China and the WTO: World Trade Organization works to ease trade tensions

World
Europe

02:15

As talk of a "trade war" between the U.S. and China ripples around the globe, the World Trade Organization finds itself in the middle of the dispute. The WTO was established in 1995 with the goal of ensuring the rules of international trade are upheld.

If the aim of the 164-country strong organization is to regulate international trade, then why has the U.S.-China dispute quickly turned into a public tit-for-tat.

One of the key pillars of the WTO is settling trade disputes-where member countries can file complaints if they think their rights are being violated, instead of taking unilateral action against a country.

SIMON LESTER, CATO INSTITUTE "There will be sort of a standard litigation process where governments file written submissions they present an oral hearing they present their arguments to the judges there, and you get a verdict, you get a ruling saying that the government being accused of violating rules is or is not actually doing so."

While the WTO provides oversight on international trade, the organization ultimately relies on the compliance of its member countries.

SIMON LESTER, CATO INSTITUTE "If a government really doesn't want to follow the rules, there's no police force. You can't put countries in WTO jail if they didn't follow the rules."

The Trump administration has criticized the WTO, calling it "a disaster", but U.S. allies have urged trade disputes to stay within the confines of the WTO.

MARY LOVELY, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS "That show of force may be getting the Trump administration what they want, but unfortunately, it does have the effect of politicizing the commercial relations to an unprecedented degree."