America v. the international rule of law

America v. the international rule of law

A reluctance to engage effectively with international courts and intergovernmental organisations has long been a strategic component of US foreign policy. But the Trump administration surpasses all that have gone before it over the past 70 years, during which time the role and influence of such international bodies have increased significantly.

In their place, the current US administration champions a defiant isolationism, characterised by hostility towards institutions such as the International Criminal Court of the World Trade Organisation (WTO). The logic underpinning this approach centres on a perceived curtailment of American sovereignty by the WTO and a belief that, on balance, the US is disadvantaged by its international dispute resolution mechanisms. Although there is no empirical evidence to support this argument, the Trump administration habitually criticises almost every international agreement and organisation – from the Paris Agreement, the North American Free Trade Agreement (NAFTA), and the Trans-Pacific Partnership (TPP), to NATO, UNESCO and The United Nations Human Rights Council (UNHRC).

John Bolton, Trump’s hawkish National Security Advisor, recently lambasted the Hague-based International Criminal Court (ICC), which prosecutes individuals for international crimes of genocide, crimes against humanity, and war crimes. Last month, in his first major policy address to the conservative think-tank The Federalist Society, Bolton asserted that “for all intents and purposes, the ICC is already dead to us.” His speech was delivered in anticipation of a decision by ICC prosecutors on whether they would open a formal investigation into alleged war crimes committed in Afghanistan over the past 15 years. Because this investigation would target both Afghan national security forces and US forces and intelligence, Bolton declared that the ICC “unacceptably threaten[ed] American sovereignty and US national security interests.”

The ICC was established in 2002 by a UN treaty, which has been ratified by 123 countries. Since its founding charter, the Rome Statute, the ICC has investigated a broad spectrum of war crimes: the use of child soldiers in the Democratic Republic of the Congo, as well as the criminal actions of several dozen prominent individuals, including the former Libyan leader Colonel Gaddafi and Sudan’s president Omar al-Bashir.

Nevertheless, Bolton has been diametrically opposed to the ICC since its foundation. When serving as Under Secretary of State for Arms Control and International Security in the Bush administration, he wrote to the UN, confirming that the US had no intention of signing up to the Rome Statute, and therefore had “no legal obligations arising from its signature.” The present administration seems determined to go much further: battling against the ICC and taking active steps to hinder its operations. The White House has announced that, insofar as US federal law allows, ICC judges and prosecutors may be banned from entering the US, their financial assets may be targeted, and they might even face prosecution under the US criminal justice system.

Bolton’s savaging of the ICC echoes the sustained attacks made by Trump himself on the WTO – the intergovernmental organisation that regulates international trade, which was established in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT).  Trump’s antagonism towards the WTO is well documented. He recently called it “the single worst trade deal ever made”, adding that “if they don’t shape up, I would withdraw from the WTO”. One of his major criticisms relates to the WTO’s dispute adjudication mechanisms. He claims that the US loses “almost all of the lawsuits in the WTO” because “we don’t have the judges”. It is the same hardball thinking on trade that prompted him to withdraw from the TPP in January 2017 at the outset of his presidency.

An incipient trade war has also been fuelled by Trump. This year, he has unilaterally imposed tariffs on imports from China, Mexico, Canada and the EU. His “America First” trade policy is predicated on the flawed and somewhat simplistic assumption that by making imported goods more expensive, US consumers will buy more American products, thereby boosting the domestic economy. Predictably, China, Mexico, Canada and the EU have retaliated in kind, making it harder for US businesses to export to those markets.

Tariffs on Chinese goods took effect in August, targeting $250bn worth of imports. China’s initial response was to impose similar tariffs on US imports. Should Trump carry out his threat to impose proposed tariffs on a further $267bn worth of goods, nearly all Chinese exports to the US would be affected. When the US decided to impose levies on imported steel and aluminium from the EU, Canada, and Mexico, they all retaliated in kind, targeting flagship American products such as Kentucky bourbon, Harley-Davidson motorbikes, and Florida orange juice.

Beyond the damage caused to US exporters, import tariffs also increase the cost of imported raw materials for a large swathe of US automotive, manufacturing, construction and energy businesses. Even Coca-Cola has said that it will increase prices to compensate for higher freight rates and metal prices, according to the Wall Street Journal.

Trump’s trade war with Canada and Mexico is further complicated by ongoing renegotiations of NAFTA. The 1994 deal eliminated the majority of trade tariffs between the three countries, most notably in the agricultural and automotive sectors, and stimulated a significant increase in cross-border trade, estimated to approach $1tn a year. Trump, however, argues that Canada “has taken advantage of our country for a long time”. His administration has therefore chosen to bypass Canada and reach a bilateral agreement with Mexico instead. This new bilateral deal was announced in August. Meanwhile the US and Mexico are yet to determine the conditions which might allow Canada to join their agreement, although there is no guarantee that this will happen.

The dispute resolution mechanism in Chapter 19 of NAFTA has been significantly scaled back by the new bilateral agreement, presenting a key stumbling block in potential negotiations with Canada. The Chapter 19 mechanism affords the three countries the right to challenge each others’ anti-dumping and countervailing duty decisions. Challenges are heard by an expert panel comprised of representatives from both countries involved in the dispute. Whatever the outcome of negotiations, the US seems determined to frustrate the dispute mechanism: it is presently blocking the appointment process for expert panels. Without new appointees, the system will cease to operate by December 2019 when two judges’ terms expire since three judges are needed to hear each appeal. Unless there is a dramatic volte face, it seems unlikely that the US will allow their seats to be filled.

The US-Mexico bilateral agreement has had other ramifications. Chapter 11, the investment component of NAFTA, provides investors from the three NAFTA countries with a predictable, rules-based investment climate. Its investor-state dispute settlement (ISDS) provisions enable investors to bring claims against governments adjudicated by international arbitration tribunals. These have also been considerably scaled back, focusing exclusively on energy, telecoms and infrastructure, to the exclusion of other sectors.

The Trump administration’s opposition to the WTO’s dispute resolution mechanisms is puzzling since the data shows that the US does not lose more cases, on average, than any of the other 164 member countries. In terms of NAFTA, the administration’s curtailing of investor protections is even more bizarre since the US has never lost a case brought against it under Chapter 11.  Some observers suggest that the US does not hesitate to use various channels in order to safeguard its interests in these arbitration proceedings, even if it is not directly party to them.

It is beyond question that the administration’s hard line on trade, international courts and tribunals plays well with Trump’s core supporters, but the logic of their position based on evidence is very much open to question. The potential consequences are far-reaching: JP Morgan economists estimate that an additional $400bn in tariffs could shave off 0.4% of global GDP – and that is a best case scenario. The IMF suggests that an escalation of tit-for-tat tariffs could cut global growth by 0.5 per cent while Morgan Stanley estimates that a full-blown escalation of the trade dispute could reduce global GDP by 0.8 per cent. In Trump’s brave new world, everyone seems destined to lose out.

 

Dominic Carman

Written by:

Dominic Carman, journalist, writer and legal commentator.
www.dominiccarman.com