The World Trade Organization’s (WTO) main body for settling trade disputes became inoperative on Dec. 10 after the terms of two of the three remaining members expired as the Trump administration continued to block new nominations.
The WTO Appellate Body had been responsible for adjudicating contested rulings over disputes between member countries. There now is just one member remaining on the appellate body out of an original seven; a minimum of three is needed for the body to function.
Over the past two years, President Trump has blocked nominations of new appellate body judges. He and U.S. Trade Representative Robert Lighthizer have accused the WTO of unfair treatment toward the United States and criticized the appellate body for overturning and modifying initial WTO decisions without adequate justification.
Dennis Shea, the U.S. ambassador to the WTO, said in Geneva last week that other countries have not seriously tried to improve the WTO’s dispute-settlement process. “The United States has…articulate[d] our longstanding concerns with the functioning of the Appellate Body,” Shea said. “We have yet to see the same level of engagement from other members.”
WTO Director-General Roberto Azevêdo announced Dec. 9 he would launch “more intensive, high-level” consultations on how to resolve the longstanding impasse over the appointment of appellate body members. Azevêdo’s comments came after WTO members were unable to reach consensus on a proposal to improve the body’s functioning.
Azevedo said that “significant changes in the dispute-settlement mechanism” will be needed and that “intensive consultations” will start immediately. Addressing the WTO’s General Council, Azevêdo said the consultations would focus on whether members are discussing all the elements that need to be addressed in finding a solution, as well as the basic concepts members need to agree upon to make progress.
“A well-functioning, impartial and binding dispute settlement system is a core pillar of the WTO system,” Azevêdo said. “Rules-based dispute resolution prevents trade conflicts from ending up in escalating tit-for-tat retaliation – which becomes difficult to stop once it starts – or becoming intractable political quagmires.”
Azevêdo said even though the appellate body has ceased to function for the time being, “(m)embers will continue to resolve WTO disputes through consultations, panels and other means envisaged in the WTO agreements, such as arbitration…but we cannot abandon what must be our priority, namely finding a permanent solution for the appellate body.”