FACT CHECK: Does The US Lose ‘Almost All’ Trade Disputes?

David Sivak | Fact Check Editor

President Donald Trump claimed Wednesday that the U.S. loses “almost all” trade disputes at the World Trade Organization.

“The WTO – World Trade Organization – was set up for the benefit of everybody but us,” Trump said in a Fox News interview. “They have taken advantage of this country like you wouldn’t believe.”

“As an example, we lose the lawsuits, almost all of the lawsuits within the WTO because we have fewer judges than other countries. It’s set up. You can’t win. In other words, the panels are set up so we don’t have majorities.”

Verdict: False

The U.S. has won 39 percent of its trade disputes, and the U.S. success rate for these rulings exceeds the global average.

Fact Check:

Since its inception in 1995, the WTO has received 532 trade disputes. The U.S. has been a disputing party in roughly half of the cases.

Trump claimed that the U.S. loses “almost all” disputes, but according to a January report by Public Citizen, a progressive advocacy group, the WTO has historically ruled in America’s favor 39 percent of the time. For example, the U.S. won a spate of cases against China in recent years that removed tariffs and restrictions on American-made goods like auto parts and steel.

Bloomberg conducted a similar analysis of WTO rulings in March that found it is common for the U.S. to win these cases, especially when it initiates the dispute. In fact, the U.S. won 86 percent of the cases it submitted.

This success is not unique to the U.S. “Governments are reluctant to commit scarce resources and risk diplomatic awkwardness by bringing cases that do not have a high probability of success,” Alan Sykes, a law professor at Stanford University, told The Daily Caller News Foundation.

As a result, the U.S. success rate is only slightly higher than the global average. The U.S beats Japan and China, for instance, but has a lower success rate than the European Union (EU).

But what’s especially notable from the Bloomberg report is that when the U.S. is accused of a violation, it loses cases far less often than the average country. It has a loss rate of 75 percent, while the EU and Japan have lost every ruling. The global average is 84 percent.

Trump claims that the U.S. loses “almost all” trade disputes, yet the country outperforms the worldwide average when both initiating and defending against a trade allegation.

To support his claim, Trump reasons that the panels deciding disputes are stacked with non-American judges. “We have fewer judges than other countries,” he said during the interview. “It’s set up. You can’t win.” And while Trump is partially correct – Americans almost never sit on a panel where the U.S. is party to a dispute – the reason is a matter of impartiality, not one of preferential treatment.

“Dispute panels are designed to be impartial so that they do not contain individuals from either of the disputing parties,” said Sykes. “Neither side has a national on the panel, let alone a majority.”

Both disputing parties have a say and must agree to the judges. If they can’t agree, an independent official appoints the judges. Nationality has become so important in picking impartial panelists that the WTO has actually suffered from a limited pool of candidates who don’t pose a conflict of interest.

While efforts for impartiality are certainly not foolproof, the outcomes of trade disputes since 1995 do not suggest the U.S. has been treated unfairly. The White House did not respond to a request for comment.

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David Sivak

Fact Check Editor
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