US opposition pushes trade court to brink of collapse

(Geneva) AFP: The World Trade Organization’s capacity to settle international disputes, a core function throughout the body’s 25-year history, is on the brink of collapse following relentless US opposition.

The appellate branch of the WTO’s Dispute Settlement Body (DSB), sometimes dubbed the supreme court of world trade, was a target of US criticism before President Donald Trump took office.

His predecessor Barack Obama’s administration began a policy of blocking the appointment of appeals judges over concerns that their rulings violated American interests.
Trump’s trade team has both extended that policy and escalated the fight.

Barring a shock breakthrough in the coming days, the court will cease functioning on Wednesday.

The WTO appellate branch normally counts seven judges but has just three left - the minimum required to hear an appeal. Two more judges are due to retire on Tuesday.
WTO Director General Roberto Azevedo warned on Friday that the organisation was facing a stark choice.

“You could restore the impartial, effective, efficient two-step review that most members say they want,” he said.

“Alternatively, your choices could open the door to more uncertainty, unconstrained unilateral retaliation -- and less investment, less growth, and less job creation.” Various reform proposals have secured broad support.

But according to EU Trade Commissioner Cecilia Malmstrom, there can be no solution without US buy-in because the WTO works on consensus.

“This is a dispute between the 163 members of the WTO and the US,” she told the European parliament last month.

US WTO envoy Dennis Shea argued on Friday that Washington had “engaged constructively over the past year” to resolve the crisis, but would not relent until its concerns were fixed.
“This is not an academic question; we will not be able to move forward until we are confident we have addressed the underlying problems and have found real solutions to prevent their recurrence,” he told a WTO meeting.

US concerns regarding the WTO appeals court include allegations of judicial overreach, delays in rendering decisions and bloated judges’ salaries.

But top American trade officials have also insisted that the US Constitution does not permit a foreign court to supersede an American one - and that WTO appellate judges assert such superiority in international trade law.

Washington reportedly threatened to block the WTO’s 2020 budget over the dispute, raising the prospect of a January 1 shutdown.

The US ultimately backed a provisional budget compromise on Thursday but it included substantial appellate body cuts.

“There is no question the Trump administration has killed the appellate body,” said Edward Alden, a trade expert at the Council of Foreign Relations think-tank. “That was its intention, and it has succeeded.”

The appellate body’s demise will place international trade disputes in legal limbo.