ responses to questions from the Panel after the second meeting, para. 1.

[vii] Jingyuan Zhou, No Unilateral Action—WTO Panel Ruled U.S. Section 301 Tariffs on Chinese Imports Inconsistent with WTO Obligations, ASIL:Insights, Volume: 24 Issue: 26, Oct. 5, 2020, https://www.asil.org/sites/default/files/ASIL_Insights_2020_V24_I26.pdf.

[viii] Jan. 30, 2026, https://www.mofcom.gov.cn/xwfb/xwfyrth/art/2026/art_517c913ad32e4af588eb54a461c688b9.html (original in Chinese)

[ix] USTR Statement on WTO Report Faulting U.S. Actions to Reindustrialize Our Economy, Office of the United States Trade Representative (Jan. 30, 2026), https://ustr.gov/about/policy-offices/press-office/press-releases/2026/january/ustr-statement-wto-report-faulting-us-actions-reindustrialize-our-economy (stating that “[t]his report only underscores the serious doubts that the United States has long expressed regarding the capacity of the WTO to regulate trade in a world marked by severe and sustained trade imbalances”).

[x] President Xi Jinping Speaks with U.S. President Donald J. Trump on the Phone, Ministry of Foreign Affairs People’s Republic of China (Feb. 4, 2026), https://www.mfa.gov.cn/eng/xw/zyxw/202602/t20260205_11851262.html

[xi] Ana Elena Sancho and Johannes Fritz, State is Back in Business, Global Trade Alert (Feb. 4, 2026), https://globaltradealert.org/blog/government-is-back-in-business

[xii] 2026 Critical Minerals Ministerial Fact Sheet, U.S. Department of State (Feb. 4, 2026), https://www.state.gov/releases/office-of-the-spokesperson/2026/02/2026-critical-minerals-ministerial/.  See also, EO 14241, Immediate Measures to Increase American Mineral Production (March 20, 2025)

[xiii] See Gil Lan, Electric Vehicle Tariffs by the US, EU, and Canada: Different Approaches and Implications for the WTO, ASIL:Insights, Volume: 28, Issue:12,  https://www.asil.org/insights/volume/28/issue/12

[xiv] Andy Bounds, EU accuses US of Breaking WTO rules with green energy incentives, Financial Times (Nov. 6, 2022), https://www.ft.com/content/de1ec769-a76c-474a-927c-b7e5aeff7d9e

[xv] The Green Deal Industrial Plan Putting Europe's net-zero industry in the lead, European Commission, https://commission.europa.eu/topics/competitiveness/green-deal-industrial-plan_en

[xvi] N. Poitiers et al., The EU Net Zero Industry Act and the Risk of Reviving Past Failures, Brugel (Mar. 9 2023).  See also Trevor Sutton and Sagatom Saha, The risk and opportunities of the EU’s green trade agenda, Brookings (Mar. 26, 2025).

[xvii] Joost Pauwelyn, A framework for WTO reform: Less law and more politics, Hinrich Foundation (Feb. 2026),

[xviii] Gregory Shaffer, Governing the Interface of U.S.-China Trade Relations, 115 AJIL 622 (2021).

[xix] Simon Lester, Joost Pauwelyn on Politics and Law in the World Trading System, IELP Blog (Feb. 5, 2026), https://ielp.worldtradelaw.net/2026/02/joost-pauwelyn-on-politics-and-law-in-the-world-trading-system/

[xx] Jeffrey Kucik, Lauren Peritz, & Sergio Puig, Rewriting Precedent: How International Adjudicators Influence Compliance, 46 Mich. J. Int’l L. 283 (2025)

[xxi] See e.g., On WTO Reform Communication from the United States, World Trade Organization, WT/GC/W/984 (Dec. 15, 2025), EU Submission on WTO Reform Communication from the European Union, WT/GC/W/986 (Jan. 21, 2026).

[xxii] Mona Paulsen, Is this the end of MFN as we know it? The EU submission on WTO reform and the meaning of development, IELP Blog (Jan. 23, 2026), https://ielp.worldtradelaw.net/2026/01/is-this-the-end-of-mfn-as-we-know-it-the-eu-submission-on-wto-reform-and-the-meaning-of-development/

Malaysia

Article 7.4: Enforcement

...

2.         If a Party considers that the other Party has not complied with a provision of this Agreement, the Party may review the terms of this Agreement and take action in accordance with applicable domestic law. A Party shall, when practicable, with a view to finding a mutually satisfactory solution, notify and seek consultations in good faith with the other Party prior to taking any action.

Cambodia

Article 7.3:  Enforcement

If either Party considers that the other Party has not complied with a provision of this Agreement, the Party may review the terms of the Agreement and take action in accordance with applicable domestic law.  Prior to taking such action, the Party shall, when practicable, seek consultations with the other Party.

El Salvador

Article 7.5: Enforcement

1. If either Party considers that the other Party has not complied with a provision of this Agreement, the Party may review the terms of the Agreement and take action in accordance with its law. Prior to taking such an action, a Party shall, when practicable, seek consultations with the other Party.

Guatemala

Article 7.5: Enforcement

1. If either Party considers that the other Party has not complied with a provision of this Agreement, the Party may review the terms of the Agreement and take action in accordance with its law. Prior to taking such an action, a Party shall, when practicable, seek consultations with the other Party.

Argentina

Article 6.4: Enforcement and Implementation

1. If a Party considers that the other Party has not complied with a provision of this Agreement, that Party may review the terms of this Agreement and take action in accordance with its law. Prior to taking an action under paragraph 2, the Party shall, when practicable, seek consultations with the other Party.

2. The Parties shall address matters related to the implementation and operation of this Agreement through the Trade and Investment Council established under the U.S.-Argentina TIFA, including sessions of the Innovation and Creativity Forum for Economic Development. The Parties may also consider further negotiations, as appropriate, through the U.S.-Argentina TIFA.

Bangladesh

Article 6.4: Enforcement

...

2. If the United States considers that Bangladesh has not complied with a provision of this Agreement, the United States shall, when practicable, seek consultations with Bangladesh. If these consultations do not result in a satisfactory outcome, the United States may reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025 on certain or all imports from Bangladesh to address the noncompliance.

For each agreement, there are two key elements:

• If a government thinks there is a violation, it may take action unilaterally under its domestic law without pursuing international adjudication first.
• A government taking that unilateral action may, but is not required to, seek consultations before doing so.

There's a caveat necessary with the Bangladesh agreement though. To me, it reads as if the consultations are not actually required ("when practicable," just like with the other agreements), but nonetheless consultations are somehow still a condition for imposing higher tariffs. I'm not sure how well the two sentences of the enforcement provision fit together in this agreement.

Also interesting in the Bangladesh agreement is that there is no pretense that both parties will be bringing enforcement actions, as it makes clear that it will be the U.S. doing the enforcement.

And finally on the Bangladesh agreement, the retaliation options seem more limited than the other agreements ("reimpose the applicable reciprocal tariff rate set forth in Executive Order 14257 of April 2, 2025" vs. "take action").

In the Argentina agreement, there is a different twist, as it ties consultations to the TIFA Trade and Investment Council. Apparently, the possibility of consultations only arises when addressing issues through this Council. Regardless, consultations are still not required.

Turning to the practical impact of all this, what will enforcing compliance with these agreements look like in practice? Will we see unilateral actions to enforce the agreements? Will there be formal requests for consultations first?

And then more broadly, will this approach to enforcement be effective? A key issue on this point is transparency: Will the public/Congress be informed about any of these enforcement actions, or will it all be done confidentially? How can we evaluate the effectiveness if we don't know what has been happening?

Update on Feb 12:

The Taiwan agreement has just been published, and here is its enforcement provision:

Article 7.4: Enforcement

1. If either Party, through its Designated Representative, considers that the other Party, either on its own or through its Designated Representative, has not complied with a provision of this Agreement, the Party, through its Designated Representative as appropriate, may review the terms of the Agreement and take action in accordance with its law. Prior to taking an action under this paragraph, a Party, through its Designated Representative as appropriate, shall, when practicable, seek consultations with the other Party, through its Designated Representative as appropriate.

Update on Feb 19:

The Indonesia agreement has just been published, and here is its enforcement provision:

Article 7.3: Enforcement and Implementation

...

2. If a Party considers that the other Party has not complied with a provision of this Agreement, that Party may review the terms of this Agreement and take action in accordance with its domestic law.[FN. 6] A Party shall, when practicable, with a view to finding a mutually satisfactory solution, notify and seek consultations in good faith with the other Party prior to taking any action.

3. To the extent that a Party experiences: (a) an import surge [FN.7] of goods from the other Party; or (b) an increase in the bilateral trade deficit following implementation of this Agreement, that Party may request consultations with the other Party.

[FN.6] For greater certainty, for purposes of this paragraph, “law” includes applicable laws, regulations, and other binding instruments or rules.

[FN.7] For greater certainty, the implementation of any commitment listed in Annex IV shall not be considered an “import surge”.

In this post, I'm going to look at the provision that tries to induce trading partners to coordinate with the U.S. on import restrictions designed to protect economic and national security. Here is the text of the provision in each of the five agreements:

Malaysia

Article 5.1: Complementary Actions

1.         If the United States imposes a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service of a third country and considers that such measure is relevant to protecting the economic or national security of the United States, the United States intends to notify such measure to Malaysia for the purpose of economic and national security alignment. Upon receiving such notification from the United States, Malaysia shall adopt or maintain a measure with equivalent restrictive effect as the measure adopted by the United States or agree to a timeline for implementation that is acceptable to both Parties, to address a shared economic or national security concern, guided by principles of goodwill and a shared commitment to enhancing bilateral relations between the United States and Malaysia.

Cambodia

Article 5.1:  Complementary Actions

1.         When the United States imposes a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service of a third country pursuant to relevant domestic law, the United States intends to notify such measures to Cambodia for the purpose of economic security alignment.  Upon receiving such notification from the United States, Cambodia shall regulate the importation of that good or service into its territory through similar measures as those of the United States in a manner that does not infringe on Cambodia’s sovereign interests.

El Salvador

Article 5.1: Complementary Actions

1. When the United States imposes a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service from a third country pursuant to relevant domestic law, and such measures are taken in furtherance of shared economic and national security objectives, El Salvador shall regulate the importation of that good or service into its territory through measures, deemed appropriate by El Salvador, having an equivalent restrictive effect as those of the United States.

Guatemala

Article 5.1: Complementary Actions

1. The United States and Guatemala intend to strategically align their trade and investment policies to further their shared economic and national security objectives. When the United States imposes a customs duty, quota, prohibition, fee, charge or other import restriction on a good or service of a third country pursuant to relevant domestic law and considers that the measure is relevant to protecting its economic or national security against non-market policies and practices of a third country, Guatemala shall regulate, consistent with Guatemala’s laws and regulations, the importation of that good or service into its territory through measures with equivalent effect as those of the United States. The Parties may discuss such measures in the Working Group.

Argentina

Article 4.1: Complementary Actions

1. If the United States adopts a border measure or other trade action and considers that such measure is relevant to protecting the economic or national security of the United States, Argentina, when appropriate, shall adopt a measure with similar effect to the measure adopted by the United States.

Focusing on the enforceability of the provisions, all of the provisions seem to provide a good deal of leeway to the trading partner, but each does it with unique wording:

• The Malaysia one says "Malaysia shall adopt or maintain a measure with equivalent restrictive effect as the measure adopted by the United States or agree to a timeline for implementation that is acceptable to both Parties" (emphasis added)
• The Cambodia one says "Cambodia shall regulate the importation of that good or service into its territory through similar measures as those of the United States in a manner that does not infringe on Cambodia’s sovereign interests" (emphasis added)
• The El Salvador one says "El Salvador shall regulate the importation of that good or service into its territory through measures, deemed appropriate by El Salvador, having an equivalent restrictive effect as those of the United States" (emphasis added)
• The Guatemala one says "Guatemala shall regulate, consistent with Guatemala’s laws and regulations, the importation of that good or service into its territory through measures with equivalent effect as those of the United States" (emphasis added)
• The Argentina one says "Argentina, when appropriate, shall adopt a measure with similar effect to the measure adopted by the United States" (emphasis added).

Do all of these variations in the wording get us to the same place? And is that place one in which these governments can basically decide whether to adopt the U.S. import restrictions or not?

Going beyond these differences in wording, in terms of practical outcomes for bilateral relations on this issue, to what extent will the issue come up in discussions between the U.S. and these governments? Will there be informal talks when the U.S. wants these governments to follow U.S. approaches to import restrictions? Will there be formal requests for consultations under the brief consultations provision in each agreement? Will the U.S. just take action unilaterally, as the agreements suggest is possible? And with regard to transparency here, if anything is raised by the U.S. in this area, will the public/Congress be informed about it, or will it all be done confidentially?

At this point, I have lots of questions but no answers.

UPDATE

The U.S. reciprocal trade agreement with Bangladesh was published today after I posted this, and I'm going to throw in the relevant provision from that agreement as well:

Article 4.1: Complementary Measures

1. If the United States adopts a border measure or other trade action and considers that such measure is relevant to protecting the economic or national security of the United States, the United States intends to notify Bangladesh of such measure. Upon receiving such a notification, and following consultations between the Parties, Bangladesh shall adopt or maintain a complementary restrictive measure, in accordance with its laws and regulations, in support of the U.S. measure.

Update on Feb 12:

The Taiwan agreement has just been published, and here is its provision:

Article 5.1: Trade Actions

1. When the authorities of the territory represented by AIT impose a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service of a territory not represented by a Party pursuant to the law of the territory represented by AIT, and considers that such measures are relevant to protecting the economic or national security of the territory represented by AIT, AIT, through its Designated Representative, intends to notify such measures to TECRO, through its Designated Representative, for the purpose of economic security alignment. Upon receiving such notification, in accordance with the law of the territory represented by TECRO, TECRO, through its Designated Representative, shall regulate the importation of that good or service into the territory it represents from a territory as agreed to by the Parties, in consultation with their Designated Representatives, through measures having equivalent restrictive effect as those of the authorities of the territory represented by AIT.

Update on Feb 19:

The Indonesia agreement has just been published, and here is its provision:

Article 5.1: Complementary Actions

1. If the United States imposes a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service of a third country and considers that such measure is relevant to protecting the economic or national security of the United States, the United States intends to notify such measure to Indonesia for the purpose of economic and national security alignment. Upon receiving such notification from the United States, to address a shared economic or national security concern identified by the Parties, Indonesia shall adopt or maintain a measure with equivalent restrictive effect as the measure adopted by the United States, guided by principles of goodwill and a shared commitment to enhancing bilateral relations between the United States and Indonesia.

There's a lot in there, and I'm not going to comment on all of it, but I wanted to react to a couple things in the "Less law" section. Joost says the following:

Here is what I wrote 20 years ago, with some updates in light of the present situation:

1. Revive the “logic” and legal flexibilities in the original GATT

“What kept the GATT together was not so much an abstract respect for legal rules, but rather the political and economic need to keep intact a negotiated balance of tariff concessions … No strong enforcement mechanism to keep this balance afloat was needed … This balance was … kept because of the threat of reciprocal withdrawals of concessions in case a country would not meet its end of the bargain. This was the secret of the GATT’s early success … Its objective was to settle trade problems, not to create or clarify trade law”.10

All the more so in today’s context, where the new normal is to “appeal into the void”, a revived dispute system should focus on settling disputes and maintaining a balance of concessions, not abstract rule compliance and the further development of “trade law”. Quick decisions — a matter of months, not years as is currently the case — on whether the balance is upset, caused by breach or non-violation, and authorizations to suspend “equivalent” concessions are more important than consistency and getting things 100% “correct”. From this perspective, a two-tiered system with an Appellate Body is not a “must have”.

GATT flexibilities ranging from exceptions and trade remedies to unilateral tariff and schedule modifications under both GATT and the General Agreement on Trade in Services (GATS) and non-violation complaints must be dusted off and revivified. Panels and especially the Appellate Body may have seen it as their task to gradually reduce these “exit options” in pursuit of free trade ideology. However, “[r]ather than being birth defects that need to be cured through gradual legalization, these flexibility and exit options … must be clarified and maintained”.11 They remain “crucial preconditions for trade deals to stick”.12

2. “Resisting the temptation of ever more legalization”

Resist “the temptation of ever more legalization, including the temptation of judicial activism and a strict rule of precedent.”13

My first comment here is that shorter time frames for disputes are good. Joost says "in a matter of months," which leaves things a bit open as to what exactly he has in mind. I might shoot for 6-9 months from panel composition to issuance of the report. This, of course, is close to what is in DSU Article 12.8, which states: "... the period in which the panel shall conduct its examination, from the date that the composition and terms of reference of the panel have been agreed upon until the date the final report is issued to the parties to the dispute, shall, as a general rule, not exceed six months." So, the time frame I suggested is similar to what was set out by the DSU drafters, and I think it could be achieved today if panels and parties made some adjustments to how disputes are handled. My sense is that the simpler cases could probably be done in 6 months or a little less; some of the AD/CVD or SPS cases, on the other hand, might be tougher to do as quickly, and 9 months is a bit more realistic. (For additional time savings, I would also suggest getting rid of the interim review stage).

Speaking of AD/CVD, I agree with Joost that flexibility on trade remedies is necessary. However, I would say a couple things here. First, regardless of any WTO DS rulings that people might find objectionable, AD/CVD is widely used today (see, e.g., the U.S. Commerce Department page that keeps track of U.S. AD/CVD orders). In practice, there is already a good deal of flexibility here. Second, what might be best on trade remedies is to loosen the rules on safeguards so that we could shift away from using AD/CVDs and towards using safeguards. This might cool down some of the trade tensions that arise from AD/CVDs, which are seen by many as involving abusive practices.

Also on flexibility, Joost mentions the exceptions. I don't know what exactly he has in mind here, but I am in favor of injecting some more flexibility into the public policy exceptions, which I think have been interpreted in too strict a manner at times.

Those were some areas of agreement, but here are a couple places where I'm a bit skeptical. Joost says he wants a lesser role for precedent. I think we need to rely on precedent at least to some degree, though, in order to know what the obligations mean. Taking non-discrimination as an example, there have always been, and still are, competing conceptions of how intent and effect should play a role in the analysis. If governments, businesses, and civil society don't know what the law of non-discrimination is, it's difficult to have any certainty as to what is permitted and what is not. Joost says the Appellate Body is not a "must have," and maybe that's true, but if there is no Appellate Body you run the risk of competing interpretations by panels that leave everyone confused about what the non-discrimination obligation requires. An obvious alternative is to have an Article IX:2 interpretation from the Members to clarify things, which would be great but seems like it would be difficult to obtain.

Finally, with regard to dusting off non-violation complaints, I want to associate myself with the famous quote of the South African delegate during the original GATT negotiations:

I would like to say, Mr. Chairman, that of all the vague and woolly punitive provisions that one could make, this seems to me to hold the prize place. It appears to me that what it says is this: In this wide world of sin there are certain sins which we have not yet discovered and which after long examination we cannot define; but there being such sins, we will provide some sort of punishment for them if we find out what they are and if we find anybody committing them. When it comes to that, we shall describe them as sins only when the Organization considers that they are not venial offences, but serious crimes; but we do not know under what circumstances the Organization might consider them to be serious. Nonetheless, seeing that there are such sins, and in spite of the fact that we do not know what they are, and in spite of the fact that we do not know under what circumstances we are going to apply any punishment to them, we shall still provide a sort of vague and general "sword of Damocles", if such a thing is possible, to hang over the head of all the people who may possibly commit this sin.

Then we come to what is the only definite thing in the whole Article: that is, the type of punishment which can be visited upon these offenders. It seems to me, Mr. Chairman, that this is something like Pirandello's play, "Six Characters in Search of an Author", only it is rather the other way round. Here it is one punishment in search of six sins!

Should we open fully the can of worms that is the non-violation remedy? Would that increase flexibilities, or would it actually reduce them?

First, he invokes the Washington Consensus as guiding U.S. policymaking in the WTO era:

In the wake of the Soviet Union’s collapse, U.S. economists and politicians alike came to a consensus: most believed that privatization, deregulation, free markets, limits on subsidies, and strong intellectual property rights were the best economic policies.

I feel like this claim, which I hear somewhat frequently, is overstated. For economists, it is probably true that there was widespread agreement on these points (except for intellectual property rights, which does not fit well with the other issues). But I don't think this consensus existed for U.S. politicians, especially in trade policy, where politicians were on balance still protectionist and supportive of subsidies (agriculture being the most famous example).

As support for my view, note first that when trade deals were passed by Congress, it was often fairly close (see, e.g., the NAFTA and CAFTA-DR votes in the House). There was always plenty of opposition, and issues such as labor rights and environmental protection often had to be brought in to trade agreements in order to get the necessary votes from Democrats. Some of the affirmative votes reflected grudging support for the trade agreement as a whole rather than a full-throated endorsement of the free trade aspects.

In addition, these deals all had a big carveout that allowed for protectionism: anti-dumping/countervailing duties (AD/CVDs). As I described in my last post, there was extensive use of AD/CVDs during the so-called "neoliberal" era, which provides some good evidence that the WTO system maintained the flexibility for governments to use protectionism.

Putting this issue in a broader perspective, Peter started the piece as follows:

Between the end of World War II and the early 1990s, U.S. presidents generally supported free trade and encouraged other countries to lower trade barriers with initiatives such as the 1947 General Agreement on Tariffs and Trade (GATT), which encouraged countries mostly outside the Soviet bloc to mutually reduce their tariffs. But U.S. administrations balanced this preference with pragmatism, taking a flexible approach to policy that considered distinct challenges discretely. When necessary, U.S. presidents were willing to use tools such as tariffs, sector-specific deals for politically-sensitive products such as textiles, and hard-nosed negotiations to tackle discrete trade tensions. The idea that strictly governing international trade with a set of universal rules would deliver economic and geopolitical benefits to all countries is historically abnormal.

Based on the use of AD/CVDs alone, I think it's clear that during the WTO era, "[w]hen necessary, U.S. presidents were willing to use tools such as tariffs ... ," which have been widely used in sectors such as steel. (Unlike with safeguards, the president doesn't have a direct say in individual AD/CVD decisions, but, subject to Congressional approval, presidents decide who to put in charge of the Commerce Department, and thus are able to influence the general policy related to dumping and subsidy calculations if they want to.)

Second, Peter also weighs in on the issue of Chinese policies and practices: "U.S. and allied policymakers tried for years to convince China to play by the WTO’s rules." I made the point here, among other places, that the period after China's WTO accession would have been the best time to challenge China's policies and practices through WTO complaints. Unfortunately, the challenges that eventually came were often narrow, and the systemic issues were ignored to a great extent. My sense is that during this period the U.S. was distracted with various foreign policy issues, on which it needed China's support or non-opposition, and that limited how far it was willing to go in challenging China. (It's not too late, though, if anyone wants to return to an approach that worked fairly well.)

Third, I want to quibble with his perspective on trade dispute settlement:

The dispute resolution mechanism in the GATT was also effectively nonbinding, encouraging countries to work out trade disputes diplomatically rather than litigating over rules.

Clearly there are differences in the degree of flexibility in the GATT and WTO dispute settlement systems, but I think people sometimes exaggerate them. There was plenty of litigation under the GATT; and there has been plenty of diplomacy during the WTO era. And to take an example of a prominent U.S. critique of WTO dispute settlement in recent years, while the use of precedent has been controversial in WTO dispute settlement, it was a term commonly used in the GATT era as well.

And then fourth, also related to the GATT vs. the WTO, I think Peter understates the broad substance of the GATT era. He says:

The first time a high-level U.S. government document identified a rules-based trading order as Washington’s overarching policy aim appears to be in 1991, when the Economic Report of the President—an annual review of the U.S. economy and the president’s priorities—stated that the “primary thrust of U.S. trade policy is to use multilateral discussions and fora . . . to promote free, rules-based trade.” Of course, presidents before the 1990s pursued international trading orders such as the GATT or the short-lived International Trade Organization, an idea that President Harry Truman backed but that the Senate failed to adopt. But these efforts mainly sought to impose some discipline on specific aspects of global trade such as tariff rates and export-oriented subsidies. 

With regard to the GATT, though, think about the national treatment obligation, the MFN obligation, and the potential of the NVNI remedy, among other things. This was, in fact, a very broad set of obligations, applying to all domestic legislation and regulation. And the ITO, of course, would have gone even further, dealing with issues such as labor rights and restrictive business practices as well.

Summing all this up, in the debate over the WTO era vs. what came before, I'm all for weighing the substance of the two eras, and evaluating what worked and didn't work, both politically and in terms of policy. Clearly we are in a time of disruption, and we need to come up with an approach that works going forward. I have plenty of my own criticisms of past U.S. trade policy, and suggestions for how to fix things (I will come back to this at the appropriate time!). But I worry that if the calls to go back to the past misread what the past looked like, that will make it difficult to find a way forward.