Trump's double standards: US under him has been violating basic WTO norms

In a direct attack on India’s trade regime, the United States has challenged in the World Trade Organization (WTO) almost all Indian export subsidy programmes on the grounds that they harm American workers by creating an uneven playing field. The programmes included in the complaint are the export-oriented units scheme as well as sector-specific schemes like special economic zones and electronics hardware technology parks. It has also objected to duty-free imports for Indian exporters. The oddest bit about the US decision is that it comes on the back of a series of US trade decisions that are grossly in violation of basic WTO norms.

Over the last fortnight, US President Donald Trump has signalled that his administration is ready for a trade war based around selective tariff increases. Mr Trump last week declared that steel and aluminium imports in the US would face higher tariffs to protect the country's national security. But a very few people buy this logic as the concerns have not risen to the level of an emergency. And when it became clear that these tariffs would not hurt Mr Trump’s primary bugbear, the People’s Republic of China, and would instead harm US allies such as Japan, South Korea and Canada, he declared “real friends” of the US might be spared the effects of this first salvo in a trade war. This led to worries in countries like India that are unlikely to be counted among these “real friends”. But even before India could protest against such selective tariffs, Mr Trump has fired his next shot.

If selective tariffs are taken to the WTO, then there is a good chance that these will be declared to be not in keeping with the rules. On the one hand, this will almost certainly be viewed by Mr Trump as further evidence of his oft-expressed view that the trading system is stacked against the US. On the other hand, there is a limited amount that a WTO ruling can in any case do in deterring a trading superpower determined to launch a trade war in violation of norms that have been painfully built up over the decades. This is clearly Mr Trump’s own inclination. It is clear not only from his unplanned and aggressive declaration of these particular tariffs, but also from the selective way in which they are being applied — only certain sectors and only certain countries will be targeted. While it may appear that this is helpful for some countries, which will thus avoid being hurt; in the long term, selective tariffs only undermine the international trading system.

The WTO is based around the most favoured nation (MFN) principle. The basic concept underlying the WTO is that all WTO members are to be treated alike unless they are specifically shown to have violated rules. This concept is being ignored in Mr Trump’s selective tariffs, and in the lobbying to be among the favoured countries that escape the impact of the tariffs. If the world moves to a regime where countries can discriminate against select countries and commodities, it might provide a semblance of victory to some perhaps, but it will ultimately hurt all and sundry and lead to a breakdown of the global trading order.