WTO members agree on temporary body to settle disputes

The Swiss economics minister, Guy Parmelin (centre), chaired the ministerial WTO meeting in Davos. © Keystone/Laurent Gillieron

Seventeen World Trade Organization (WTO) members, including Switzerland, the European Union and China, have agreed to create a temporary mechanism to settle international trade disputes. 

This content was published on January 24, 2020 - 14:33
Keystone-ATS and Reuters/sb

The move comes after the United States paralysed the WTO Appellate Body last month, throwing the Geneva-based organisation into crisis. 

The EU announced on Friday that a group of WTO members had agreed to work on an “multi-party interim appeal arrangement” to preserve the WTO’s two-step dispute system until its own Appellate Body becomes operational again. 

“We, the ministers of Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, Uruguay, remain committed to work with the whole WTO membership to find a lasting improvement to the situation relating to the WTO Appellate Body,” the WTO members said in a joint statement.  

“We believe that a functioning dispute settlement system of the WTO is of the utmost importance for a rules-based trading system, and that an independent and impartial appeal stage must continue to be one of its essential features.” 

They said they would put in place “contingency measures that would allow for appeals of WTO panel reports in disputes among ourselves, in the form of a multi-party interim appeal arrangement based on Article 25 of the WTO Dispute Settlement Understanding”. 

Other states are free to join the initiative, they added. The announcement came after a mini-ministerial conference at the World Economic Forum (WEF) meeting in Davos, which was attended by 35 country delegates and presided by Swiss Economics Minister Guy Parmelin.

Marie-Gabrielle Ineichen-Fleisch, State secretary at the State Secretariat for Economic Affairs (SECO), said it was important to move forward quickly and that the interim body remains temporary.

"Our goal is to get the Appellate Body back to work, and to ensure WTO remains relevant organisation," she told reporters in Davos on Friday.


Neutered

Their initiative was launched in mid-December by the EU and several WTO members after the US effectively neutered the WTO’s highest dispute court

Last month, the terms of two of the last three judges on the WTO’s appellate court ended, after Washington continued its policy of blocking new appointments to protest how the WTO does business. 

Since 2001, the US - under Presidents George W. Bush, Barack Obama and Donald Trump - has blocked new judges’ appointments to protest against  the way the WTO does business. After Trump’s election, Washington stepped up pressure by refusing to renew the terms of two of the three remaining members of the appeals panel. The US is unhappy with the court's "overreach" and "disregard" of WTO rules and is displeased about how the WTO has tied its hands in dealing with China. 

At present, only one judge remains operational out of the original seven-member appeals court that rules on trade disputes; a minimum of three are needed for it to function. 

WTO chief Roberto Azevedo is desperately seeking a solution to the crisis, but observers are worried about the impact for multilateralism and the global trading system. 

Speaking in Davos on Wednesday, US President Donald Trump vowed action with the WTO, saying Azevedo would visit Washington as soon as next week, but giving no other details. 

"We're going to do something that I think will be very dramatic," Trump told reporters.

At a press conference in Davos on Friday, Azevedo said he there were numerous ideas and papers being circulated about fixing dispute settlement at the WTO.

"There are options out there, we are trying to fix it, but we're not there yet," he said. "I would say that I would be confident that more progress will be possible in the short term."

Azevedo said Trump wanted to see the WTO change and that he had been invited to Washington to discuss how deep such reform would be.


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