U.S. Demands Exacerbate WTO Dispute Body Turmoil

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By Bryce Baschuk

The Trump administration is blocking the appointment of several key World Trade Organization officials in a high-stakes gamble that could shake up the world’s preeminent trade dispute settlement forum.

U.S. trade officials linked the process to appoint three new members of the WTO appellate body to U.S. demands for changes to the WTO’s 22-year-old dispute settlement rule book, according to participants at an Aug. 31 meeting in Geneva.

More than a dozen WTO members pushed back and said they were concerned by the systemic implications of the Trump administration’s linkage, according to participants at the Aug. 31 meeting.

During the meeting of the WTO dispute settlement body (DSB) U.S. trade officials said that simply moving forward with filling vacancies risks perpetuating concerns that the urgent attention of the settlement body, according to sources familiar with the discussions.

WTO appointments are granted on a unanimous basis. U.S. opposition to any new candidates may be problematic for the appellate body, which is short-staffed and overwhelmed during a rising tide of high-profile trade disputes.

Seven-Member Panel

The WTO’s seven-member appellate body is down to five members after the recent departures of Kim Hyun-chong, who resigned in August, and Ricardo Ramirez-Hernandez, whose term expired in July.

The WTO appellate body is set to lose a third member on Dec. 11 when Peter Van den Bossche’s final term expires.

The absence of two and potentially three WTO appellate body members comes at a difficult time for the dispute settlement system, which has been saddled by an increasing number of complicated cases.

The appellate body — which has the final authority to uphold, modify, or reverse WTO dispute rulings — is expected to deal with 20 or more appeal cases in 2017, including a dispute over tobacco plain packaging rules, WTO Appellate Body Chairman Ujal Singh Bhatia aid in a speech last month.

Unprecedented Situation

Trump administration officials have argued that the WTO must find a way to address the problem that was created when Kim resigned.

The U.S. said the WTO stumbled into an unprecedented situation when the appellate body issued a ruling on Sept. 5 that that both Kim and Ramirez-Hernandez were panelists on, despite the fact that they were no longer appellate body members, according to a copy of the U.S. statement at the Aug. 31 meeting.

U.S. officials said it is important for WTO members to formulate a legal framework to address such a situation before they begin considering nominees to replace the outgoing members.

Members of the WTO dispute settlement body will convene in Geneva on Sept. 15.

U.S. Animosity

Trump’s trade officials have been critical of the WTO’s dispute settlement system — an international forum where independent arbiters settle trade disputes among the WTO’s 164 members.

U.S. Trade Representative Robert Lighthizer has criticized the WTO for legislating on issues that extend beyond the scope of its responsibilities. Separately, Commerce Secretary Wilbur Ross slammed the effectiveness of the dispute settlement mechanism and called on the WTO to speed up its lengthy dispute proceedings in a press conference this spring.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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