The Role of the WTO in the U.S. Economic War on Venezuela

Misión Verdad
Image for postThe World Trade Organization (WTO) was founded 25 years ago to impose regulatory guidelines governing trade between all countries. It is an institution that was conceived within the framework of the Bretton Woods Agreements in 1944, but was not formed until early 1995.

According to the organization’s rules, member countries must offer each other fair trade conditions, resolve disputes through consultation and negotiation, and openly publish laws and regulations governing foreign trade activities.

It is obvious that the United States, one of the most influential countries in the institution, whose government was the first to promote it, now is torpedoing it with its growing policy of unilateral coercive measures, wrongly called “sanctions,” against nation-states, individuals, and private companies. Liberal trade is dying a little more each time the US Treasury Department issues a new update to its “blacklist”.

Against Venezuela, according to the OFAC, as of June 2, 2020 the accumulated unilateral coercive measures of the United States amounted to 366 sanctions according to the SDN List (a sort of “black list”).

Image for postChart: Venezuelan Center for Chinese Studies

It is a policy of Washington that has being used since 2014 until today, imposing an economic-commercial blockade, siege and asphyxiation strategy on the Bolivarian Republic of Venezuela, affecting goods and services of Venezuelan origin.

Venezuelan consultations before the WTO

In the face of the economic warfare being waged by Washington on the Venezuelan population, the state presided over by Nicolás Maduro has exercised its right to denounce and officially dispute Anglo-imperialist affronts.

Thus, Venezuela made a request for a consultation before the WTO, which represents the formal initiation of a dispute before this body. The consultations provide an opportunity for the parties to discuss the matter and find a satisfactory solution without continuing the dispute.

It works like this: after 60 days, if the consultations fail to resolve the dispute, the complainant can request a panel decision. Panels then conduct investigations and produce a report to which one or both parties can appeal.

If a trade measure is found to violate WTO law, the respondent must comply with the covered agreements within a period not exceeding 15 months. If the respondent refuses to comply, the complainant may request compensation from the respondent.

Venezuela appeared before the WTO as a plaintiff to request consultations on the resolution of disputes with the United States in 1995, regarding a dispute over the sale of gasoline between the two countries. On that occasion, a decision on the matter went against Washington, and both countries subsequently negotiated a new revised regulation.

The last Venezuelan consultation was held on December 28, 2018, in which it initiated a dispute before the WTO against U.S. measures that blockade the Venezuelan economy, finance and trade.

Venezuela argues that certain U.S. laws and regulations relating to goods and services of Venezuelan origin, the liquidity of Venezuelan public debt, transactions in Venezuelan digital currency and the list of specially designated nationals and persons on the “black list” are incompatible with the WTO’s General Agreement on Tariffs and Trade (GATT) of 1994 and the General Agreement on Trade in Services (GATS).

The 2018 consultation

The complaint made by the government of Nicolás Maduro before the WTO involves the application of differential transport tariffs and higher regulatory charges to products of Venezuelan origin, giving less favourable treatment than that granted to products of US origin.

In addition, the petition points out that ships have been stopped and the most convenient routes for the international transit of ships or other means of transport have been obstructed.

The petition also rejects measures to ban imports and exports between the United States and Venezuela, the South American country being a historic supplier of oil to the North.

Unilateral coercive measures, we know, prohibit commercial exchange between countries. That is why oil exports to other countries such as China have grown to the detriment of Venezuelan-American trade.

Image for postChart: Venezuelan Center for China Studies

The petition also denounces the detention and seizure of certain goods that transit or are in U.S. territory, such as the seizure and theft of the assets of Citgo, a subsidiary of Petróleo de Venezuela (PDVSA).

It is estimated that with this last measure, the U.S. Treasury Department has blocked access to $7 billion in assets and up to $11 billion in potential oil exports in 2020 that would no longer reach the Venezuelan state’s coffers for the import of goods and services needed by the population, in addition to limiting access to investment by the Venezuelan economy.

After the United States refused to respond to Venezuela’s WTO inquiry (in support of the “Guaidó project”), Maduro’s government requested that a panel be established on March 14, 2019. The Venezuelan delegation requested the establishment of a panel but the United States has blocked the appointment of new judges to the panel.

Washington claims that the WTO dispute settlement panel could not legitimately consider an agenda item submitted by the “illegal Maduro regime”. The monthly meeting of the panel was postponed “until further notice”.

US Trade Representative Robert Lighthizer threatened to veto any WTO bid that shows any “hint of anti-Americanism (sic)”. This is why the United States has successfully blocked all nominations to the body’s appeals court by vetoing the appointment of new members.

As a result, the WTO is suffering the worst crisis in its history, without being able to coordinate clear responses in the framework of a pandemic and in the midst of the trade and technology war between China and the United States. The world of liberal trade is becoming increasingly vulnerable, as Venezuela struggles to overcome the imbalances posed by Washington’s economic war against its population.