History of the WTO
Before World War II, European powers imposed harsh trade restrictions against countries outside their empires, which hurt U.S. exporters substantially. This also contributed to Japan going to war to carve out an “East Asian Co-Prosperity Sphere” and Nazi Germany attacking eastward to obtain “living space” – that is, vassal territories – nearby.
A success story
Members of the WTO, which currently number 164, agree to four core principles:
- non-discrimination, which means all imports are subject to the same tariff rate, with some exceptions
- reciprocity, which balances the reduction of barriers and allows for retaliation
- decision-making by consensus.
How it works
What would happen if the US left
If the U.S. were to leave the WTO, other countries could freely raise tariffs against it. And the U.S. would lose access to the dispute settlement mechanism, which would make retaliation the only response available.
This would inevitably raise prices and reduce choice for U.S. consumers, undercut the competitiveness and profitability of companies that rely on imports and slow economic growth. The WTO’s demise would also raise the odds of violent conflict among states.