What does it mean for lawyers if President Trump follows up on his threat last week to withdraw from the WTO if it doesn’t ‘shape up’?
The US is already pushing the WTO to the very edge of its being able to function. For instance, the US also last week blocked the appointment of yet another judge to the WTO’s appellate body. Since the existing three judges come from the US, China and India – all big countries likely to be subject to appeals – there will doubtless be future recusals from one of them because of conflicts of interest in a particular case, meaning that that appeal can’t be heard.
The EU is trying to engage with the US in reforming the WTO, to see if US objections are aimed at destroying the organisation, or can be accommodated by future changes.
As to what will replace the WTO, we already see it in President Trump’s conduct with China, NAFTA and the EU – bullying and trials of strength. As America leads, other countries may follow. A good explanation of the role of the WTO, the grievances of the US against it, and the consequences of the US pulling out can be found here.
This obviously feeds into the broader Brexit debate, and whether now is a sensible time for the UK to be leaving the EU and – as some hard Brexiteers are daily pushing more vocally – launching ourselves into the WTO regime. The author of the WTO explanation above runs an entertaining and educational Twitter account which deals with some of the Brexiteers’ arguments.
The other place to go to find out what is happening on these issues from an international trade angle is to the Twitter account of Bloomberg’s WTO reporter. For instance, you will find a discussion on whether the consent of Congress is needed for President Trump to pull out of the WTO.
There is no new light to be generated by a discussion of Brexit or Trump politics. I am interested rather in the consequences for lawyers – meaning for international trade in legal services – if the US pulls out of the WTO, as seems more and more likely.
At first, doubtless, the remaining members will try to keep things going, as with the Paris climate agreement and the Iran nuclear deal, both of which have also suffered from a Trump withdrawal. That means that, at worst, we will be able to rely on WTO rules in our trading with the EU and the rest of the world bar the US – assuming, of course, that we will be able to establish our WTO schedules independently of our current entwinement with the EU’s schedules in time, which is an exercise fraught with obstacles.
Around 80 WTO member countries have made some sort of commitment relating to legal services in their schedules, out of 164 members in all – in other words around half. They include many, but by no means all, of the countries in which English and Welsh solicitors are interested in practising. That means that there is a basis of rules that UK lawyers can use to gain access to those markets.
Often, this basis may be low and restrictive, giving not much of an opening. For instance, approximately 60 member states schedule legal services involving advisory/consultancy services on home country law and international law. But then there are problems with issues like: registration with the local competent authority; the appropriate vehicle for practising; whether local lawyers can be brought in to the practice; and which foreign lawyers are eligible under the rules. But, as mentioned, there are at least existing rules for further negotiation.
But if the US, the world’s largest economy, is out of the WTO and no longer subject to its rules, and at the same time probably bullying and imposing tariffs on many other countries, it may be that the WTO will not last that long. If so, we will be back to the law of the jungle, where the strongest prevails.
In that case, we will need separate trade agreements with every country where lawyers wish to operate, to replace the existing WTO commitments. Legal services will take their place alongside other goods and services in bilateral trade negotiations, and we will have to jostle to have our case heard. There is the subsequent danger that legal services may be traded against something which is considered more important. Just as the UK is small compared with the USA and China, so legal services are small compared with financial services and many manufacturing industries.
In practical terms, the Law Society will have to prepare itself for individual bilateral negotiations in those markets (potentially 27 EU and 164 WTO) where currently the EU and WTO provide grouped bases for market access.