US Declares War On World Trade With Massive FART Act
What was once rumour has turned out to be true; the US under Trump's administration is ready to withdraw from the World Trade Organisation and sanction foreign nations if it doesn't suit US needs. This has taken the form of the Fair And Reciprocal Tariff (FART) Act:
Exclusive: A leaked Trump bill to blow up the WTO
Axios has obtained a leaked draft of a Trump administration bill — ordered by the president himself — that would declare America’s abandonment of fundamental World Trade Organization rules. Why it matters: The draft legislation is stunning. The bill essentially provides Trump a license to raise U.S. tariffs at will, without congressional consent and international rules be damned.
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The details: The bill, titled the "United States Fair and Reciprocal Tariff Act," would give Trump unilateral power to ignore the two most basic principles of the WTO and negotiate one-on-one with any country:
The "Most Favored Nation" (MFN) principle that countries can't set different tariff rates for different countries outside of free trade agreements;
"Bound tariff rates" — the tariff ceilings that each WTO country has already agreed to in previous negotiations.
"It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal," said a source familiar with the bill.
"The good news is Congress would never give this authority to the president," the source added, describing the bill as "insane."
"It's not implementable at the border," given it would create potentially tens of thousands of new tariff rates on products. "And it would completely remove us from the set of global trade rules."
Behind the scenes: Trump was briefed on this draft in late May, according to sources familiar with the situation. Most officials involved in the bill's drafting — with the notable exception of hardline trade adviser Peter Navarro — think the bill is unrealistic or unworkable. USTR, Commerce and the White House are involved.
In a White House meeting to discuss the bill earlier this year, Legislative Affairs Director Marc Short bluntly told Navarro the bill was "dead on arrival" and would receive zero support on Capitol Hill, according to sources familiar with the exchange.
Navarro replied to Short that he thought the bill would get plenty of support, particularly from Democrats, but Short told Navarro he didn't think Democrats were in much of a mood to hand over more authority to Trump.
White House response: Spokeswoman Lindsay Walters said, "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."
But Walters signaled that we shouldn't take this bill as anything like a done deal. "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."
Between the lines: Note the specificity of Walters' quote above. Trump directly requested this legislation and was verbally briefed on it in May. But he hasn't met with the principals to review the text.
The bottom line: As a smart trade watcher told me: "The Trump administration should be more worried about not having their current authority restricted rather than expanding authority as this bill would do."
President Trump has repeatedly told top White House officials he wants to withdraw the United States from the World Trade Organization, a move that would throw global trade into wild disarray, people involved in the talks tell Axios. What we're hearing: “He’s [threatened to withdraw] 100 times. It would totally [screw] us as a country,” said a source who’s discussed the subject with Trump. The source added that Trump has frequently told advisers, "We always get ed by them [the WTO]. I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States."
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Flashback: During the campaign, Trump told NBC's Chuck Todd on "Meet the Press," in July 2016: "World Trade Organization is a disaster." Some aides have tried to explain to Trump that in their view, the U.S. does well at the WTO, given the U.S. has an army of trade lawyers and created the system:
The “Economic Report of the President” for 2018, which bears Trump’s signature on Page 11, states: “[T]he United States has won 85.7 percent of the cases it has initiated before the WTO since 1995, compared with a global average of 84.4 percent. In contrast, China’s success rate is just 66.7 percent.”
But Trump is unmoved by those arguments, according to sources with direct knowledge:
Trump’s economic advisers do push back in the moment when he raises the idea of withdrawal.
But they’ve never put in place a policy process to take the idea seriously, according to four sources with direct knowledge of his private comments.
That dismissive attitude in the face of Trump’s insistence could ultimately prove to be a mistake — as history has shown with other policy ideas of which aides do not approve.
Between the lines: Even if his advisers put a policy process in place and try to make sure he’s well-informed on what it would mean to try to withdraw from the WTO — there is no guarantee that Trump won’t do it. History shows he doesn't care about the process.
Remember when Trump upended his globalist trade advisers’ carefully constructed policy process and simply announced he’d be imposing massive tariffs on steel and aluminum imports? It’s not unimaginable that the same could eventually happen with his desire to try to withdraw from the WTO.
Why this matters: A U.S. withdrawal from the WTO would send global markets into a spiral and cast trillions of dollars of trade into doubt.
It would also blow up an institution that for 70-plus years has been a pillar of global economic and political stability.
The consequences of a U.S. withdrawal are so profound that, like Trump’s senior advisers, the trade community hasn’t seriously entertained the possibility that Trump would try to withdraw.
A top trade lawyer in Washington said: “We think he’s nuts, but not that nuts."
The safety valve: Should Trump defy his advisers and announce a withdrawal at some point in the future, he would run into significant legal hurdles.
As head of state, Trump under international law could make the notification at the WTO. But the U.S. law implementing the WTO agreements states quite plainly that withdrawal from the WTO requires an act of Congress.
What’s next? Probably nothing. This move seems too extreme, even for Trump.
Sources with knowledge of the situation say the Trump administration will continue to call attention to various ways in which the U.S. encounters what some Trump advisers perceive is unfair and unbalanced treatment within the framework of the WTO.
The administration will likely continue to push the envelope on all its trade policies, fully expecting its actions will be challenged within the WTO.
But if Trump continues to feel as if he’s being unfairly stymied by the international body, you’d be a fool to confidently declare that he won’t follow through on his desires at some point.
Y'know, i really hope they do pass the FART Act (yes, i know Twitter was there before i was), cuz then it might just shock Trump out of his stupidity and get him to fire Navarro and Lighthizer
US Declares War On World Trade With Massive FART Act
ed by them [the WTO]. I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States."
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