James Bacchus
In one more sign of its reckless retreat from responsibility in international trade, the United States is reportedly refusing to pay its agreed share of the budget of the embattled World Trade Organization (WTO). In Geneva, US delegates have evidently told other members of the WTO that its payments for the 2024 and 2025 WTO budgets are on hold pending a review of all US contributions to international organizations.
So far, no one in Geneva is saying much about this latest insult by the Trump administration to trade multilateralism (following Trump’s previous insults and those of Joe Biden for nearly a decade). The 165 other member countries of the WTO are doing their best to pretend the United States is not acting as badly as it is in international trade governance, as they have been doing for some time now. But it is getting harder for them to pretend that all is still well with the rules-based multilateral trading system that the United States played a major role in creating but seems now to be bent on wholly abandoning.
Why would the United States refuse to pay its WTO dues?
The White House has not said.
It is not because the amount of the dues would break the US budget. Overall, the WTO has an annual budget of about $232 million. By longstanding agreement, every year this amount is allocated proportionately among the 166 WTO members according to their share of world trade in the preceding year. Accordingly, the United States is supposed to pay about 11 percent of this WTO budget—about $24 million per year.
This is probably less than US taxpayers fork over to pay for President Trump’s frequent golf trips. Those costs reportedly total tens of millions of dollars. Indeed, one report reckons that Trump’s golfing has already cost the US budget $18 million since he was sworn into his second term as president on January 20. If Trump’s team is truly looking to save Americans money by acting more efficiently, they would be better off looking in Mar-a-Lago than in Geneva.
Nor is it because the amount of the WTO dues is unfair. If the US thinks the current system of dues allocation is unfair, it has not said so. What could be more fair than divvying up payment for the total budget according to the respective amounts of trade represented by the participating countries? The approximately $24 million in US dues is the most paid by anyone because the United States has the largest share of world trade. (China is close behind.) As the largest dues payer, the United States chairs the WTO budget committee, a role it is evidently willing to forfeit by nonpayment.
What does the United States get in exchange for these annual dues? It gets a system that has enabled American and other trade in the world to flow smoothly and fairly. This is because this system is based on agreed rules that have been backed for the past quarter of a century by the last resort of economic sanctions against trading countries that refuse to uphold them. Among other benefits, this rules-based multilateral trading system provides—in the words of the WTO treaty—“security and predictability” in world trade so that producers and traders can feel confident in sending their goods and services across international borders. And, as I explained in a 2023 essay, none of the most common populist broadsides against the organization, such as its supposed bias against US interests, are true (though it still needs reform).
Is this important to the United States? Consider another recent event. Earlier this month, the United States bombed Houthi militants in Yemen because they had been attacking oil tankers and container ships crossing the Red Sea through the Suez Canal. According to Vice President JD Vance in the infamous Signal chat that has been grabbing headlines, these attacks affected 3 percent of US trade. Apparently, he thought this did not justify the bombing; but President Trump did. In contrast to this 3 percent of US trade, the WTO affects 100 percent of US trade. About 98 percent of all world trade falls within the scope of the WTO rules that provide “security and predictability” for trade, and around 80 percent still occurs under the organization’s multilateral rules.
Of course, the Trump administration looks askance at these international trade rules, much as it does at almost everything relating to international institutions of all kinds. Beginning under Barack Obama, intensifying under Trump, continuing with Biden, and now worsening significantly under Trump now that he has returned to the presidency, the United States has betrayed its history and its ideals by becoming a scofflaw in international trade. It has weakened the international rule of law in trade by undermining the WTO dispute settlement system. It has ignored a series of WTO rulings that have rightly gone against it. And it has shown little or no interest in modernizing the trading system to make it more fit for purpose in the 21st century.
Given all this, it should come as no surprise that the Trump administration is now refusing to pay its WTO dues.
The larger question looms: Is this but a prelude to US withdrawal from the WTO? As I’ll explain in a forthcoming paper, the United States could, under the WTO treaty, withdraw from membership in the WTO by giving the other members six months’ notice.
Sen. Josh Hawley (R‑MO) has already announced that he will be submitting a resolution soon calling for US withdrawal from the WTO. The Trump administration has not yet taken a position on this proposed resolution. If Trump endorses this effort, and if this withdrawal happens, then it would be by far the worst mistake yet by Trump—among many, many—on international trade.
Meanwhile, the other members of the WTO are reportedly working on a “Plan B” if, following the conclusion of its current contributions review, the United States ultimately decides not to pay its dues. As part of this emerging plan, expect China to step up and offer to pay more while perhaps also assuming the chairmanship of the WTO budget committee. It is unclear how this would be in the national interest of the United States of America, in trade or otherwise.