Heading into the 2024 election season, discussions about America’s trade deficit, which amounts to $785 billion, are likely to be prevalent. While it may seem convenient to lay the blame on the administrations of presidents like Trump or Biden, the true underlying issue lies with the World Trade Organization (WTO). Initially established to ensure fair competition in global trade, the WTO has unfortunately become a stumbling block in efforts to improve America’s trade balance.

Since its creation, the WTO has consistently favored other nations over the United States. The U.S. made the decision to join the WTO in 1994, after which, by 2000, our trade deficit had skyrocketed, doubling as a percentage of our GDP. Subsequently, another significant decision was made, granting China Permanent Normalized Trade Relations status following its admission into the WTO. This move exempted China from annual congressional review, the rationale being that it would help narrow our trade deficits. Contrary to expectations, our trade deficit continued to climb by another 40 percent until Donald Trump took office in 2017.

Although not the only factor contributing to our trade imbalances, the WTO remains the primary culprit. A system based on rules is essential for global trade, yet the existing setup is far from impartial, presenting various flaws that persist.

Among the flagrant issues is the self-declared status of “developing country,” allowing nations to benefit from special trade privileges without stringent criteria for determining eligibility. As a result, 80 percent of WTO members, including China – the world’s second-largest economy, claim this status. Consequently, the U.S. is compelled to grant favorable trade terms to China, despite being the main source of our trade deficits. The disparity is evident, especially when comparing China’s per capita net-worth to that of genuinely developing countries like India.

Though these terms were agreed upon by our negotiators years ago, what previously made sense now poses severe challenges. The U.S. ends up making enduring concessions to the majority of other WTO members, inhibiting our ability to negotiate bilateral trade agreements. This scenario diminishes incentives for other nations to engage in such negotiations when they already have a deal that favors them. Consequently, the U.S. has notably fewer bilateral trade agreements compared to countries like Mexico.

Additionally, the dispute resolution process within the WTO has oftentimes been unfavorable to the U.S. The imbalance is evident in the skewed panels that lean towards countries with positive trade balances, not impartial arbiters. With the U.S. as the defendant in one-quarter of all WTO cases, and a 90 percent loss rate, it’s absurd to suggest that the U.S., with the largest trade deficit, is the primary violator of international trade laws.

The treatment of Value Added Tax (VAT) remains a significant concern. Many countries provide full VAT rebates on exported goods, making them cheaper in the U.S. compared to their home markets. Conversely, U.S. goods encounter VATs and tariffs abroad, rendering them less competitive in foreign markets. Efforts by the U.S. to address this imbalance with new tax regulations were thwarted by the WTO, prompting suggestions for a complete overhaul of our tax system, raising questions on the WTO’s authority to dictate U.S. tax policies.

Even when the WTO regulations are clear-cut, enforcement often lingers. While the organization mandates appellate decisions within 90 days, cases can drag on for years on end. Notably, the Boeing-Airbus subsidy case took more than 17 years to resolve, exemplifying how delays render the dispute resolution process almost ineffective, discouraging countries from pursuing complaints.

Moreover, the WTO fails to address critical matters like currency manipulation, intellectual property rights, and barriers in service industries, disproportionately impacting the U.S.

Prominent shifts are necessitated in reforming the WTO. However, this can only materialize when the majority of beneficiaries under the current structure acknowledge that an alternative – a potential U.S. withdrawal, would be far more detrimental. Trump has contemplated implementing universal tariffs, which could potentially force the U.S. out of the WTO, leading to catastrophic outcomes for several WTO members. Given the U.S.’s status as the world’s largest importer, the fallout could result in nearly a trillion dollars in global trade damage, eclipsing potential losses incurred domestically.

The severity of such a move should not be overlooked, particularly considering its potential implications. While critics often reference the Smoot-Hawley tariffs as a lead-up to the Great Depression, it’s crucial to note that the global depression was already underway before those tariffs were enacted.

Trump has signaled a strong stance against the WTO, advocating for significant changes. On the other hand, Democratic nominee Kamala Harris is yet to outline her strategies regarding trade policies but could greatly benefit from a reform-centered approach towards the WTO. Rectifying our trade deficit should be viewed as a national mandate, devoid of political partisanship.

Wilbur Ross served as Secretary of Commerce under the Trump Administration spanning from 2017 to 2021. He is the author of the book “Risks and Returns: Creating Success in Business and Life.”