NCPA - National Center for Policy Analysis

Cato Study: WTO Does Not Usurp U.S. Sovereignty

June 1, 2000

The World Trade Organization cannot dictate the domestic laws and regulations of its member nations, and therefore does not represent a threat to U.S. sovereignty. Rather, the WTO "enhances the freedom and the prosperity of Americans," say William H. Lash III and Dan Griswold, authors of a new study from the Cato Institute.

They make the following observations:

  • The WTO is a contractual organization that arbitrates disputes among members on the basis of rules that all have agreed to follow -- although the U.S. has the power to veto any agreement of which it disapproves.
  • The WTO wields no power of enforcement -- cannot levy fines, impose sanctions, change tariff rates or modify domestic laws.
  • The organization's basic charter exempts broad categories of trade restrictions -- allowing members to restrict trade for reasons of national security, public health and safety, and conservation of natural resources, and to ban imports made with forced or prison labor.
  • The same dispute settlement mechanism that can render judgment against U.S. laws has been used effectively to encourage other nations to scrap trade laws that discriminate against U.S. exports.

The authors add that just as WTO membership opens markets for U.S. exporters, so it encourages the U.S. to keep its own markets open to the benefit of consumers and import-using industries here.

Source: William H. Lash III and Dan Griswold, "WTO Report Card II: An Exercise or Surrender of U.S. Sovereignty?" Trade Policy Briefing Paper No. 9, May 4, 2000, Cato Institute, 1000 Massachusetts Ave., N.W., Washington, D.C. 20001, (202) 842-0200.

 

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