Draft Admin Proposal Would Allow Trump to Ignore Key WTO Principles

A draft of a bill from the Trump administration would propose having the US abandon key World Trade Organization principles and offer President Donald Trump significantly more discretion over US trade policy, a White House official has confirmed to CNN.

Trump ordered the draft legislation and was briefed on it in May, Axios first reported, citing sources familiar with the situation, and the report said most officials involved in crafting the proposal believe it is “unrealistic or unworkable.” The CNN source familiar with the discussions on the proposed legislation described the proposal as “the beginning of a conversation” on trade and not a signal that the United States was prepared to abandon its role in the WTO.

“We face unfair trade barriers,” the official said, adding, “something needs to be done.”

A White House spokesperson did not return CNN’s requests for comment on the bill. White House spokeswoman Lindsay Walters told Axios that the leaked draft is not “actual legislation that the administration was preparing to rollout.”

“Principals have not even met to review any text of legislation on reciprocal trade,” Walters told the news site.

President Trump has long made clear his dislike of the World Trade Organization (WTO), saying that the “World Trade Organization is a disaster” on the campaign trail, and last week, it was reported that Trump wanted to turn his campaign suggestion to exit the WTO into a reality. Now, Axios has obtained a leaked draft of a bill that is designed to do just that, called the “United States Fair and Reciprocal Tariff Act.”

The “United States Fair and Reciprocal Tariff Act” essentially bestows Trump (or any future president) with the power to determine any current or future tariff rates with countries—outside of the jurisdiction of the WTO. As Axios explains, it circumvents two of the fundamental principles of the WTO: that of the “Most Favored Nation” and “bound tariff rates.” The first blocks countries from setting different tariff rates for different countries to avoid favoritism. The second creates a tariff ceiling for all WTO countries—to which all of the countries have previously agreed.

Not only does the bill create a way to operate outside the rules of the WTO, renegotiating and applying tariffs unilaterally, but also it puts this power in the hands of the President. The bill explicitly calls for the President of the United States to “have a wide array of tools to open the markets of U.S. trading partners and encourage participation in negotiations to liberalize trade…and adjust tariff rates.”

The bill only calls for the President to “consult with” the Senate Finance Committee and the House Ways and Means Committee and post a notice of the planned tariffs in the Federal Register 30 days before it is due to take effect. A source told Axios that the bill “would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal.”

According to The Hill, however, officials who drafted the bill are skeptical that it could ever be approved, with White House trade adviser Peter Navarro having told White House legislative director Marc Short that it did not stand a chance of getting through Congress. White House spokeswoman Lindsay Walters told Axios that Trump has asked his team to develop a plan to deal with tariff imbalances, but cautioned that the administration was not planning a legislative rollout.

“It is no secret that POTUS has had frustrations with the unfair imbalance of tariffs that put the U.S. at a disadvantage. He has asked his team to develop ideas to remedy this situation and create incentives for countries to lower their tariffs. The current system gives the U.S. no leverage and other countries no incentive,” Walters said.

“The only way this would be news is if this were actual legislation that the administration was preparing to rollout, but it’s not,” she said. “Principals have not even met to review any text of legislation on reciprocal trade.”

It is called “United States Fair and Reciprocal Tariff Act,” but many are simply calling it the “FART Act,” including former members of the White House and journalists on Twitter, Business Insider adds. Anthony Scaramucci, who served as Trump’s director of communications for 10 days, said that the bill “stinks” as it would ask US consumers to pay for tariffs.

Others were quick to point out the unfortunate acronym, including Axios’ Jonathan Swan, who originally broke the story about the draft legislation. Some have even suggested that a White House staffer was in on the joke when the bill was named, or even that it was a deliberate act of subversion.

According to Axios, most of the officials who wrote the draft bill believe that it is untenable and essentially “dead on arrival.” Trump would not be able to withdraw the US from the WTO without the approval of Congress.

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